Given the benefits that ICT can bring to SMEs, SMEs in most regions in India still have been slow to adopt it. One cause of limited adoption is the lack of dynamism between ICT firms and SMEs outside of the ICT sector. ICT firms have not provided goods and services tailored to SMEs in the past because demand from SMEs has been low. However, their demand is low in part because ICT products available in the market are too complex and expensive. The result is a vicious cycle of limited supply and limited demand that ultimately excludes SMEs from the benefits of ICT. Other factors also contribute to the limited supply and demand of ICT for SMEs:
Supply side:

1. Poor communications infrastructure results in limited access and higher costs.
   Many regions still have poor communications infrastructure. Outdated equipment and state-owned monopolies often result in expensive charges and limited coverage, especially in rural areas.
2. Most advanced ICT products are designed for larger firms and not SMEs.

   ICT firms used to target large enterprises because they had a larger budget and were willing to pay for more complex ICT services. Their products are often too expensive and too complex for SME users. However, competition in this market is making firms – both large and small – turn their attention towards the untapped SME market.

Demand Side:

1. Limited ICT literacy of SME owners hinders their ability to choose the appropriate technology and understand the concrete benefits it can bring to their business.
   Many SME owners are unfamiliar with operating a computer, are skeptical of the concrete benefits to its core business, and have the stereotype that ICT is only for larger companies. Even if they have the will and financial resources to integrate ICT into their core business, SME owners are often at a loss when needing to choose the most appropriate and cost-efficient product.
2. Limited ICT literacy of employees in SMEs hinders ICT adoption.Even if SME owners have a strategic understanding of why they should adopt ICT, their staff is often untrained. Training costs both time and money – resources that SMEs usually lack.
3. Adopting ICT is an adaptive challenge, not a technical challenge.
   Adopting ICT is a difficult task for companies of all sizes, whether they are in developed or developing states. In fact, a lot of management literature focuses on the organizational changes that firms must go through in order to effectively adopt ICT because they change the way firms do business. While the changes may be beneficial in the long run, they often hurt one department and strengthen another. For example in order to make ERP‘s cost-saving and efficiency-building features work, managers must be willing to take measures that can be anathema in the state-owned sector, such as selling businesses, laying off workers, and changing longstanding vendor relationships. All of this can be tough to do. Thus, SME owners are often reluctant to bring their firm through a learning curve that may be difficult and costly.
4. Lack of financing options limits SME ability to purchase ICT.
   Lack of financing and appropriate technology is clearly a major handicap to developing country producers and exporters, and it inhibits developing countries from deriving full benefits from their trade rights. SMEs usually have limited ability to make larger investments in their firm due to the lack of financing options. Given the financial squeeze, IT budgets are usually small or nonexistent. In addition, adopting ICT is not a one-time cost because there are ongoing costs of maintenance, upgrading, and human capacity building.