While Covid-19 forced a lot of large companies to transform digitally, for a lot of medium and small enterprises the journey has started now. Not to mention, the transformation journey is now aided by large companies. Case in point: the newly launched accelerator programme by Hindustan Unilever Limited (HUL) along with Genpact called Be.Seen has been designed to help scale businesses owned by minority and underrepresented groups in India. “HUL’s partnership with Genpact will support minority-owned businesses while helping HUL advance towards its commitment of spending Rs 2,000 crores annually with diverse businesses by 2025,” Ansu Archana, procurement director, Beauty and Wellbeing, Hindustan Unilever, said in an official communiqué.
It is believed that one of the biggest challenge medium and small businesses face is a shortage of funds. Moreover, often raising funds turn out to be a herculean task. Besides, any transformation initially requires large sum of capital. “While the need for digital transformation is integral to competitive success, these small and medium businesses must also keep in mind costs associated with large-scale transformation projects. This often leads to MSMEs shying away from adopting technology with a holistic approach and instead focus on incremental deployments”, said Geeta Gurnani, IBM Technology, CTO and Technical sales leader, IBM India and South Asia.
To be sure, 47% of micro-enterprises and 53% of SMEs have adopted digital sales platforms in India, according to a survey conducted by CRISIL in November 2020. It was at 29% in pre-pandemic times.
Industry estimates show that India has a funding gap of around US $1.2 trillion every year for this segment. Industry experts believe that fin-tech companies will play a critical role closing in the gap with the United Payments Interface (UPI). “We will witness a large number of MSMEs will get the digital facelift when it comes to accessing credit. We are going to witness a UPI movement in digital lending through ONDC and OCEN”, Rajashekara V. Maiya, VP and global head of business consulting, Infosys Finacle said.
In addition to providing martech solutions, software-as-a-service (SAAS) based solutions have become a recent favourite. A good example of this is providing SaaS-based solutions that offer businesses of all sizes the benefits of rapid time-to-value, low-to-no management overhead, and predictable costs. For Zurvan Marolia, SVP and head, manufacturing council, Godrej & Boyce, MSMEs are provided with sustainable solutions to manage and monitor business operations. “Our marquee initiative for MSME suppliers, ‘Beyond Sourcing’, has helped in strengthening our supply chain by onboarding 25% of our key MSME partners and have further plans to induct 50% more by 2030. Initiatives like this will be instrumental in driving growth by creating a more accountable, efficient, resilient, and sustainable supply chain,” he added.
The martech and adtech piece is given importance as it allows these companies to get an insight on customer journey. MSMEs have direct access to their loyal customer base and they struggle in finding new customers. Big tech players claim to have technology, expertise and customers, and they need MSME products to build loyalty around their own brands. Thus, they offer MSME an avenue to reach more customers through their platform however customer ownership remains with big tech. They need to understand this that MSMEs desire to own customers and thus have to develop their platforms where MSME can build loyalty and retain customers -be it products or services”, Vineet Nayar, former CEO HCL Technologies and founder chairman of Sampark Foundation, said.
However, industry experts are quick to warn that this journey also means these businesses are susceptible to all kinds of cyber threats. Indian manufacturing sector was particularly susceptible to cybersecurity risks, representing nearly 30% of all identified cyber threats during the period between January and March 2019, as per Quick Heal Technologies’ enterprise division’s latest study. “Lack of awareness and training are among the fundamental challenges to digital transformation. Like the JAM (Jan Dhan-Aadhaar-Mobile) movement in retail customers, we can expect a similar movement in MSMEs with OCEN, and a whole lot of LSP (Lending Service Providers) and Account Aggregators (AA) in the near future. This will drive the L-Commerce (Local Commerce) within a locality, and region thereby providing access to digital transactions and digital transformations,” Maiya from Infosys Finacle, said.