Indian companies eye SME sector

The adoption of cloud computing among small businesses could help Indian IT service providers grow even more.

The adoption of cloud computing among small businesses could help Indian IT service providers grow even more.

The SME sector is often overlooked by big service providers because its fragmentation makes it costly to serve.

"There is huge scope for us in SME market," said Some Mital from body for the Indian software industry Masco.

Tata Consultancy Services is running a trial of an SME service in the cloud in India. If successful this could come to the UK.

European head A S Lakshmi said the problem for suppliers attempting to succeed in the SME sector is the fact that it is fragmented and companies do not all fit into a single mould. "They have the same requirements of large companies but it is difficult because they are very fragmented."

But cloud computing will reduce the overheads of serving a fragmented market.

SME could offer the next source of growth for India which dominates BPO outsourcing.

India has a 51% of the total [BPO] global outsourcing market, said Mital. "This is a time where we are looking to IT to help India really transform itself."

Mital acknowledged that the Philippines are becoming a global competitor with India - although its focus remains largely on the US market.

The services sector has fuelled the country's rapid growth over the last 15 years, said Banish Ganguly from commerce organisation the Confederation of Indian Industry.

Whereas countries such as China have enjoyed a booming growth mainly due to a strong manufacturing base, in India the percentage of manufacturing to its GDP has stayed roughly the same over the last 20 years. But the services contribution has grown from 41% to 57% during the same period, she said.

"[Historically] there were too many regulations on the manufacturing sector, which restricted its growth. But in services there were no such restrictions as there are no physical export/imports to measure," she said. The Indian government has also encouraged the growth of its services sector by creating special economic zones which give companies tax concessions, added Ganguly.

According to Ganguly, Europe is currently India's largest trade partner.

But growth in manufacturing could start to outpace that of services. "IT and services are unlikely to grow more than the country's GDP, while manufacturing will grow above GDP," she said. As the market begins to mature in current sectors, this could make prospects in the SME market appear attractive.

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