IT market moving towards smaller cities: MAIT

BANGALORE: From the time the world started facing the economic slump, we have been hearing from the Indian IT industry that it sees this downturn as an opportunity for growth.

The industry experts so far have noted the areas that bear fruits of growth, which include government, education, financial services and health-care. But the contributory factor that would generate enormous opportunity would be the tier-2 and tier-3 cities rather than the tier-1 like Bangalore, Hyderabad or Mumbai.

“The IT market has started moving towards the smaller cities,” said S.R Rao, Addl. Secretary, e-governance, Ministry of IT, Govt of India at the National Conference, 'Emerging Business Opportunities and Sustaining Market in Challenging Times'.

Citing an example of a laborer in a remote village of Rajasthan who wanted to enroll her child in a school that has a computer, Rao further added that even the remotest village in Rajasthan understands the importance of IT, hence the daily wage worker who earns about 80 rupees per day is ready to spend half of her money on the school with computer facility instead of opting the free government school, for the better future of her child.

“The amount of confidence shown by the tire-2 and tier-3 cities and the SMEs, even during the time of downturn has been much higher than big the large enterprises,” noted Rao.

The conference by MAIT, an organization that serves the purpose of scientific, educational and IT industry promotion in India, was aimed at showcasing the present business environment in India and areas of opportunities that would sustain growth for the industry in near future.

The SME sector from the small towns apart from the metros would be on of those areas contributing immensely towards the industry's growth.

“The SMEs contribute about 20 per cent towards the Indian GDP and 35 per cent towards the exports. There are about 7-8 million SMEs in India out of which only a million use IT. The opportunity is clearly there as the IT adoption rate is very low,” said Sameer Garde, country general manager, Dell India.

Things like affordability, investing in skilled working capital, infrastructure still remain an issue for this sector, and the impact of economic slump has not been spared.

“Recession has had an impact on the SME. The issue is about how to manage. But this is a great opportunity for the SME to tighten their belts to streamline operations. Emphasis on IT is critical,” said Dheeraj Dikshit, country head-SME, HSBC India.

He added that taking loan during these times is the easiest thing, but that would be the worst thing and can be disastrous to prioritize on what to do with the money.

According to Dikshit the three things SMEs need to focus upon are managing liquidity, risks and sustain business growth in this environment.