The Midsize Crisis-and Opportunity

Everyone's running after the SMB market, so it had to be
a very big deal. But we figured that if those million-plus SMBs around were
really buying a lot of tech, India's market would be way bigger than it is,
starting with PC penetration (a couple of PCs for every hundred citizens).

The midsize businesses make up a big chunk of the SMB
market, and the 400-plus companies we surveyed (around Rs 10-750 crore) tell us
that they're far from using tech seriously. They have some IT people, but IT
is not strategic for 60% of them. Usage is low for most applications.

But the survey also helps define the opportunities. A
surprise was the financial (BFSI) sector and its relatively low use of IT.
India's large-enterprise BFSI has been the big tech adopter and the IT
market's big growth area and driver (ditto for services and BPO exports). You
have to use IT in banking today. Yet the smaller banks are far behind.

Thus, the opportunity for a vendor or services company
which can figure out not just what these smaller banks need (that's the easier
part) but how they can get there. And show them how. There's no way they can
go for the investment scale and independent facilities of a big bank. Shared
infrastructure is the way to go.

For that, such banks need to come together. Take the
'cooperative' banks, which do not, paradoxically, cooperate with each other.
If they did, they could ramp up tech deployment, from back office apps to ATMs.
Just as our State banks have been able to leverage so much of shared
infrastructure and apps (mainly the SBI's), dropping their costs way below an
ICICI's or HDFC's.

Playing a catalytic role here could help the industry more
quickly develop the untapped potential in this hot vertical. (Our survey also
shows that the midsize BFSI businesses plan to spend a great deal on IT in the
year ahead.)

That's just an example of the untapped potential in the
midsize companies. Major vendors often focus their domain expertise onto their
'named accounts' or large enterprises only. Their SMB focus is often
separate, and generic. Then there are the domain experts who remain
exports-only, leaving the SMB market for smaller players who do not have the
expertise (and can't get it from the former, who aren't interested in such
partnerships).

For if there's one thing this survey shows, it's not
the low penetration. That's the past story: the fiscal year just gone by.
It's the opportunity. In the year ahead, the midsize market will ramp up. And
the time to tap it is now.