AMI-Partners: SMBs in Sri Lanka Spent US$240M on ICT Last Year.

Having cast off the burden of political uncertainty, most SMBs are now bullish about growth in 2008, says AMI study

KOLKATA, India -- Small and medium businesses (SMBs, or companies with up to 999 employees) in Sri Lanka invested more than US$240 million on ICT (info-communications technology) last year. Over 60% of this spending comes from SBs (small businesses, or companies with up to 99 staff) according to the latest study by New York-based Access Markets International (AMI) Partners, Inc.

"IT products and services made up over 55% of the total ICT spending among SMBs in Sri Lanka in 2007," says Swati Sasmal, Senior Research Manager at AMI Partners. "The rest comes from telecom products and services. Sri Lankan SMBs are also constantly striving to reach the higher levels of growth and achievement attained by their largest neighbor - India." This explains the considerably high growth rate in IT spending.

AMI expects IT expenditure to grow at an impressive 24% in 2008. This is because SMBs in Sri Lanka are becoming more aware of the advantages of IT in achieving competitive excellence and developing an edge over competitors. However, the overall growth rate of ICT products and services for 2008 is lesser--though healthy--at 14%.

"Within the overall IT spending pie, computing hardware and Internet will comprise around 70% of the total," Ms. Sasmal says. "This is because Sri Lankan SMBs are primarily focused on building a robust IT and telecom infrastructure."

Another significant category is IT services (which includes Product Support Services and Professional Services) that is anticipated to comprise about 11% of the total IT spend in 2008. IT services serves as the backbone for all IT deployed by Sri Lankan SMBs - both in terms of basic infrastructure and advanced projects like enterprise connectivity. Within IT services, product support services (computing, software & networking support) account for a majority of the services spend - around 65% of the pie at present. Professional services make up the remainder.

Sri Lanka's economy is set to grow at a healthy 7% GDP this year. Recent AMI surveys point out that around 22% of Sri Lanka's PC-owning SBs and over 45% of MBs (medium businesses, or companies with 100 to 999 employees) plan to expand their workforce over the next 12 months.

"More than one-in-five MBs plan to open new sites or branches this year," Ms. Sasmal says. "During the last 12 months, about 30% of Sri Lankan MBs experienced a double-digit rise in annual revenues. About 60% of MBs are bullish about maintaining their growth rates in the next 12 months. Mobility is an important business need for Sri Lanka MBs since they need to keep in close touch with their customers and suppliers. About 60% of MBs have mobile (regularly on-the-move) employees."

Growth in workforce and overall infrastructure, and employee mobility act as drivers for adoption of Internet and networking technologies. "This is true especially for the SB segment that is still in the process of building an adequate connectivity infrastructure," Ms. Sasmal says. "About 50% of SBs have indicated an intention to deploy high-speed broadband connectivity, while over 40% plan to focus on networking all hardware in main office locations."

Although SMBs are eager to adopt affordable broadband services, the tariffs are still on the high side. The Sri Lankan Government as well as internet service providers (ISPs) need to work on a collaborative approach to lower tariffs so as to boost broadband penetration.

Related Studies

AMI's 2007 Sri Lanka Small Business Overview and Comprehensive Market Opportunity Assessment and 2007 Sri Lanka Medium Business Overview and Comprehensive Market Opportunity Assessment studies highlight these and other major trends in the context of current/planned IT, Internet and communications usage and spending. Products and services covered include established and emerging hardware, software, applications and business process solutions. Based on AMI's annual surveys of SMBs in Sri Lanka, the studies track a broad spectrum of issues pertaining to budgets, purchase behaviors, decision influencers, channel preferences, outsourcing, service and support. Also covered are detailed firmographics and critically important technology attitudes and strategic planning priorities. This data points to key opportunities and messaging hot buttons for vendors and service providers seeking to match their offerings to SMB market requirements.

For more information about this study, AMI-Partners, or our global SMB research, call 212-944-5100, e-mail [e-mail], or visit our website at www.ami-partners.com.

About Access Markets International (AMI) Partners, Inc.

AMI-Partners specializes in IT, Internet, telecommunications and business services strategy, venture capital, and actionable market intelligence -- with a strong focus on global small and medium business (SMB) enterprises and extending into large enterprises and home-based businesses. The AMI-Partners mission is to empower clients for success with the highest quality data, business strategy perspectives and "go-to-market" solutions. Led by Andy Bose, the firm has built a world-class management team with deep experience cutting across IT, telecommunications and business services sectors in established and emerging markets.

AMI-Partners has helped shape the go-to-market SMB strategies of more than 150 leading IT, Internet, telecommunications and business services companies over the last ten years. The firm is well known for its IT and Internet adoption-based segmentation of the SMB markets, its annual retainership services based on global SMB tracking surveys in more than 25 countries, and its proprietary database of SMBs and SMB channel partners in the Americas, Europe and Asia-Pacific. The firm invests significantly in collecting survey-based information from several thousand SMBs annually, and is considered the premier source for global SMB trends and analysis.