Small, medium units set to post 65% growth in 2 years

Bangalore, Mumbai emerge top spots for operations in Dun and Bradstreet study

Our Bureau

Coimbatore, Dec. 21 A Dun and Bradstreet study on IT SMEs in India shows that this sector is poised to achieve 65 per cent growth in the next two years surpassing the growth rate of 43 per cent in the last two years.

The study entitled 'Emerging IT SMEs of India 2007' covered 244 companies with an annual turnover of less than Rs 10 crore as on March 2007. These companies were chosen from 437 locations across the country.

Bangalore and Mumbai emerged as top locations for operations with 18 per cent and 17.6 per cent of the profiled companies operating from these two cities.

Overseas presence by 28 per cent of the sample encapsulates the changing trend in the SMEs perspective. These are now willing to cross borders to pursue growth.

Companies in the Rs 1 crore to Rs 5 crore revenue bracket accounted for close to 50 per cent of the profiled companies.

Manpower shortage

"Despite the strong growth prospects, the IT SME sector is witnessing several challenges such as acute shortage of skilled manpower, faced to a large extent by the companies located in the Tier II and III cities," says the COO of Dun and Bradstreet, Mr Kaushal Sampat.

Key insights

Some key insights further revealed that 32 per cent of the companies offered both IT services and software products, custom application development and IT consulting were the two popular software services, more than 50 per cent of the companies had difficulty in getting funds, 36 per cent looked at Tier II cities such as Nagpur, Surat and Guwahati to establish centres, and withdrawal of tax sops by 2009 for the IT, ITeS and BPO industry could have a significant impact on the growth story.

The respondents expressed concern about salary hike and withdrawal of tax sops.

The study also revealed that a bulk of the IT SMEs revenue was from the domestic market. Only 35 per cent of the companies were involved in exports.