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 Monday, July 14, 2008
There are nearly 16.2 million Home-based businesses (HBBs) in India and these constitute about 8% of the 202.9 million households. Nearly one-eighth of these HBBs are PC penetrated and they are set to spend US$8.4 billion on upgrading their ICT (info-communications technology) infrastructure this year, up a healthy 19% over 2007, according to a recent study by New York-based Access Markets International (AMI) Partners.

AMI-Partners defines HBBs as income-generating entities based in the home, led by individuals who are self-employed; it excludes individuals who work for a larger organization and telecommute, have a formal work-at-home arrangement with their employer or do after-hours work from home.

“For every dollar spent by HBBs in India 67% goes for telecom services and 22% on computing. The high spending on telecom services imply that the HBBs rely on the data and voice services to a large extent to conduct their businesses,” says Dipendra Mitra, Analyst at AMI-Partners.

Although IT comprises a much lesser proportion of the IT/Telecom spending pie, the former is set to rise at a faster rate within HBBs as they strive to reach a technological superiority level commensurate with their nearest brethren - the Very Small Businesses (VSBs or companies with up to 4 employees). “In the long run, the ultimate objective of HBBs is transition to the level of VSBs - as expressed by over one third of HBB owners,” says Mr. Mitra.

An interesting comparison of Very Small Businesses operating from Commercial Space and Home:

  • The number of HBBs outnumber VSBs by a factor of nearly 7:1
  • Both HBBs and VSBs are at the initial stages of PC adoption. Their PC penetration levels are at an embryonic stage indicating a huge opportunity for PC vendors wishing to make a dent into this nascent market
  • HBBs mostly lag behind VSBs in usage of primary technologies indicting that they are still in the First Wave of Technology adoption
  • HBBs are considerably younger than VSBs and thus are quite eager to adopt the latest technologies as they endeavor to transit the Second Wave of Technology adoption
  • Both HBBs and VSBs show significant promise of future growth - 40% to 45% of them have indicated plans of workforce expansion and over four-fifth of them anticipate revenue growth in the next 12 months

The Very Small Businesses operating from commercial space and Home together constitute a highly lucrative market for IT vendors since businesses in both these segments are on the growth path and they aim to increase levels of IT adoption at a rapid pace. Moreover, any vendor targeting the VSB space will also find it convenient to tap the HBB market segment since there is a considerable similarity within both these segments in terms of demographic, psychographic and IT adoption profile.

Source: Cellular News.