Upbeat trends in markets the world over seem to have percolated into the Indian information technology (IT) sector — and especially into the small and medium segment.
Smaller businesses in the Indian IT sector contribute 10-15 per cent of the total product output. This seems an innocuous number, but assumes significance in the light of the fact that the overall size of the Indian IT sector is $50 billion (Rs 230,000 crore).
“While the downturn meant tough times for the entire industry, companies such as ours offering baseline services managed to scrape through with just small glitches. Even so, for the past few months, there has been a perceptible improvement in business. Numbers have improved — from two or three requests for proposals (RFPs) a month, we are now meeting targets of five-to-seven RFPs every month,” said a senior executive at Kolkata-based Connectiva Systems.
Problems for the smaller players, however, go beyond the restraints offered by the downturn. Kalyan Kar, managing director, Acclaris, said, “Small players can survive only when they are able to carve out a niche for themselves. This they can achieve by focusing on specialised models and products tailored for specific markets. The idea, therefore, is to be as cost-effective as possible.”
The sentiment was reiterated by a Nasscom report which stated, “SMEs would need to make considerable effort and formulate concerted strategies if they want to grow in this highly fragmented market. The need is to sharpen their competitive edge by flushing out indifference in the entire supply chain, put higher emphasis on value, delivery and service rather than just on price.”
Nasscom president Som Mittal had said that support for the industry by the government through extension of fiscal benefits under Section 10A/10B would mitigate the impact of the recession and protectionist measures adopted by the US government. This, he said, was essential for SMEs, as it would facilitate their continued growth, provide parity with incentives under the SEZ scheme and encourage industry to move into the smaller cities.
