Driven by increasing adoption of cloud and mobility solutions, small and medium businesses (SMBs) are likely to spend over Rs.1-lakh crore (about $18.5 billion) on information technology by 2017-18, a Nasscom study, conducted by research firm Frost & Sullivan (F&S) said.

According to the study, Indian small and medium businesses (SMBs) spent about Rs.47,200 crore ($8.7 billion) on IT in 2012-13.

Of this, 45 per cent was spent on hardware, while 40 per cent was on IT services (implementation, support and training) and 15 per cent was on software licensing and software as a service (SaaS).

“SMBs play a critical role in the Indian economy in terms of GDP and employment generation. They face significant challenges in the volatile business environment and technology can help them compete on the global platform,” Nasscom President R. Chandrashekhar said.

Indian IT players also needed to create specific solutions for the SMB sector, tailor-made to suit their specific needs, he added.

“We have proposed to the government that money spent on technology by the SMBs should also be considered among the investments done by them and give them incentives,” he said.

F&S Associate Director Nishchal Khorana said investment in technology could help SMBs streamline operations, standardise processes, enhance productivity and quality of products and services.

The report said SaaS adoption by SMBs in India was growing at a compounded annual growth rate (CAGR) of over 25 per cent and was expected to reach Rs.2,000 crore ($370 million) by 2017-18.

It added that manufacturing contributed to nearly 21 per cent of domestic spend of SMB on IT, while education accounted for about 15 per cent.

More In: Industry | Business