Why Are Indian SMEs Crucial for Big Tech Companies?

The small and medium businesses (SMEs) in India include 63.4 million units and accounts for nearly 30% of India’s GDP, employing about 460 million people. The sector also makes up for 33.4% of the India’s output in manufacturing, giving employment to around 120 million Indians, according to CII. When it comes to exports, the SMEs contribution is estimated at about 45% of the total exports. Even though the small and medium-sized enterprises (SMEs) sector contributes to a large chunk of India’s GDP, traditional inefficient methods of operating business and the low rate of technology adoption has hindered smaller business to achieve their potential. Google’s research in collaboration with consultancy firm KPMG revealed that 68% of the 51 million SMEs are not connected to the internet. The study also found that digitization of SMEs could expand their contribution to India’s GDP by 10 percentage points, pushing it up to 46-48% by 2020. Clearly, SMEs in India are yet to attain their full potential and get to the next level of business growth. The finance ministry recently set a target of making Indian a 5 trillion dollar economy and SMEs play an important role in achieving the target. The only hurdle is technology adoption, and this is where tech companies are coming to the front, making technologies available for SMEs to thrive.

What Tech Companies Are Doing To Foster Technology Adoption In SME Sector

Elaborating how different companies are focusing on the SME sector, we see many examples. One of the most prominent is telecom giant Reliance Jio announced that it wanted to expand the digital benefits and make them more inclusive for small and medium sized businesses. The company said SMEs will be given cheap digital services, from compute to storage, to connectivity. Jio’s partnership with tech giant Microsoft will help provide the cloud services Jio would need to scale the infrastructure to millions of SMEs across India. Reliance is not the only one working to bring digitisation to Indian SMEs. Recently, large tech companies like Dell, HP, Intel, Vodafone Idea and WhatsApp came together under the guidance of industry body Confederation of Indian Industry (CII) for project called Tech-Saksham. The project plans to reach out to over 10,000 MSMEs. The tech companies will work with SMEs overcome challenges in adopting technology, proving resources and expertise to make sure India’s large SME base gets the digital assistance it needs badly. Shreekant Somany, Chairman, CII National MSME Council stated the direct benefit of the project involving the technology players will be made available through training programmes and workshops on the latest technological solutions such as cloud computing, and market access for trade and exports. Yet another example is Cisco, one of the world’s largest players in cloud networking, which recently set the target of having interactions with 25 SMEs everyday in an initiative to help them go digital. About 30% of Cisco’s business in India comes from SMEs, and therefore the company has made SMEs a big priority. The company has reported that the SMEs want simple solutions and therefore cloud-based offering from the company has been extremely successful among SMEs, adding 5,000 new customers this year in India. “We are seeing significant traction in our SME business, thanks to ‘Start’ portfolio. Since the launch of Cisco Start portfolio in FY17, we have on-boarded 5,000 new customers in a year,” Cisco India and SAARC Managing Director. Apart from that, Google has also been working to capture this booming market with its enterprise offerings such as Google for Work, Google Cloud and others. The company’s CEO has also stated that Google will provide digital training to “thousands of small businesses so they can adopt technologies. Digital Unlocked is one such program run by Google in partnership with industry body FICCI, to provide Indian SMEs key digital skills to help them to get online and connect to customers in different parts of the country. Even Facebook announced an initiative under which it is collaborating with Venture Capital (VC) funds to accelerate the growth of the small and medium businesses (SMEs). Facebook’s VC Brand Incubator Program will be the first in a series of programs by Facebook that will be focused on helping SMEs achieve growth in India by providing them with technology skilling and support.

The Opportunity

According to Google-KMPG study cited above, digitally-empowered SMEs have about twice the revenue growth projections in comparison to offline SMEs. This is an area of large opportunity for tech companies, where they can profit tremendously by helping SMEs grow through technology innovation. In an effort to fill the widening gap between large and small businesses, tech companies are fast competing to provide digital infrastructure support to SMEs. This includes a wide array of support, from digital payments to cloud to AI-led innovation. IDC predicts SME spending on IT hardware, software, and services, including business services, is expected to reach $684 Bn in 2021 . India will be one of the fastest growing markets for IT spending in SMEs, growing at 7% CAGR from 2016-2021. The digitisation wave which started with digital payments extended to GST software and GST bundled devices being made available to SMEs. All of the transactional has enhanced the use of cloud based technologies. But, compute and storage requirements are only going to increase with time and if India wants to include SMEs, it must have a robust digital infrastructure with world class cloud and connectivity services.

Overview

The need of the hour is for industry stakeholders, government policy makers and enterprises to work together to enable the digital empowerment of SMEs, which have been left behind. Big tech companies have realised the opportunity as they are actively helping Indian SMEs adopt newer technologies like cloud, AI, process automation, IoT and data analytics to make enterprise process like accounting, inventory management, sales, marketing, HR, customer service, etc more efficient and at par with their large global counterparts.

Why Indian SMEs Are Important For Big Tech Companies

Why Indian SMEs Are Important For Big Tech Companies

What Tech Companies Are Doing To Foster Technology Adoption In SME Sector

The Opportunity

Overview

Discussion

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