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Indian SMBs to invest $8.73 billion on telecom

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CIOL Bureau
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KOLKATA: Buoyed by the country's booming economy, Indian small and medium

businesses (SMBs) are on track to spend over US $8.73 billion on telecom

equipment and services this year. Expenditures on telecom services accounted for

the bulk of all telecom investment, comprising 95% of total spending, according

to the latest study by New York-based AMI-Partners.






As India's SMBs (with employee sizes between 1 and 999) embrace the
fast-globalizing economy, interaction with business partners has become an

important focal point for these businesses. “Indian SMBs prefer a highly

personal touch in their interactions with business partners,” says Neha Jalan,

Kolkata-based Analyst at AMI-Partners. “Their primary methods of communication

with both clients and suppliers/vendors are via telephone calls and in-person

visits.”






Local telephony remained the primary driver of telecom spending among India's
small businesses, accounting for 55 per cent of all telecom spending.






The majority of India's small businesses are consumer-centric, though sales to
other small businesses also account for a significant proportion of their

revenues. These businesses prefer to partner with other local small businesses,

and telephone conversations remain their primary means of communication with

business partners.






Landlines are still essential to small and medium businesses in India — they
average 2.21 telephone lines per SB, and close to 20 lines per medium business.






“The state-run communications service provider BSNL is the undisputed market
leader among Indian SMBs, two thirds of whom have BSNL connections,” noted Jalan.

“However, lately, private vendors such as Bharti, Tata Teleservices and Reliance

Telecom have been expanding their territorial reach and making inroads in this

lucrative market.”






“Cell phone usage has surged significantly in the past year as a result of the
falling tariffs brought about by increased competition and the resulting price

wars,” remarked Jalan. Nine-in-ten SMBs already deploy mobile telephony and

usage of cellular phones is expected to approach saturation in the next twelve

months. Mobile telephony ranks third in their communication preferences —after

fixed telephony and in-person visits.






Cellular service expenditures form a significant proportion of medium
businesses' telecom service spending — accounting for close to a third. Less

than a tenth of medium businesses also access the internet via their mobile

devices and this service is anticipated to grow in the near future.






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