There are nearly 16.2 million Home-based businesses (HBBs) in India and these comprise of about 8% of the 202.9 million households. Nearly one-eighth of these HBBs are pc users 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 revenue-generating tools based in the home, led by individuals who are self-employed; it does not include individuals who have jobs in larger telecommunication companies. "For every dollar spent by HBBs in India 67% goes for telecom services and 22% on computing. From the spenditure it can be seen that home- based worked spend a lot on telecommunication services.," says Dipendra Mitra, Analyst at AMI-Partners.Although IT contributes to a lesser proportion of the IT/Telecom spenditure, the former is set to increase at a rapid rate within HBBs as they struggle to reach a technological supremacy level corresponding 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 ratio of HBBs to VSBs is 7:1
- Both HBBs and VSBs are in their premature stage. It means that there is room for market growth in this field
- HBBs are still behind VSBs in the use of technology.
- Both HBBs and VSBs have avenue for enormous growth - Commercial space has resulted in the operating of VSBs. Home constitutes a very profitable market for IT vendors. This is because businesses in these areas have been on the growth path and thus they aspire to bring up the heights of IT adoption at a fast pace. Tapping the HBB market segment is a very suitable for vendors who are targeting the VSB space. In terms of demographic, psychographic and IT adoption profile, there are very significant resemblances.