Derek Newberry

The New Asian Tiger… Indian SMEs? I’d bet $500 billion on it.

For years, we at New Ventures have been encouraging investors and aid organizations to pay attention to the growing numbers of SMEs being created by waves of adventurous entrepreneurs throughout the developing world. I would point to businesses like Aires as shining examples of small, innovative companies that have strong potential for rapid growth. It was good to read this morning that communications giant Nortel agrees. The corporation recently announced a new strategy to target the burgeoning demographic of SME owners entering the Indian market. As competition has increased, these businesses are becoming progressively more sophisticated and demanding better IT infrastructures, a fact that has driven Nortel’s profits in the region.

The potential benefits lay on both sides of the spectrum; for larger corporations engaging SMEs as clients, and for rural India, which has a huge potential customer base that SMEs will tap into. Adil Zainulbhai, CEO of the consulting firm McKinsey & Co. recently touted the profits to be gained among rural communities that will soon wield $500 billion of buying power. The agility and BOP connections among smaller businesses puts them in a perfect position to take advantage of this new resource. Like Nortel, I have a feeling India’s investors will catch on to the trend.