Indian SMBs Spend $5 Billion On Telecom

by CXOtoday Staff    Apr 04, 2007

An AMI study titled Small Business Market Overview, Comprehensive Market Opportunity Assessment and 2006-2007 medium businesses (1-999 employees) in India reveals that SMBs spent over US$5 billion on telecom equipment and services last year, 5% over 2005.

The study claims that the data points to key opportunities and messaging hot buttons for vendors and service providers seeking to match offerings for SMB market requirements.

Further details of spending on telecom services indicate that components such as Cellular services, IP Centrex services, local and long distance telephony account for more than 90% of total telecom spending.

Nilanjana Mitra, Kolkata-based Analyst at AMI-Partners says, “Today telecom connectivity is not just about talking through the instrument but it works as a business tool, a work assistant, a marketing device and a mechanism which gives the advantage to face the competition”.

“Our survey shows that 89% of SMBs in India currently use mobile phone voice services while 11% access email via their mobile devices. Other services such as audio conferencing are also on the rise, especially among tech savvy SMBs”, claims Mitra.

Also, there is increasing pressure on SMBs in India to focus on customer relationship Management (CRM) solutions to sustain growth in a business environment. This also has a direct impact on need for better communications. Some other connectivity devices gaining prominence among SMBs are IP PBX and IP phones.

“SMBs are gradually gaining awareness of the advantages of IP-based communication modes over traditional telecom, namely hassle-free interaction with business partners worldwide at a much reduced cost”, says Mitra.

“Current adoption of these technologies is at an embryonic stage within SMBs in India. We expect future growth trends to be quite high and the growth rate to continue unabated for the next couple of years”, adds Mitra.

Cellular spending - currently comprising 18% of overall telecom services expenditure in India - is set to account for a larger share of the spending pie over the next five years.

The main drivers that propel SMBs to adopt cellular services are a need for mobility, 24/7 connectivity, and accessibility to business partners.

More than 20% of SMB revenues are generated from interstate as well as international customers increasing the need for better communication and CRM.

Other details of the study include: Among Indian telecom service providers, BSNL continues to be a market leader in terms of local and long distance services. The remainder of the market is fragmented with Bharti, Reliance, MTNL and Tata battling for market share.

“However, within different cities, Bharti is a leading player that provides stiff competition to BSNL and MTNL, especially in the top four metros - New Delhi, Mumbai, Kolkata and Chennai”, Ms. Mitra says.

“Other players like Tata Teleservices and Reliance have also shown significant year-over-year jumps in SMB market penetration due to aggressive marketing and promotional campaigns.” adds Mitra.