A new breed of Indian software companies is profiting from the hunger of smaller enterprises for cutting-edge technologies, unlike their bigger IT services brethren that depend on large corporations in markets abroad.
While the likes of Infosys, Wipro and Tata Consultancy Services earn more than $75 billion (Rs 4.7 lakh crore) by providing software services overseas, the upstarts are targeting millions of small and medium businesses in India eager to adopt the latest technologies.
"The factors driving the movement towardsSMBs are SMBs themselves, which have realised that software can make a difference to their businesses. Thanks to cloud computing, software is getting cost-effective," said Sharad Sharma, former R&D head of Yahoo in India, and part of iSpirt, the industry thinktank for Indian software product firms.
Among the up and coming lot are business phone services provider Exotel, helpdesk software manufacturer Freshdesk, medical practice management-focused Practo , customer engagement solutions provider Capillary, and digital commerce solution provider MartJack, all of which cater to the needs of small businesses, both in India and abroad.
While older, established companies that provide services to SMBs operate through sales partners, start-ups are going online, obviating the need for large sales teams and providing services through the internet. Telephony provider Exotel said large sales forces pounding the pavement to sell to small businesses are no longer necessary.
A $15 billion opportunity
Exotel is backed by Blume Ventures and Mumbai Angels. "India's SMB owners are changing. And we have to stop assuming they are not connected. All these second-generation owners who have inherited businesses from their parents have smartphones and use the internet," Exotel co-founder Vijay Sharma said.
Exotel has 450 customers, which it acquired mainly online, including bus-ticketing portal Redbus, taxi service Ola Cabs, and e-commerce company Groupon India. According to technology consultancy Zinnov, the addressable market for SMB-focused companies in India comprises at least 10 million enterprises.
Their technology spending is expected to grow at a compounded annual rate of 15% to $15 billion (Rs 94,000 crore) by 2015. Sharma's iSpirt is attempting to boost the usage of software products in the country and intends to reach at least 100,000 SMBs in at least 19 different industry verticals by February. Its software adoption initiative focuses on helping small jewellers understand the software that can help them manage their business better.
While companies like Exotel are targeting the Indian SMB market, those like WebEngage, which provides a web survey and feedback service, are moving to tap markets abroad. "We made up our minds to crack the Indian market and now we have a good list of clients here. Now the segment we are looking at is the nearly 500,000 small and medium e-commerce websites in the US," said Avlesh Singh, co-founder of WebEngage.
In India, the company counts Flipkart, Myntra and Homeshop18 among clients. Freshdesk, which provides helpdesk software as a service, has more than 10,000 clients and expects to have more than 13,000 by the end of the year. Even though the majority of its customers are SMBs overseas, it has a few Indian clients, among them travel website MakeMyTrip and jobs site Naukri.
Moreover, companies that start out with a focus on SMBs need not always stay in that space as they grow, said Girish Matrubootham, co-founder of Freshdesk.
"A good example is Salesforce.com. They started out targeting SMBs, but now you can see them everywhere. That is one of the inherent advantages of providing software as a service. Even if you start small, you can sell to big companies because there is no problem with scaling."