SMBs in India: Can it scale up?

Off late I am able to witness three different types of markets for various products and services. Apart from Enterprise markets and Consumer markets which existed till 2000, there is new and emerging ‘Small-And-Medium-Business (SMB)’ in growing economies like India and China. The Sensex Bull Run which existed till a month back was mainly driven by these SMBs which come under ‘Mid-cap’ and ‘Small-cap’ stocks. I believe India’s future growth will mainly depend on these SMBs.

I was brought up in north-western part of Tamilnadu, India which is known for its enterprising people and industries thanks to visionary Entrepreneurs and excellent educational institutions. This north western part consists of places like Coimbatore, Tirupur, Salem, Erode and Karur. Coming to numbers Coimbatore district alone exports whopping 10,000 Crores (Around 2500 million USD) outside India and big names like ‘Wal-Mart’ uses materials exported from this area. A PriceWaterHouseCoopers – CII (Confederate of Indian Industry) study puts it’s revenue potential from IT/ITES sector at a mind boggling $1Billion. Having used the textile and mechanical products from my childhood which is made in these areas, I can very well say they are extremely good in quality and low in cost. Also this example is just a portion of the north-western part of Tamilnadu. I can very well say there are lots and lots places exist in India which has got similar potential. But the challenge is ‘Can it scale up?’

Being a techie, I feel technology Industry need to play a major role in ‘enabling’ these SMBs to scale to the world class. Excellent software products in supply chain management, e-commerce, online payment system, networking areas are very much essential. But when I looked at the statistics in the Asia-Pacific (APAC) region in 2005, Indian SMBs have contributed only 10% of the total spending for IT which is pretty disappointing. This should go up and this is extremely vital for India’s economic growth.

Today morning I was reading this ‘Network-On-Wheels’ (NOW) initiative by Cisco. Apart from USA and Canada, it is launched only in India to tap the SMB market. This is really good news indeed. From my personal experience I can say the SMB Entrepreneurs in north-west Tamilnadu lack the exposure and they are not fully aware of IT. By launching programs like NOW both IT and SMBs will benefit a lot. Still lot of potential needs to be unleashed and I am keeping my fingers crossed!