IT spend to go up by 24 %

CONNECTIVITY: The increasing need to stay connected 24x7 will enhance PC penetration.

Small and medium businesses in India are set to spend more than $8 billion to beef up their IT infrastructure in 2007, a rise of 24 per cent over 2006.

While computing products would still account for the bulk of IT investments, internet spending is fast increasing as these enterprises take to IP-enabled business process services.

According to a recent study by Access Markets International (AMI) Partners , an increasing number of smaller companies are planning to recruit more staff this year, invest in new facilities, push advertising campaigns and build IT infrastructure, as they look at technology adoption as an effective strategy to beat competition.

Greater employee mobility, increased competition and expansion in terms of office locations have prompted Indian SMEs to rely heavily on basic Internet-based applications.

Increased dependency on the Internet also boosts the use of mobile devices, availing services like banking/bill payment and online travel-booking are recent trends among Indian SMEs, the study points out.

While saving on costs is still their primary focus, the phenomenal growth of the Indian economy has made SMEs optimistic about future business prospects.

According to the AMI Partners' survey, businesses with "always-on-the-move" employees have increased by over 20 per cent since last year. A preference for value-added services such as email on the phone from telecom service providers are a testament to the increasing need for 24/7 access.

The survey also revealed that six out of ten medium businesses surveyed listed increased IT storage capacity and deployment of enhanced storage solutions as a key strategic priority, while over half also listed enhancing enterprise IT security as a key concern.

Thus, investments in security and storage solutions are anticipated to grow dramatically in 2007. The survey reveals that 93 per cent of small businesses (1-99 employees) and 86 per cent of medium businesses (100-999 employees) experienced revenue increases in the past year, with 15 per cent of SMEs experiencing an overall increase of over 20 per cent.

As Indian SMEs gear up to compete with international companies, about 15 per cent of the SMEs said they would respond to increased competition by boosting their capital outlay and investing in new technology. Investments in computing products such as personal computers and printers still account for the lion's share of SME IT investments.

However, in spite of small businesses accelerating their IT investments, less than a third of these companies own a computer terminal. Among businesses using computers, over 40 per cent said they considered buying additional hardware and upgrading their hardware an important move. This translates into a great opportunity for vendors.

This translates into a phenomenal opportunity for vendors.