Financial sector's IT spend rises

Indian small and medium enterprises offering banking and financial services, insurance, real estate (collectively called FIRE) and professional services, will be the biggest spenders on information technology (IT) this year.

The overall spending on IT by these sectors in 2007 is expected to be 25 per cent higher than last year.

The manufacturing vertical "" which includes discrete manufacturing, life sciences, pharmaceuticals and process manufacturing "" will alone account for $2.9 billion or 36 per cent of the $8 billion IT spend by Indian SMEs in 2007.

IT spending by these verticals will be on the entire IT gamut that include desktop, notebook, printer, printer cartridge, the Internet, networking, website, as well as on security building through anti-virus, etc.

According to the latest study by Access Markets International (AMI) Partners, FIRE, professional services and the manufacturing sector have emerged as the most significant spenders for security products, and account for more than 80 per cent of the security spending.

SMEs like an insurance agent's firm, small corporate agent's firm, cooperative bank, or a non-banking financial corporation, with up to 999 employees, fall under the banking and insurance sector.

Professional services would include chartered accountants' firm, accounting firms, audit firms, etc, with up to 999 employees.

Professional services also include smaller advertising and consulting firms, data processing, legal and PR services, engineering, photography, physical distribution and logistics, among others.

According to AMI, more than 56,000 new SMEs within manufacturing, FIRE and professional services sectors are planning to invest in basic PC infrastructure this year in order to enhance business management, communications and networking.

Moreover, many existing and new SMEs are looking at increasing their Internet facilities and adopting better security measures, as employees become more mobile.

According to AMI, Indian SMEs have spent nearly $160 million over the last 12 months on security-related products and services, such as anti-virus and anti-spam software, intrusion detection programs, firewalls and other IT security measures.

The very small enterprises (VSEs, or companies with up to 19 employees) face several impediments, such as the need to control costs, increase in competition and challenges of globalisation.

Within the Indian VSEs, sub-verticals such as ready-made garments, food processing, retail and wholesale pharmaceuticals, are the most progressive, AMI pointed out.

"Their need to maintain quality, control costs and retain customers is fuelling IT adoption. Their IT infrastructure requirements are also hugely influenced by their customers, suppliers and regulatory compliance," pointed out Dipendra Mitra, analyst with AMI.

According to AMI, the IT revolution among Indian SMEs is taking place at two levels. On one hand are smallenterprisess, which are aggressively investing in basic computing infrastructure.