Internet Spending among Indian SMBs Grew by 33% in 2006.

Spending on Internet Access set to grow 21% this year, says new study from AMI Partners

KOLKATA, India -- Small and medium businesses (1-999 employees) in India are set to invest US $1.2 billion to boost their overall internet infrastructure and solutions in 2007, a rise of US $300 million

over last year. Within the overall spending pie, SBs dominate in terms of total expenditures. However, an interesting finding is that MBs comprise roughly a quarter of the overall Internet expenditure in spite of the fact that they account for a mere 4% of the overall Internet business universe. These findings are available as part of the latest report by New York-based Access Markets International (AMI) Partners, Inc.

"Currently almost two thirds of India's PC-owning small businesses are connected to the Internet, whereas medium businesses have already reached near saturation in terms of Internet adoption," says Kalyan Banga, Kolkata-based Analyst at AMI-Partners. "However, there still exists a substantial scope for bridging the adoption gap in the case of more advanced Internet technologies such as e-commerce, e-purchase, intranet, etc." In fact, SMBs are gradually beginning to view the Internet as an intrinsic part of their overall business operations, rather than as just another technology tool for facilitating business transactions.

Building a basic Internet connectivity infrastructure is still the priority for India's SMBs. Since robust connectivity serves as a backbone for future anticipated adoption of advanced technologies like VPN and WAN, this is especially true for larger medium businesses. A detailed analysis of the Internet-related spending components of Indian SMBs show that over 60% of SMB Internet-related spending is devoted to Internet-access technologies. Within the different high-speed internet access technologies, DSL is currently used by over 45% of Internet SMBs; this penetration is anticipated to rise by nearly 10 per cent this year. "A significant factor driving DSL installations is the introduction of Data One broadband service by BSNL, which has played a pivotal role in popularizing broadband usage within the SMB segment and making it more affordable," says Mr Banga. Broadband usage is also a priority for over 90% of MBs and close to 70% of SBs whose attitudes indicate that deploying broadband access or enhancing broadband Internet speed is a vital strategic focus area in the next 12 months.