SMEs form the backbone of Indian economy with an estimated 43 million registered and unregistered entities across the country providing employment to around 100 million people which accounts for 40% of India’s workforce, second only to the agriculture sector.
SMEs form the backbone of Indian economy with an estimated 43 million registered and unregistered entities across the country providing employment to around 100 million people which accounts for 40% of India’s workforce, second only to the agriculture sector. SMEs contribute 45% of the total Indian manufacturing output and 40% of the total exports.
Yet the SMEs are saddled with the constant challenge of accessing monetary resources and labour at the right cost at the right time. On the one hand, trained resources migrate from SMEs to higher paying jobs and on the other, large customers and OEMs expect a drop in price each year in keeping with the expectations of their stakeholders to remain competitive in the marketplace. There is also a constant need to improve quality and the increasing importance of innovation lately. While there is an urgent need to address sector specific needs of businesses and periodic policy interventions are required to promote MSME development in the country, can digital support address some of these challenges and mitigate some of their concerns?
Firstly, SMEs have limited access to the market and invariably their circle of marketing and customers is restricted by the resources at their disposal to reach out to new customers. Digital presence and digital marketing are excellent cost-effective methods which have the potential to open up innumerable opportunities for the SMEs. There are also several sector-specific and regional digital marketing platforms namely FarmGuru, Shopmatic, Wydr and others that have emerged lately that SMEs could take advantage of.
Zoho Recruit, HRApp, PeopleQlik are good examples of applications that are cost effective and enable SMEs to manage their HR functions and compliances with ease. Stickiness of labour and the efforts of training and retention are other challenges SMEs face. In order to mitigate this problem, some SMEs are tapping into women and retired personnel segment using a combination of remote work through digital platforms where applicable and training through learning platforms blended with on the job training. For manufacturing companies, combination of favourable frameworks developed by the government such as National Apprenticeship Act and NEEM and online and just-in-time training facilitated by digital methods could address the problem to some extent.
Industry associations such as CII and MCCIA are making efforts to help the SMEs to adopt digital practices. Access to larger market, better customer service, reduction of errors and savings in time and cost, particularly in intensive manual work, have been the primary motivations for the SMEs to consider digital transformation of their businesses. Although the costs for going digital are not high, the speed of adoption is a major issue for most SMEs due to their limited bandwidth and competing priorities.
Data literacy is another area which requires attention. If SMEs improve their data capturing and cataloguing mechanisms they would benefit from enormous insights through analytics to improve their process efficiencies. SMEs have to think about their digital transformation journey as not necessarily a mega project but as an agile initiative with small projects aligned with their immediate business priorities and customers’ needs driving their strategy for digitalisation. IT management has become simpler with easy-to-use applications and affordable and with hosting on the cloud, offices can function from anywhere. SMEs need to therefore get innovative with the way they function by taking full advantage of the emerging digital ecosystem.
The writer is chairperson, Global Talent Track, a corporate training solutions company