Dell Services, the new entrant into the information technology (IT) services segment (after its acquiring Perot Systems), is gearing its focus on the growing small and medium enterprises (SMEs) market.
The keen interest of Dell Services for the SME segment has its reason. The global sourcing addressable market for the SMEs in core geographies is likely to be $230-250 billion by 2020, according to Nasscom Perspective 2020.
India being one of the countries with a sizeable SME segment, IT vendors are increasing their footprint in this segment. Be it India’s largest IT companies such as Tata Consultancy Services or Wipro Infotech, or multinationals like IBM and Dell, they’re all eyeing this growing segment. Unlike the earlier strategy of offering large-enterprise products after removing some features, most of the players have come out with a different offering and approach.
Indian SMEs are expected to spend $16.8 billion (around Rs 78,456 crore) on technology, including hardware, software and bandwidth in 2010, according to Access Markets International (AMI) Partners.
“True enterprise IT services firms have been focusing on the SME segment but the revenue contribution from this segment tells a different story. I think one reason for this small traction from the large IT firms into the SME is the fact that they are too tuned into the enterprise segment and the second is the marketing initiatives. If the big players can manage to get a strategy in place, the SME sector will be a gold mine,” said Diptarup Chakraborti, Principal Research Analyst, Gartner.
Take, for instance, TCS, which announced its foray into the SME segment over a year before, with its IT-as-a-services approach. The company today has close to 60 customers and has plans to increase its footprint in other geographies.
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“IT-as-a-service will be our only way of targeting the growing SME segment. We have a three-focus agenda. The first is to increase our solutions footprint, the second would be to scale the existing customer and, finally, appointing sales channels to grow,” said Venguswamy Ramaswamy, Global Head of Small and Medium Businesses at TCS. With a focus on manufacturing, education, healthcare and retail, TCS has set up data centres that serve customers.
Ramaswamy further said: “After this recession, there is a renewed interest among SMEs to adopt technology. That also from larger players like TCS. This recession also made several of these small IT vendors shut shop. They are now stuck with IT solutions and set-ups, with no one to look after. This has made them look at much more stable players.”
Chakraborti added that with IT firms investing in technologies and framework like cloud computing, Software-as-a-service (Saas) and platform approaches, all these have also reached a stage of maturity. But, he cautions that deal sizes in SME are not too lucrative.
Agrees Anand Sankaran of Wipro Infotech. “I don’t think we are looking at large deals anyway in this segment. There could even be deals of Rs 2 crore for five years. What has changed for both the SME customer and IT services provider is the availability of technologies like Cloud, Saas and others,” he added. Sankaran also feels that these technology approaches solve many of the business hurdles like pricing and collections. “From the vendor standpoint, since the new offerings are subscription-based, they can take services as they can pay. From an IT service provider, our collections mechanism becomes easy,” said Sankaran.
Wipro, too, is aiming at the SME sector through its Cloud Computing offering launched a year back. “We will focus at six clusters. Auto, textile, cooperative banks and hospitals are something we have already started working on and the other two sectors that we plan to enter are gems and jewellery and toys,” said Sankaran.