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India's SMBs to invest $1.2B on Internet infrastructure

Posted: 07 Jul 2006 ?? ?Print Version ?Bookmark and Share

Keywords:Internet? infrastructure? AMI-Partners?

Small and medium businesses (SMBs) in India are set to invest up to $1.2 billion on beefing up their Internet infrastructure and solutions this year, according to a recent study by New York-based AMI-Partners. This would account for almost one sixth of the total IT spending at $7.7 billion this year, the report further said.

Almost all MBs and more than half of PC-using SBs already have access to the Internet. "However, close to a half of these SBs use dial-up access and therefore an untapped market still exists in the broadband Internet arena," said Avimanyu Datta, a Kolkata-based analyst at AMI-Partners.

Additionally, website and e-commerce penetration remains comparatively low among SBs. "The reason for this low penetration is attributed to the products SBs sell. They operate on very low margins as their customers are usually medium businesses, not large businesses. As contact with end consumers increases, website and e-commerce penetrations are likely to correspondingly increase alongside the margins," explained Datta.

The AMI-Partners report also said that despite growth-enhancing factors, the Internet in India is yet to be synonymous with business growth and opportunities among SMBs. "This is because the Internet is still perceived as an enabler in India, rather than a driver of business growth and opportunities," Datta added. "The Internet is not opening new avenues for growth, but is instead supporting a growth that is evident, and therefore it's embraced. Its adoption is more reactive than proactive. It's still considered an economical channel for communication rather than a strategic growth driver to enhance competitive position."

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