Hint of Optimism as 30% of India SMBs Anticipate an Economic Revival in the Next 3 Months

“The benefits of the stimulus packages provided by the India government are gradually percolating down to the SMBs,”– says AMI

KOLKATA, India--(BUSINESS WIRE)--Effects of the worldwide economic recession have trickled down to developing nations – and India is not impervious to the consequences. A significant proportion of India SMBs (small and medium businesses with up to 999 employees) have experienced tighter cash flow and sharp declines in revenues brought on by cancelled orders or investment plans. Business has been put-on-hold by SMB customers. Inventory constraints are another key problem that SMBs in India face – as they are burdened with a glut of excess products.

“Impacts of a Game-Changing Economic Downturn: How to Market Effectively & Stay Competitive”

These are some of the major findings that have been obtained as part of AMI’s latest quarterly tracking study, 2009 Q-1 India SMB: “Impacts of a Game-Changing Economic Downturn: How to Market Effectively & Stay Competitive”. This study was initiated among India SMBs during October – December 2008.

PC shipments within any country have a very close relationship with GDP and other economic indicators. Based on the current economic situation and India SMB spending in the last 3 months, AMI forecasts that in the next three months, almost 23% of SMBs in India are likely to invest in basic IT products such as desktops in the next 3 months – a marginal drop from the purchase propensity exhibited in the last 3 months. Other consequences of the somewhat bleak outlook are lower employee hiring rates and a near-freeze in the addition of branches.

India SMBs have been adopting a wait and watch policy for new technology adoption. AMI’s in-depth research among these SMBs reveals that most have not cancelled or shelved their new technology adoption and purchase plans; rather they have merely postponed them. Future PC purchases by India SMBs are likely to be driven by enhancement of compliance requirements and adoption of various PC-based applications, e.g. accounting software.

India SMBs remain receptive to IT spending, especially when consistent with their efforts to leverage current IT – thereby enhancing productivity, improving customer relations, and expanding business capabilities. It is important for IT vendors to identify new bundling opportunities to repackage the offerings (hardware, software and/or services) into more complete IT packages that provide value-addition to customers yet enable significant cost cutting. The ‘pay as you use’ model is gathering momentum since OPEX is being preferred to a greater extent than CAPEX. Key drivers behind the growth of the former are lower initial costs and overall TCO, fewer maintenance problems, greater affordability and easier availability of broadband. As per AMI’s quarterly tracker survey, significant proportions (more than 17%) of SMBs indicate that they would be very likely to invest in software applications if they are available on a flexible monthly, per-user payment structure.

The above equates to an opportunity for tech marketers and IT vendors. They should speak directly to SMBs and explain the value proposition of IT as a key to survival and success in the new economic environment. Use of better communication modes is another key method of navigating the economic downturn. As SMBs make an effort to reduce travel costs they utilize Internet-based collaborative technologies, e.g. audio & video conferencing as well as VoIP/ Skype calls, to connect remotely to employees and branches. These tendencies hold considerable promise for data communication vendors.

Related Studies

AMI-Partners’ 2008-09: India Small Business Market Overview –Impact of Economy: Changing Dynamics, Opportunities & Challenges and 2008-09: India Medium Business Market Overview –Impact of Economy: Changing Dynamics, Opportunities & Challenges studies highlight major trends in the context of current/planned IT, Internet and communications usage and spending. Based on AMI-Partners’ annual surveys of SMBs in India, the studies track a broad spectrum of issues pertaining to budgets, purchase behaviors, decision influencers, channel preferences, outsourcing, service and support. Also covered are detailed firmographics and critically important technology attitudes and strategic planning priorities. This data points to key opportunities and messaging hot buttons for vendors and service providers seeking to match their offerings to SMB market requirements.

For more information about this study, AMI-Partners, or our global SMB research, call 212-944-5100, e-mail [e-mail] or visit www.ami-partners.com.

About Access Markets International (AMI) Partners, Inc.

AMI-Partners specializes in IT, Internet, telecommunications and business services strategy, venture capital, and actionable market intelligence — with a strong focus on global small and medium businesses (SMBs), and extending into large enterprises and home-based businesses. The AMI-Partners mission is to empower clients for success with the highest quality data, business strategy perspectives and “go-to-market” solutions. Led by Andy Bose, the firm has built a world-class management team with deep experience cutting across IT, telecommunications and business services sectors in established and emerging markets.

AMI-Partners has helped shape the go-to-market SMB strategies of more than 150 leading IT, Internet, telecommunications and business services companies. The firm is well known for its IT and Internet adoption-based segmentation of the SMB markets; its annual retainership services based on global SMB tracking surveys in more than 25 countries; and its proprietary database of SMBs and SMB channel partners in the Americas, Europe and Asia-Pacific. The firm invests significantly in collecting survey-based information from several thousand SMBs annually, and is considered the premier source for global SMB trends and analysis.