The Indian IT sector, which has been adversely affected by the global economic slowdown, might lose some of its business from the domestic small and medium enterprise (SME) segment as well.
The Indian SME segment, which has been growing at approximately 30% for the past few years, contributes around 40% of IT vendors’ total revenue. According to industry analysts, the sector is not insulated from the current economic slump.
“Given the current situation, there will be a slowdown and a lot of caution in this sector as well. Its growth rate is expected to come down to around 15%,” commented an analyst.
“Like other companies, now their main focus will be to save cash,” he added. Companies like Symantec, NetApp and Cisco are looking at the SME segment in smaller cities and planning to grow aggressively in these markets.
“We have rolled out products targeting the SME segment, and are expecting it to be a significant revenue contributor,” commented Surajit Sen, director, channel, alliances and market, NetApp India.
Like NetApp, other IT vendors are looking at SMEs to grow their businesses. In accordane, they are venturing into the smaller cities, where the SME segment has become aware regarding IT deployments.
However, given analysts’ view that the SME segment will feel the heat of the global economic slowdown, one can expect some cost-cutting in their IT spend, at least for the next few quarters. This is expected to affect the revenue of the IT vendors. For IT solutions provider Symantec, the SME segment represents strong potential for business expansion.
Though the company has not seen major cost-cutting by SME clients as yet, they are experiencing a lot of prudence on the latter’s part. “There is a lot of caution among them. It’s like a wait-and-watch situation for everyone,” commented Ajay Verma, director, channel and alliances, Symantec India.