MAP-IT 2000: SME: Growth Ahead

IDC India conducted a nation-wide survey earlier in the year, the MAP-IT
2000, to map the IT potential of cities in India. It aimed to capture spending
patterns in various segments and components. The large-scale study was based
upon an
end-user survey of commercial establishments and households across the top 25
cities in India. It had a sample size of 4,884. The study considered the total
number of telephone-owning establishments as base.

PC penetration

PC penetration in the surveyed establishments grew
exponentially in the last 3—4 years. This growth could be attributed to the
growing dependence of business processes and operations on IT. The overall
penetration of PCs among telephone-owning establishments is 64%. Of this the
large establishments had business complexities like integrating supply chain
mechanisms, and showed maximum penetration–of 95.8%. This indicated an
increasing dependency on IT amongst businesses of large size and operation.
While the government, education and research segment had a penetration level of
85.4%, the SME segment had the lowest penetration of 56.8%. The SMEs, hence, had
the maximum potential for the vendors.

Regional spread

Among the regions, western India has the highest overall PC
penetration (69%) among the surveyed establishments. South India interestingly
has the lowest overall penetration though a bulk of IT majors are based in the
region. The general reach in large establishments is quite high in all regions.
But the pattern changes when it comes to SMEs with the PC penetration varying
from 52% in the north to 63% in the west.

PC penetration in cities

Nearly 72% of the PC-owning establishments are in the
"base metros" and "priority I cities" with the rest in
priority II and priority III cities.

PC penetration in SMEs grew by 7% over the previous year. In
base metros and priority I cities, the PC penetration among SMEs is more than
60%. 64% of large establishments are in the base metros. Of these 28% are in
Mumbai while 24% are in Delhi.

Verticals

Among the vertical segments, software and IT have a
penetration of 100% followed by the finance sector at 80%. PC penetration in the
manufacturing and telecom sector is more than 60%. In some verticals, PC
penetration figures in the large and SME segments show a big difference. For
example, the mining segment has a 97.7% penetration in the large-scale segment
and only 42.7% among the SMEs. Manufacturing is the largest segment–accounting
for 42%–among the large establishments. Trading and finance account for 24%
and 8%, respectively.

Potential segments: First-timers

PC penetration in the SME segment is just 57%. On the other
hand large-scale industries account for a penetration rate of 96%. The SME
segment thus seems to hold the maximum potential for PC growth.

North India, which had the lowest PC penetration in the SME
segment, seems to be fast catching up on other regions. It had the maximum
number of first-time PC buying establishments, at 34.4%, followed by south India
at 28.2%.

In the SME segment, the services component is expected to
rise with the decline of the hardware component. The overall IT spending in the
country is expected to cross Rs 21,000 crore by end 2000-01.

DQ report

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