The role of information communications technology in small and medium enterprises in India

Abstract

This report looks at the manner in which Small and Medium Enterprises (SMEs) in India(mostly Bangalore, Chennai and Pune) use Information Communications Technology in thecourse of their respective businesses. Based upon the responses to a questionnaire and theanalysis conducted thereon, the report makes 3 suggestions to IT vendors seeking to providesolutions to SMEs. IT vendors can target:1. SMEs that deem it important to be at the Cutting Edge of Technology within their field, aswell as at SMEs that are actively planning and working towards expanding to new markets2. SMEs that are growing in terms of the number of employees, since the intensity of thefirm?s IT investment (normalized by its annual revenue) seems positively related to thenumber of FTEs; however, the intensity of investment in IT seems to decrease slightly withthe rise in revenue – this might be on account of the situation in which SMEs invest in IT atthe outset but once they become stable and start earning higher revenues, the increase in theirinvestment in IT is significantly lesser than the rise in their revenue3. SMEs that are internally well managed in terms of IT and Knowledge diffusion and thesize of the SMEs? customers.