Financial Daily from THE HINDU group of publications
Tuesday, May 17, 2005
SMBs contribute over 40 pc of Microsoft India's revenue
Raja Simhan T.E.
Chennai , May 16
SHARE of small and medium size businesses (SMBs) to Microsoft India's revenue has increased to 40-50 per cent from 30-40 per cent a year ago, said a senior company official.
Quoting a third party study, Mr Rajeev Mittal, Director, Small and Mid Market Solutions and Partners, Microsoft Corporation India, said that the company's revenue was about Rs 800 crore last fiscal, and of this SMBs contributed 30-40 per cent. "At present SMBs contribute 40-50 per cent, and we expect it to be 50-60 per cent in the next couple of years. This indicates increased IT penetration among SMBs," he said.
Quoting data from AMI Consulting, a consultancy firm, Mr Mittal said that in India there are around 1.8 million SMBs (small size firms employ up to 50 people and medium size firms up to 500), and of this, 900,000 own a personal computer. SMBs spent $17.5 billion on IT and telecom in 2003-04, and this is expected to touch $34 billion in 2008. In 2004, over 20,500 medium businesses in India invested $596 million in various kinds of telecom-related technologies.
The challenge that the Indian software and services industry faces is that despite its large size, the SMB market continues to remain low-key in terms of revenues and global reach. However, issues such as globalisation and pressure from international buyers to deal with vendors only online are forcing Indian SMBs to adopt IT, he said.
The National Association of Software and Service Companies says that 50-60 per cent of the Indian IT industry revenue will be from the SMB segment by 2008. Currently this figure is less than 10-15 per cent, it said.
According to Mr Mittal, Microsoft India has adopted a cluster-based approach to target the SMBs. The company has identified 35 clusters, including diesel engines in Coimbatore and hosiery in Tirupur. It has tied up with eleven companies, including Reach Technologies (for textile industry), Ilabs (retail), Ramco Systems (manufacturing) and Forum (retail), to target each industry vertical, he said.
In the last one year Microsoft India has doubled its team that focuses on SMBs to 70. This is in addition to employees working through third party vendors. The company has about 3,000 channel partners across the country for SMBs, he said.
"We realise that the small business market is unique and our goal is to ensure that these customers have the support and solutions they need to succeed in selecting, implementing and utilising technology that will improve the efficiency of their business. For example, we are dedicating $2 billion to research and development of technology for small- and mid-market businesses this year alone," Mr Mittal said in a statement.
Microsoft offers small business customers products that cater to their requirements. Having identified the SMB community as a key audience, it offers a comprehensive and integrated set of servers, services and end-to-end business applications that help SMBs manage their business and build success, he said.
For instance, Microsoft Windows Small Business Server 2003 is an integrated offering that includes Windows Server 2003 along with the latest versions of SQL Servers and Microsoft Shared Fax Service.
With this package, SMBs automatically protect their data, increase their productivity and extend their customer reach.
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