In the U.S., small and home offices are expected to spend $71 billion on I.T. products by 2002. This is up from $51.1 billion spent in 1998, according to a report from IDC.
Home and small offices (companies with less than 10 employees) currently generate 24 percent of all I.T. spending in the U.S., according to the report. In 1998, there were 5.7 million small offices in the U.S. and an estimated 22.2 million home offices. By 2002 the number of small offices is expected to reach 6 million while the number of home offices is expected to swell to 30 million.
According to the report, three main factors are driving the growth of small and home offices:
PC based technology has increased the competitiveness of small companies. As technology improves and prices drop, small businesses find a diverse and inexpensive range of available equipment that previously could only be afforded by large companies with more substantial budgets.
Corporate restructuring means that an increasing number of companies are outsourcing projects to increase productivity. Larger businesses are finding that it is cheaper to outsource projects to small companies rather than invest in internal resources. As more larger companies become dependent on small offices, the number of new small and home businesses will increase. As small businesses are cast into direct competition with each other, their prices will drop. And purchases will increase because the lowest bidder with the most current technology will get the job.
Society places greater value on its entrepreneurs. As an increasing number of small and home businesses appear, manufactures of I.T. equipment must rethink their business strategy. No longer will primary customers be large businesses. The amount of I.T. products being developed for small businesses will increase and become cheaper to accommodate a smaller business’ budget.
Small businesses should expect to see the prices of I.T. products decline slightly over the next few years, while seeing competition increase as more professionals leave the large and medium-sized corporations to start their own businesses. Additionally, the amount of I.T. targeted towards small businesses will increase as an increasingly diverse array of projects is outsourced to small businesses.
