KOLKATA, INDIA: 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.

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 percent 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 pc) 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.