IT spending in SMB sector to cross $18.5 billion by FY18: Report

National Association Software and Services Companies (NASSCOM) recently launched ‘Indian SMB Market’ - Monetizing emerging opportunities in association with Frost & Sullivan. The elements of research, devised jointly by NASSCOM and Frost & Sullivan reveal that the SMB market is estimated to witness a Y-o-Y growth of 15 % (CAGR), which will propel the IT spending in the sector to cross USD 18.5 billion (Rs. 1,00,000 crore) by FY18. 

The report also highlighted that Indian SMBs are rapidly innovating and are adopting technology solutions to enhance competitiveness in the dynamic global and domestic business environment. The IT firms are continuously developing their strategies roadmap for the SMB market with products designed specifically for this segment, having dedicated business units with relevant business metrics and focused go-to-market strategies.

While launching the report, R. Chandrashekhar, President, NASSCOM stated that “Small and Medium Businesses across all verticals play a critical role in the resurgence of Indian Economy and contribution to GDP and employment generation. SMBs face significant challenges in the volatile business environment and global competition. Technology is an enabler that can pave the way for being competitive, drive growth and integrate with global supply chains. Our Industry members are developing innovative vertical focused solutions leveraging the SMAC stack, to support SMB customer in India. NASSCOM will partner with Government and Industry associations to ensure successful adoption of IT.”

Today, India’s SMB segment is recognised as one of the critical pillars of the Indian economy. The report highlights that SMBs employ about 40% of India’s workforce and contributes more than 17% to national GDP. Despite its size the SMB segment is facing many challenges, like fragmentation, unorganized growth, and scalability issues among others. Hence, there is a compelling need to streamline operations, standardise processes, and enhance productivity and quality of products & services. It is imperative that these needs are addressed as they will drive investment in IT solutions domain.

Of the overall technology solutions available, cloud adoption will be a key element to transform the ecosystem. Advantages of cloud services such as low capex, lesser TCO, flexible storage options and easy data management is attracting SMB players. As a result, SaaS adoption by Indian SMBs is growing at a CAGR of 25% and is expected to reach USD 370 million by FY18. A significant portion of SMBs would continue to focus on business software and enterprise applications, mainly for an integrated business view.

Accelerating SMB IT adoption requires all stakeholders - state government, industry associations, MSME, and other relevant players, to work jointly to encourage IT adoption and increase awareness of existing IT solutions. There is also an imperative need to create collaboration platforms for industry players where they can share best practises, enable easier access to funding and network with likeminded people to create innovative IT solutions that are revolutionary.