February 1, 2005

It is estimated that are about 46,000 companies in India with between 100 and 1,000 employees. Between them, these companies spent $2.91 billion on IT in 2004. This isn't a lot in percentage terms, as the average Indian company of this size spends approximately 0.33 percent of its revenues on IT. However, add up all those companies and it makes a lot of spending waiting to be captured.

Analyst group AMI Partners has released research showing that 54 percent of these Indian companies plan to add workforce in 2005. Growth plans are driven by growing revenues; about half of Indian SMBs experienced revenue growth in 2005, and fully a third saw annual revenue growth above 10 percent.

With a significant number of Indian SMBs telling AMI Partners that they expect revenue growth in 200 as well, e-business vendors have all the metrics they need to tell them that there's plenty of opportunity in the Indian market.

Applications play an important role in this opportunity. Seventy percent of surveyed Indian SMBs told AMI Partners that they are interested in supply chain management (SCM) applications; two-thirds of respondents mentioned customer relationship management (CRM) and enterprise resource planning (ERP) applications. There's also a lot of security-related spending.

E-business applications companies selling into this opportunity will need to rely heavily on local connections. Even in North America, it's just about impossible to make an impact on the vast, fragmented SMB landscape without resorting to an army of local partners and resellers; this is even more necessary in a foreign country like India. One strategy is to acquire a local player and turn them into a reseller, as SAP is now doing with DCS Quantum in Europe.

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