BANGALORE, INDIA: Small and medium manufacturing firms in India are gearing up to spend $3.7 billion on IT infrastructure in 2009, medium businesses as the predominant IT spenders. A typical medium business outspends its small business counterpart by a factor of twelve, stated a recent study by AMI -Partners, a provider in research and consulting for SMB.

“Small and medium manufacturing businesses in India operate in lean environments with limited resources and IT personnel,” said Abhilash DB, Analyst at AMI-Partners.
He further added that some of the key drivers for escalating investment in IT infrastructure are increased competition, customer demand for high-quality products with reduced lead time, and the need for integration of different business functions. The majority of small and medium manufacturing firms have suppliers that are larger manufacturing companies, and are oriented to work within the specified standards of these larger firms.

“Due to the competitive environment,” Abhilash continues, “many manufacturing firms have upgraded and revamped their basic IT infrastructure, hence computing products have the largest share of total IT spending in this vertical.” Internet products have the second largest share of spending as manufacturing firms need to establish real-time connectivity with business partners.

“There is still a significant scope of increasing Internet penetration within SBs in particular – about one quarter of PC-owning SBs have yet to deploy Internet access. This is mainly due to lack of Internet and broadband options. particularly for remote areas. Thus, ISPs have a golden opportunity to supply to this latent market,” noted Abhilash

According to AMI, various vertical-focused Independent Software Vendors (ISVs) are entering the SMB manufacturing space with SaaS-based offerings, drawing the attention of IT decision makers within India SMB markets.
Many such on-demand solutions are available to improve business profitability such as solutions for managing accounting and payroll, materials movement and processing, logistics, and order management.
Increased broadband adoption will lead to a boost in the adoption of these types of on-demand solutions, noted the study.