How adoption of ICT can enable Indian MSMEs up the ante in both national and international markets

Micro Small and Medium Enterprises (MSMEs) always play a significant role in the growth and development of the nation be it in industrial development, forex earnings, or in the generation of employment opportunities. They are considered as the growth drivers of India's economic growth. The contribution of small businesses is immense in terms of innovations, galvanising private ownership, fuelling entrepreneurial skills, and for economic diversification.

Over the past few years, the government has taken many initiatives for the welfare of the SMEs in India. However, basic amendments in the existing policies, economic reforms, and awareness in the effective usage of policies are the needs of the hour to empower the small-scale units in their path to becoming globally competitive. Today, technology upgradation plays a crucial role in enhancing the competitiveness and in fostering the growth of MSMEs.

Adoption of Information and Communication Technology (ICT) can enhance the productivity and global competitiveness of Indian MSMEs. According to a Confederation of Indian Industry (CII) report, majority of the small businesses considered ICT as an optional tool that triggers decline in the productivity levels of small business in manufacturing units. However, government and industry-led interventions led MSMEs in other sectors develop strong appetite in deploying the technology to build competitiveness in the business environment.

A recent CII ICT survey for MSMEs revealed that 83 per cent of MSME use ICT tools for finance and accounting, while 75 per cent of the respondents reported that their companies use ICT tools for HR and administration functions, and 68 per cent reported that their companies use ICT tools for marketing and sales. Sixty-four per cent of the SMEs reported that their companies use ICT tools for production purposes.

Industry speaks

Dipankar Khasnabish, Senior Principal, Infosys India Consulting Unit, while speaking at the CII Karnataka MSME Conference 2015 in Bengaluru recently, said,

From the perspective of service providers like Infosys, the goal is to work with global 10,000 startups as we do not do much work with SMEs. We have developed certain platforms for SMEs, but when it comes to building a platform independent of the government, we face lot of challenges. But the time has come when all the SMEs should start investing in technology.

The CII in partnership with the government of Karnataka had organised CII Karnataka MSME Conference 2015 ‘Enabling MSME Business’ on 22nd July in Bengaluru.

The objective of this conference is to address issues and challenges faced by MSME companies, both at the central and State level. With an intention to protect, support, promote and foster the growth of MSMEs, Government of India has taken a large number of protective and promotional measures. It aims to multiply financial assistance by funding.

Galahad Franklin, Director (product marketing project and vision), Microsoft India, says,

Be it a large project or a small one, quality matters a lot. For SMEs, the main concern is how fast you can deliver a particular product or service to the customers. So to manage the business environment effectively, one needs to hire people with familiarisation and experience like project manager, functional heads. This sometimes becomes difficult for small businesses due to budget constraint. Therefore, deploying a software can list down all the activities and amalgamate resources. A business starts at a very small level but gradually it is scaled year on year. Analytics tools, secured information help small businesses become bigger in the market.

Investment in technology

Deployment of IT enables SMEs to augment communications within an organisation and build a strong network with customers and suppliers. The nature of IT deployments among MSMEs has witnessed a dynamic shift over the years, from usage of technology to improvements in internal process, in order to meet the requirements of tech-savvy customers and to reduce costs as well.

Today, SMEs use a pool of technologies to empower their business, which includes cloud-based services and solutions, mobile technologies, VOIP (voice over internet protocol) and messenger tools.

"If more Indian SMEs adopt the latest IT tools, there is potential for them to grow their overall revenue by Rs 3 lakh crore and create 11 lakh new jobs. The revenues of IT-enabled SMEs grew 15 per cent faster and created twice as many jobs as compared to those that used less ICT technology," revealed a recent survey on Indian SMEs.

Prithviraj Ghosal, Regional Head of India Mart at the CII event says,

In India, SME which adopt technology grew 20 per cent in terms of revenue as compared to SMEs which do not use technology. India has the second largest population of SMEs among BRIC countries. SMEs in India contribute more than 40 per cent of the total industrial output and provide employment to 75 per cent of India's workforce.