Indian HBBs to spend US$ 8.4B on IT

KOLKATA, INDIA: There are nearly 16.2 million Home-based businesses (HBBs) in India and these constitute about 8 percent of the 202.9 million households. Nearly one-eighth of these HBBs are PC penetrated and they are set to spend US$8.4 billion on upgrading their ICT (info-communications technology) infrastructure this year, up a healthy 19 percent over 2007, according to a recent study by New York-based Access Markets International (AMI) Partners, Inc.

AMI-Partners defines HBBs as income-generating entities based in the home, led by individuals who are self-employed; it excludes individuals who work for a larger organization and telecommute, have a formal work-at-home arrangement with their employer or do after-hours work from home.

“For every dollar spent by HBBs in India 67 percent goes for telecom services and 22 percent on computing. The high spending on telecom services imply that the HBBs rely on the data and voice services to a large extent to conduct their businesses,” says Dipendra Mitra, Analyst at AMI-Partners.

Although IT comprises a much lesser proportion of the IT/Telecom spending pie, the former is set to rise at a faster rate within HBBs as they strive to reach a technological superiority level commensurate with their nearest brethren – the Very Small Businesses (VSBs or companies with up to 4 employees). “In the long run, the ultimate objective of HBBs is transition to the level of VSBs – as expressed by over one third of HBB owners,” says Mr. Mitra.

Comparison:



The number of HBBs outnumber VSBs by a factor of nearly 7:1 Both HBBs and VSBs are at the initial stages of PC adoption. Their PC penetration levels are at an embryonic stage indicating a huge opportunity for PC vendors wishing to make a dent into this nascent market HBBs mostly lag behind VSBs in usage of primary technologies indicting that they are still in the First Wave of Technology adoption.

HBBs are considerably younger than VSBs and thus are quite eager to adopt the latest technologies as they endeavor to transit the Second Wave of Technology adoption.

Both HBBs and VSBs show significant promise of future growth – 40 percent to 45 percent of them have indicated plans of workforce expansion and over four-fifth of them anticipate revenue growth in the next 12 months.

The Very Small Businesses operating from commercial space and Home together constitute a highly lucrative market for IT vendors since businesses in both these segments are on the growth path and they aim to increase levels of IT adoption at a rapid pace. Moreover, any vendor targeting the VSB space will also find it convenient to tap the HBB market segment since there is a considerable similarity within both these segments in terms of demographic, psychographic and IT adoption profile.