In IT, Small is Big

It’s not only the big Daddys of IT industry like the Infosys’ and Wipros who are making hay while the sun shines, even small IT companies are laughing all the way to the bank, as a study on emerging IT companies shows. Dun & Bradstreet, the world’s leading provider of global business information, knowledge and insight, on Wednesday released its study on “Emerging IT SMEs of India 2007”. The study covers 244 IT companies on a pan-India basis that have an annual turnover below Rs 100 mn as of 31st March 2007.

Kaushal Sampat, COO, Dun & Bradstreet, India said, the study reveals that IT SMEs are confident of a 65% growth in the next two years surpassing their growth rate of 43% in the last two years. “Despite the strong growth prospects, the IT SME sector is witnessing several challenges such as the acute shortage of skilled manpower, which is mostly faced by IT SMEs located at Tier - II and III cities,” he said.

Mukul Mathur, Director, Channels & Marketing, IBM India released the study report, and Alok Bharadwaj, Vice President, Cannon India Pvt Ltd was the Guest of Honour. Lingraju Sawkar, Vice President, India, South IBM and dignitaries from the ITeS and BPO industry participated in a panel discussion that followed thereafter.

The 244 profiled companies operate from a total of 437 locations across the country. Bangalore and Mumbai emerged as the top locations for operations, with 18% and 17.6% of the profiled companies operating from these two cities respectively. Overseas presence by 28% of the sample encapsulates the changing trend in the SMEs’ perspective, which are now willing to cross borders to pursue growth. Companies in the revenue bracket of Rs 10 – 50 mn accounted for almost 50% of the companies surveyed.

Key Insights of the report on IT SMEs:
• 32% of companies offer IT services as well as software products
• Custom application development and IT consulting are the two popular software services
• More than half of the companies, close to 53%, face moderate problems in acquiring funding
• 36% of companies are now looking at Tier - II cities such as Nagpur, Surat, Guwhati, and Chandigarh to develop centres
• 43% of the companies feel that the withdrawal of tax sops for the IT, ITeS, BPO industry by 2009 will be a very significant factor in terms of deciding future industry growth
• IT SMEs are confident of a 65% growth in the next two years surpassing their growth rate of 43% in the last two years

• IT SMEs derive bulk of their revenues from the domestic market and only 35% of the companies are involved in exports. Further, exports are mainly to the Asia Pacific region; thus IT SMEs are fairly insulated from the rupee appreciation.
• Salary hike and withdrawal of tax sops remain topmost concerns for IT SMEs.
D&B features on FORTUNE Magazine’s Most Admired Companies Industry List, ranking first in the Financial Data Services category. D&B ranked first in the areas of employee talent, financial soundness, long-term investment, quality of management and use of corporate assets. D&B has achieved this distinction for the second consecutive year.