Monday, June 13 2005 16:16 Hrs (IST) - World Time -

Bangalore: The IT data and network storage market in India is poised for major growth with the small and medium scale sector expected to increase its storage expenditure by 150 per cent in 2005 over the $43.2 million spent last year.

"India's virgin storage market is poised for large scale adoption of enhanced storage solutions. Storage expenditure by small and medium scale sectors are expected to increase more than one-and-a-half times in 2005," a study by AMI-Partners, a US-based consulting firm in information technology and telecom, said.

The total spending on the storage products in 2004 comprised $26.3 million on DAS storage while network storage spending amounted to $16.9 million.

"Despite data security threats presented by viruses, 'malicious worms and trojans', Indian small and medium enterprises are rapidly adopting these more sophisticated enterprise software applications," it said.

While HP dominated the IT storage market, particularly among the SMEs, the study said it was likely to face growing competition in network storage from vendors like EMC, which were also expanding their presence in this market.

Elaborating the key drivers behind storage spending, AMI analyst Neha Jalan said as PC usage has expanded in India, the country was witnessing accelerating growth in total number of network users as well as the number of distinct customers/business partners who generated data via electronic transactions.

"This, in turn, is increasing IT storage requirement of many SMEs," she said. Moreover, Indian SMEs were realising the importance of customer relationship management to provide better customer service.

"Currently almost five per cent of SMEs have adopted CRM software and an additional 15 per cent of businesses anticipate investing in CRM solutions this year," the study said.

Spending on enterprise-level applications such as ERP, whose usage is still at an embryonic stage, was also expected to surge in the next few years.

Besides, the increasing focus on security was also leading SMEs to invest in data backup and disaster recovery solutions.

"Demand for storage is increasing rapidly, especially among BPOs, which constitute a significant proportion of Indian medium businesses and have to handle vast amount of data for their clients," Jalan said.