With fewer staff and with problems unique to their size, SMBs are ideally suited to outsourcing, but it's a sector that services providers under value, according to Greg Kershaw, regional vice president of Birlasoft.
Birlasoft Australia is an outsourcing provider with offices in Melbourne and Sydney and is a division of the CK Birla Group, one of India's largest commercial and industrial houses, with strategic equity participation by GE Capital.
Speaking at Gartner's 2006 Outsourcing and IT Services Summit in Sydney last month, Kershaw said outsourcing providers are still targeting the big end of town, particularly government.
"SMBs frequently manage volatile situations and if they are a subsidiary of a large international company, which is often the case, there is a standard suite of applications they must maintain; and it is very difficult," he said. Smaller organizations need application support.
"The application mix of large companies, including Oracle and SAP, must be supported. [The mix] is not as complex for SMBs, but its maintenance is still necessary," he said.
"SMBs also have specialist application challenges - many have bespoke applications and their IT managers are faced with the problem of finding staff to manage an application [not tied to a career path]."
Without budgets to source specialist skills, and faced with IT staff churn, smaller companies confront IT staffing problems.
"[Many] companies find that functions are too small to be looked at in a meaningful way [by outsourcers] -- they must have a helpdesk, but can they afford to have a dedicated person or people for it? Most think there is not enough work to outsource," he said.
"The key to effectively providing outsourcing to SMBs is to keep close to them and understand that all customers are unique.
"These organizations are generally owned by individuals - they pay real money to real people and want to feel important."
When SMBs do outsource, Kershaw said it is often to former employees or familiar faces that don't have the bandwidth to invest in quality processes.
"There needs to be more than just a phone service -- there needs to be people on site who understand the politics, priorities of the company and see who within the business gets things done... they need to be a part of the business wherever possible," he said.
Jim Longwood, Gartner Research VP, said SMB outsourcing is more of a niche market.
"In general there are single-service providers. But just because a company is smaller doesn't mean it doesn't need the same services [as larger businesses]," Longwood said.
"The scale is quiet different, but they still have the application requirements and they need to make sure they aren't hit by spam or security problems. If their systems go down it is much more catastrophic."