SMBs in SAARC spent over US $16B on IT and Telecom in 2007

KOLKATA, INDIA: Small and medium businesses (SMBs or companies with up to 999 employees) in the SAARC region (Bangladesh, Pakistan, Sri Lanka and India) spent nearly $16 billion on IT and telecom solutions last year. SBs (small businesses or companies with up to 99 employees) are a major contributor to this spending accounting for over 70 percent of the spending.

"IT products and services account for over 55 percent of the total ICT spending among the SAARC SMBs in 2007," says Dipendra Mitra, Analyst at AMI Partners. "The rest comes from telecom products and services. Within the SAARC countries Indian SMBs prod over 85 percent of the ICT spending. The other three SAARC countries are constantly striving to reach the higher levels of growth and achievement attained by their largest neighbor - India. This in turn is providing a boost to the ICT expenditure of these other three SAARC countries."

SMBs typically go through three distinctive phases of IT deployment - from building infrastructure solutions (Wave I) to deploying connectivity solutions (Wave II) and ultimately enterprise solutions for extending their business reach with their remote locations, customers and business partners (Wave III).

"Almost all SBs in Bangladesh, Pakistan and Sri Lanka are still in the first wave of IT adoption. A majority of India SBs are also in the first wave of IT adoption but are fast adopting new technologies to move to the second level," Mitra says. "However, almost all Indian MBs have migrated to the second wave of IT adoption. A similar scenario also prevails among the other three SAARC MBs."

Computing and Internet are likely to dominate IT spending as SMBs move to build a robust IT infrastructure. But MBs will spend a greater proportion on networking compared to SBs, as MBs are keen to enhance their focus on connectivity technologies. The presence of a stable computing and networking infrastructure is required as the backbone for further advanced IT applications. As the level of IT investment increases, there is a change in the perceived role of IT from a support function to an enabler of competitive advantage.

PC adoption is quite low among the SAARC SBs at present. In India, PC adoption is marginally higher for SBs, where about a third of the SBs have adopted computers. PC penetrations for the other three SAARC SBs hover within 10 percent to 15 percent. However, more than 30 percent of SBs in these other three SAARC countries have indicated that they intend to purchase new PCs in the next 12 months. This relatively untapped PC market provides a huge opportunity to IT vendors wishing to make a dent into these markets.

Pakistan, Bangladesh and Sri Lanka have been embroiled in various political and economic uncertainties. However, these countries are now looking beyond these hurdles and most SMBs are now bullish about growth in 2008.