IT companies have identified a new growth opportunity—nonmetro India. According to a report by IT marketing and consulting firm Channel Technologies, marketing spends in tier-II and tier-III cities by infotech companies have risen 100 per cent over the last two years.
There is a vast untapped reservoir of small and medium enterprises (SMEs) in the non-metro cities on the lookout for cost-effective IT solutions, which can be implemented quickly. Marketers are exploring the vast untapped potential in these towns and cities for IT hardware, software, security, storage, networking, messaging, centralised applications, and spam control by organising or taking part in events like exhibitions and presentations, roadshows, seminars and interactive meetings.
Early this year, as part of its Vision 2010 plan, SAP India announced plans of tapping the enormous potential in the SME ERP market in India. SAP India’s objective is to increase its Indian customer base to 15,000 by 2010, 80 per cent of which will come from the SME segment.
To extend its SME reach across India, Cisco has recently identified 16 tier-II and tier-III cities. “Cisco’s growing focus is on SMEs, which form the fastest growing market segment in India. Our commercial vertical in India, comprising SMEs and mid-market companies, is growing at over 50 per cent year on year,” says Pramodh Menon, Senior Vice President, Commercial, Cisco India & SAARC.
According to estimates, the SME segment is growing at the rate of 12 per cent CAGR in India; this is expected to rise to 27-30 per cent by 2010. “We notice a clear shift in the geographical skew of our revenues.
Till 2005-06, metros contributed almost 70 per cent of our revenues; this dropped to 50 per cent in 2006-07; and this year we expect the non-metro share to be even higher,” says Ajay Manachanda, Director, Channel Technologies. For IBM India also, the SMB (small and medium business) Division is its fastest growing unit and contributes nearly 20 per cent of the company’s total revenue worldwide.
“A majority of the estimated 7.5 million SMEs operate out of tier-II and tier-III markets in India and this is an opportunity no vendor can ignore,” says Ramesh Narasimhan, Director, GSMB (Global Small & Medium Business), IBM India and South Asia.