SMBs
to invest $8.37 Billion on Telecom equipment
and services in 2006
SMBs
to invest $8.37 Billion on Telecom equipment
and services in 2006 Buoyed by the country's
booming economy, Indian small and medium businesses
(SMBs) are on track to spend over US $8.73
billion on telecom equipment and services
this year. Expenditures on telecom services
accounted for the bulk of all telecom investment,
comprising 95% of total spending, according
to the latest study by New York-based AMI-Partners.
As India's small and medium businesses (with
employee sizes between 1 and 999) embrace
the fast-globalizing economy, interaction
with business partners has become an important
focal point for these businesses. "Indian
SMBs invariably prefer a highly personal touch
in their interactions with business partners,"
says Neha Jalan, Kolkata-based Analyst at
AMI-Partners. "Their primary methods of communication
with both clients and suppliers/vendors are
via telephone calls and in-person visits."
Local Telephony:
The Primary Driver of Telecom Spending
Local telephony remained the primary driver
of telecom spending among India's small businesses,
accounting for 55% of all telecom spending.
The majority of India's small businesses are
consumer-centric, though sales to other small
businesses also account for a significant
proportion of their revenues. These businesses
prefer to partner with other local small businesses,
and telephone conversations remain their primary
means of communication with business partners.
Despite the widespread usage of cellular phones,
landlines are essential to small and medium
businesses in India - they average 2.21 telephone
lines per SB, and close to 20 lines per medium
business. "The state-run communications service
provider BSNL is the undisputed market leader
among Indian SMBs, two thirds of whom have
BSNL connections," noted Ms. Jalan. "However,
lately, private vendors such as Bharti, Tata
Teleservices and Reliance Telecom have been
expanding their territorial reach and making
inroads in this lucrative market."
Mobile Telephony:
A Fast-Emerging Phenomenon in the SMB Space
"Cell phone usage has surged significantly
in the past year as a result of the falling
tariffs brought about by increased competition
and the resulting price wars," remarked Ms.
Jalan. Nine-in-ten SMBs already deploy mobile
telephony and usage of cellular phones is
expected to approach saturation in the next
twelve months. Mobile telephony is an important
method of communication for Indian SMBs, ranking
third in their communication preferences -
just after fixed telephony and in-person visits.
Cellular service expenditures form a significant
proportion of medium businesses' telecom service
spending - accounting for close to a third.
As medium businesses boast of a more mobile
workforce and multiple locations, this is
unsurprising. Less than a tenth of medium
businesses also access the internet via their
mobile devices and this service is anticipated
to grow in the near future. Medium businesses'
technology adoption is largely driven by the
challenges of increased competition and globalization,
and as customer satisfaction assumes greater
importance, Indian MBs embrace the benefits
of mobile telephony in order to be constantly
accessible.
