AMI-Partners' Study Shows India Medium Businesses Spent over $2.9 Billion on It Products and Services in 2004, Driven by Strong Adoption of Connectivity, Computing and Productivity Solutions.

NEW YORK -- The Outlook for 2005 Remains Robust with Approximately 13,000 New Medium Business Site Openings, and Plans to Hire Around 600,000 New Employees

India medium businesses (MBs) surged ahead in 2004, hiring employees, opening new sites and increasing spending on IT. The previously under-saturated MB market made strong strides in adopting new and advanced IT products and solutions, encompassing virtual private networks (VPNs), networked storage, wireless LANs, intrusion detection, firewalls and customer-focused enterprise applications. Overall, spending on IT by India medium businesses grew by 15%, registering nearly US$3 billion.

The above findings were released today by New York-based Access Markets International (AMI) Partners, Inc., a leading consulting firm specializing in IT, Internet, telecom and business services market intelligence, trends and strategy with a strong focus on global small and medium business (SMB) enterprises. AMI conducts the IT industry's most comprehensive annual tracking surveys of SMBs in several countries, including the U.S., France, Germany, U.K., Australia, China, Japan, South Korea, Brazil and Mexico.

Expansion of the work force -- new sites and a positive outlook for the next 12 months

There are over 46,000 India medium businesses, employing between 100 and 999 employees and generating average annual revenues (sales turnover) of US$13.4 million each. Collectively they generated over US$625 billion in annual revenues in 2004 -- including cross transactions with other SMBs, large businesses and additional sectors -- and they laid out a hefty US$2.91 billion on IT products and services. Highlights from the AMI study, which included face-to-face in-depth interviews with medium businesses across Tier 1 and Tier 2 cities in India, are as follows:

--Fifty-four percent of India medium businesses plan to expand their workforce over the next 12 months.

--More than two thirds of businesses have multiple sites and 19% of MBs plan to open new sites or branches.

--During the last twelve months, more than half of all India MBs experienced an increase in their annual revenues, with one third recording an annualized revenue growth rate exceeding 10%.

The outlook for the next 12 months remains strong; 18% of MBs expect an increase in annual sales revenues. Although India medium businesses are highly metro-centric, a large percentage (close to 26% or one in four) is located in and around mid-sized cities and small towns. "IT vendors are increasingly sharpening their focus towards Tier 2 and 3 cities as metro cities are approaching saturation," said Swati Sasmal, Senior Analyst at AMI-India (Kolkata branch).

Attitude towards technology adoption

"India MBs face further challenges and competition in the wake of increasing globalization. Consequently, it is imperative for them to adopt new, competitive technologies such as Internet connection at optimum speed. Creation of a secure infrastructure is a priority since the risk of cyber crimes is greater than ever. India MBs have also become much more client-oriented because customer satisfaction is the buzzword for success in the current era. For this reason they intend to remain constantly accessible by customers, creating a 24 X 7 atmosphere," added Ms. Sasmal.

MBs are looking to implement solutions that will enhance the intelligence and scalability of their network in the most cost-effective way. Burgeoning interest in wireless LANs and the increasing need for VPNs have caused MBs to refocus their technology-adoption decisions.

With increasing globalization, connectivity has become essential to MBs in India for efficiency and broader reach. Additionally, the need to provide employees the benefits of anytime, anywhere access with a secure voice network has elevated the importance of VoIP technology. More than two thirds of India MBs have listed VoIP adoption among their top strategic focus areas for 2004. They are moving towards an un-wired world as well, as evidenced by 62% of the MBs expressing their willingness to adopt wireless LAN.

In an attempt to reduce inventory and increase cost control, 70% of MBs in India are emphasizing the adoption of solutions for successful supply chain management. This is also helping to improve overall business process efficiencies. Due to increased competition, India MBs are focusing on building a long-term, real-time relationship with customers. As a result, over two thirds of medium businesses expressed the need for enterprise software applications such as CRM and ERP software packages.

A growing awareness and adoption of security solutions

Expanded mobility, remote access and increased use of network and Internet-based applications involving monetary transactions and/or sensitive information have driven the need for IT security. Fifty-eight percent of MBs in India have installed anti-virus protection, with twenty-two percent upgrading their solutions within the last one to two years. Forty-two percent of businesses have deployed some form of network-based firewall. Virtual private networks (VPNs) have proven themselves to be a fast, inexpensive way to connect multiple sites securely, and MBs are adopting them readily. Nearly one third (close to 8,800 of India MBs) has deployed a VPN.

India MBs have spent over US$55 million during the last 12 months on security-related products and services such as anti-virus and anti-spam software, intrusion detection programs, firewalls and other IT security measures. Service sector businesses are the significant spenders on security products. Within security categories, anti-virus comprises nearly a quarter, while network firewall/VPN accounts for almost one sixth.

About Access Markets International (AMI) Partners, Inc.

AMI-Partners specializes in IT, Internet, telecommunications and business services strategy, venture capital and actionable market intelligence -- focusing on global small and medium business (SMB) enterprises.

The AMI-Partners mission is to empower its clients for success with the highest quality data, business planning and "go-to-market" solutions. AMI was founded in 1996 under the name of Access Media International (USA), Inc. by Andy Bose, a former group vice president at IDC. Since its inception, the firm has built a world-class management team, each with ten to fifteen years' experience in IT, telecom, online communications and multimedia.

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 eight 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; and its proprietary database of several thousand SMBs in the U.S., Europe, Asia-Pacific and Latin America. 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.

For more information on AMI-Partners or our global SMB surveys, please visit www.ami-partners.com or call 212-944-5100.