Indian SMEs lead in tech spending; 35% of SMBs plan to go to cloud in next 2-3 years: Microsoft research

  • The study examines the relationship between technology adoption, technology partners and business outcomes for SMEs in 10 markets including India
  • Nearly 35% of SMEs in India spend more than 10% of their income on technology
  • 26% of SMEs in India are early adopters of new technologies
  • Intense competition remains a major hurdle for Indian SMEs

New Delhi, 6 October 2022: The recently published Microsoft SMB Voice and Attitudes to Technology Study 2022 revealed that small and medium-sized enterprises (SMBs) in India lead the way in technology spending compared to their global counterparts, with around 35% of them spending more than 10% of their revenue on technology. Growing customer base and improving customer retention are key drivers of technology adoption by SMEs in India.

This study examines the role of technology in shaping the landscape, as well as their attitudes, preferences and adoption of technology. The study, prepared by Analysys Mason, covers over 3,000 businesses with 1-300 employees in 10 high- and middle-income markets (including India) globally, spread across the top 5 verticals in 10 global high- and middle-income markets industry.

Indian SMEs lead in tech spending and cloud adoption

  • SMEs in India are the most optimistic about future cloud adoption; 27% of SMBs in India are wholly or mostly cloud-based – a percentage expected to reach the global average within 2-3 years.
  • 26% of SMEs in India are early adopters of new technologies. They are ahead of their peers in other countries when it comes to spending on technology, with around 35% spending more than 10% of their income on technology. Among them, 22% of SMBs in India are most likely to plan to grow by more than 10% next year.
  • Small and medium businesses in India look to technology to help them expand their customer base (39%) and improve customer retention (38%).
  • SMBs in the middle-income market (27%) are more concerned about cloud migration than those in the high-income market (22%).

Competitive intensity is greater in India than elsewhere

  • More than a third of SMEs do not share a single business challenge – the intensity of competition and supply chain issues are the most common.
  • SMEs in India are most likely to cite the intensity of competition as a major obstacle (35%).
  • SMBs in the middle-income market (27%) are more concerned about cloud migration than those in the high-income market (22%).
  • Customer loyalty, cash flow, cloud migration and regulations are equally challenging for about a quarter of SMBs.

Managed Service Providers (MSPs) and Cloud Service Providers (CSPs) are a third of SMBs’ favorite technology partners

  • Due to the impact of the pandemic, SMEs are more willing to invest in managed IT services and cloud solutions.
  • SMEs are actively looking for partners with consulting and mentoring capabilities, such as Managed Service Providers (MSPs) or Cloud Service Providers (CSPs) and System Integrators (SIs).
  • 31% of SMBs prefer to buy technology products and services through MSPs and CSPs. Many SMBs do not have the capacity or require IT specialists. Therefore, MSPs and CSPs are well suited to support SMB’s technical challenges by complementing the expertise of SMB’s internal IT teams.
  • 25% of SMEs surveyed in India prefer to work with application developers/Independent Software Vendors (ISVs).

SMEs value broad CSR/ESG goals, but environmental sustainability is the most common goal

  • Indian SMEs (45%) are most likely to want to improve environmental sustainability, compared to 37% of SMEs in the overall market.
  • Half of SMEs cite social goals as their main business goals, including sustainable business practices and diversity and inclusion.
  • One-third want increased employee satisfaction to ensure higher employee retention rates and improve the lives of people in their communities, while another third want to improve their protection of customers through high-quality cybersecurity solutions data capabilities to ensure they act as responsible businesses.

Samik Roy, Executive Director, Small and Medium Business, Microsoft India, said: “Clearly, linking technology investment and adoption to business strategy, as well as working closely with partners, is critical for SMEs to succeed. Rooted in technology and committed to fully Organizations, large and small, that realize their potential will be able to stay ahead by becoming more agile, resilient and future-proofed.”

SMEs are the cornerstone of the economy and important job creators, contributing approximately 30% of India’s GDP and providing employment to more than 114 million people in the country. Microsoft is committed to supporting small and midsize businesses through its continued investment and commitment, providing these organizations with the trusted technology they need to innovate and grow.

Read the full report here: Microsoft Small and Medium Business (SMB) Voices and Attitudes to Technology Research

To learn more about Microsoft Solutions for SMBs in India, visit Microsoft – Prepare your business for the future

About Microsoft India

Microsoft (NASDAQ “MSFT” @microsoft) supports digital transformation in the age of intelligent cloud and intelligent edge. Its mission is to empower every person and every organization on the planet to achieve more. Microsoft established its India business in 1990. Today, Microsoft’s physical presence in India has more than 20,000 employees engaged in sales and marketing, research, development, and customer service and support in 11 Indian cities – Ahmedabad, Bangalore, Chennai, New Delhi, Gur Gang, Hyderabad, Kochi, Kolkata, Mumbai, Noida and Pune. Microsoft offers its global cloud services from local data centers to accelerate the digital transformation of Indian startups, enterprises and government organizations.

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