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Indian manufacturing SMBs to spend USD 3.7 billion on IT

SearchCIO.in Staff

A recent study conducted by IT research firm AMI-Partners reveals that small and medium-sized manufacturing firms in India plan spends of up to USD 3.7 billion on IT infrastructure in 2009. Among these, medium businesses (MB) are the prominent IT spenders.

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AMI defines the small and medium business (SMB) as an organization with up to 999 employees, and an MB as a company with 100 to 999 staff. The AMI study states that overall IT spending in fiscal year 2009-10 grew by approximately 4% in comparison with 2008-09. "Small and medium manufacturing businesses in India operate in lean environments with limited resources and IT personnel. Some of the key drivers for escalating investments in IT infrastructure include increased competition, customer demand for high-quality products with reduced lead times and the need for integration of different business functions," explains Abhilash DB, an analyst at AMI-Partners.

According to Abhilash, many manufacturing firms are upgrading and revamping their basic IT infrastructure. Computing products form the largest chunk of total IT spending in this vertical, which amounts to USD 2.1 billion in fiscal year 2009-10. The traction is seen toward computing products like high-end PCs and servers. Of this, PCs will have a major share, with 57 percent. The total spend on servers in this segment will be USD 221 million.

SMB manufacturing firms will be spending around USD 484 million on Internet products and Web-based solutions. Majority of the manufacturing firms still rely completely on broadband.
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Apart from this, virtualization will be a fast-adopted technology due to its cost savings. IP-based SAN storage solutions and cloud-based platforms will be the emerging trends. For streamlining communication, manufacturing SMBs are likely to look at unified communications to manage the cost.

The second-largest spending will be on Internet products and Web-based solutions. "SMB manufacturing firms will be spending around USD 484 million on Internet products and Web-based solutions. Majority of the manufacturing firms still rely completely on broadband. Wireless internet technology is yet to receive a fair traction in this space," Abhilash says.

SaaS-based offerings that target the SMB manufacturing segment are also gaining mileage in the Indian SMB market. On-demand solutions for accounting and payroll, materials movement and processing, and logistics are now of much interest to these SMDs. According to the study, increased broadband adoption will lead to a boost in the adoption of such on-demand solutions.