The Hindu Business Line : SMB spend on telecom gear, services rises 5%

Kolkata April 6 Small and medium businesses (SMBs) in India - comprising companies that engage between one and 999 people - spent over $5 billion on telecom equipment and services in 2006. This marked an increase of five per cent over expenditure on similar heads in 2005. Spending on telecom services, IP Services, local and long distance telephony accounted for more than 90 per cent of the total telecom spending by Indian SMBs in 2006, according to a recent report released by the New York-based Access Markets International (AMI) Partners, Inc.

The report states that telecom connectivity today is looked upon more as a marketing device and a mechanism that facilitates competitive advantage.

The report states that 89 per cent of SMBs in India use mobile phone voice services while the balance 11 per cent access e-mail via their mobile devices.

Other services such as audio conferencing were on the rise, especially among tech-savvy medium businesses.

SMBs' focus on customer relationship management (CRM) and their desire to sustain their growth in a highly-competitive environment had propelled the need for better communications and the need to remain connected with customers. As such, connectivity devices such as IP PBX and IP Phones were gaining prominence even as SMBs were becoming increasingly aware of the advantages of IP-based communication modes over other traditional telecom channels. "Current adoption of these technologies is at an embryonic stage within SMBs in India, and we expect future growth trends to be quite high and the growth rate to continue unabated for the next couple of years," says AMI Partners.

According to the report, cellular spending, which currently accounts for 18 per cent of the overall telecom services expenditure in India, is set to account for a larger share of the spending pie over the next five years.

The need for mobility, 24/7 connectivity and accessibility to business partners were among the main imperatives for SMBs to adopt cellular services.

With more than 20 per cent of SMB revenues generated from inter-State as well as from international customers, the need for better communications and CRM was profound.

The report states that BSNL continues to be the market leader in terms of local and long-distance telecom services.

The balance of the market is fragmented with players like Bharti, Reliance, Tata and MTNL in the field.