Small and medium businesses (SMBs) are expected to spend about $18.5 billion (Rs 1.11 lakh crore) on information technology by FY2018, driven by growing adoption of cloud and mobility solutions, a study has said.
According to a Nasscom study, conducted by research firm Frost & Sullivan (F&S), Indian SMBs spent about Rs 47,200 crore ($8.7 billion) on IT in FY2013.
Of this, 45 per cent was spent on hardware, while 40 per cent was on IT services (implementation, support and training) and 15 per cent was on software licensing and software as a service (SaaS).
"SMBs play a critical role in the Indian economy in terms of GDP and employment generation. They face significant challenges in the volatile business environment and technology can help them compete on the global platform," Nasscom president R Chandrashekhar said.
He added that Indian IT players also need to create specific solutions for the SMB sector, tailor-made to suit their specific needs, he added.
"We have proposed to the government that money spent on technology by the SMBs should also be considered among the investments done by them and give them incentives," he said.
Chandrashekhar added that there is also a need to set up collaboration platforms for industry players to share best practises, enable easier access to funding and network with like-minded people to create innovative IT solutions.
F&S associate director Nishchal Khorana said investment in technology can help SMBs streamline operations, standardize processes, enhance productivity and quality of products and services.
"Of the overall technology solutions available, cloud adoption will be a key element to transform the ecosystem. Advantages like low capex, lesser total cost of ownership and easy data management is attracting SMB players," Microsoft India general manager SMS&P Meetul B Patel said.
He added that various stakeholders including government, industry associations and players need to work jointly to encourage IT adoption and increase awareness of existing IT solutions.
The report said SaaS adoption by SMBs in India is growing at a compound annual growth rate (CAGR) of over 25 per cent and is expected to reach Rs 2,000 crore ($370 million) by FY2018.
It added that manufacturing contributed to nearly 21 per cent of domestic spend of SMB on IT, while education accounted for about 15 per cent.