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Indian SMBs to spend US$6.4B on telecoms

By Vivian Yeo, ZDNet Asia on August 12, 2008

Summary

Small and midsize businesses continue investment in equipment and services, to better manage customers and rising costs, finds new study.

Topics

3g, analyst, india, leadership, senior analyst, small and medium business, telecommunications, unified communications, video conferencing, web conferencing

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Rising costs, and the need for better customer relationship management, are driving up spending on telecom equipment and services among small and midsize businesses (SMBs) in India, a new study has revealed.

AMI-Partners, which conducted the study, said in a statement late Monday that Indian SMBs are on track to spend US$6.4 billion enhancing their connectivity infrastructure this year, an increase of about 7 percent over 2007.

Small businesses, defined by AMI-Partners as companies with up to 99 employees, are expected to contribute about 80 percent of the forecast spending. According to Dev Chakravarty, senior analyst at AMI-Partners, cellular penetration for this segment has reached 98 percent, almost on par with local phone penetration.

Unified communications is expected to feature in Indian SMBs' telecommunications investment plans for 2008 due to the need to communicate with remotely located employees, said Chakravarty. Spending on services, in particular, makes up over 80 percent of total spending in the area of unified communications.

"Usage of video and Web conferencing is still at an embryonic stage among Indian SMBs, but is anticipated to move forward along with greater availability and affordability of bandwidth; many ISPs (Internet services providers) are indeed striving to bring down the broadband costs," noted Chakravarty.

He added: "SMBs are considering cutting down on business travel to bring down costs, especially in the wake of spiraling fuel prices. Other real-time communication methods like audio and video conferencing can help them reduce the need of business travel and face-to-face meetings."

SMBs in the country are also expected to add around half a million new telephone lines within the next 12 months, said Chakravarty. Together with the impending arrival of 3G and the possible entry of foreign operators into the spectrum fray, it is expected to spur increased value-added services and tools for SMBs that in turn allow them to exercise better customer relationship management.

Analysts, however, are divided over the rollout of 3G in India. Gartner expects commercial 3G services to be launched by April 2009, but Ernst and Young India pointed out that it could take another year or two.

According to AMI-Partners, BSNL/MTNL retains its market leadership and is followed by Bharti Telecom. Reliance Communications and Tata Teleservices are also contenders in the market.

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