Honeywell Leads Digital Revolution Among MSMEs

India's MSME ecosystem is experiencing exponential growth, contributing significantly to the economy. With 633.9 lakh MSMEs, these enterprises play a vital role in socio-economic progress, employment generation, and entrepreneurial prowess. Honeywell recognizes the importance of this sector and through Impact by Honeywell, is empowering MSMEs with affordable technology solutions.

Empowering MSMEs Through Digital Transformation

An Exclusive Interview between Jasmeet Bhatia, General Manager, IMPACT by Honeywell and Faiz Askari, Founder of SMEStreet.

1. What are your views on the MSME ecosystem in India? Could you elaborate on the specific digital technologies that MSMEs are embracing to enhance their operations?

The Indian MSME ecosystem is one of the fastest-growing sectors in the Indian economy. Today India has a total of 633.9 lakh MSMEs across urban and rural India, who contribute significantly to the country’s exports and account for 33% of GDP. The projected growth of MSMEs in the country is anticipated to increase from 6.3 crore to around 7.5 crore, with a projected Compound Annual Growth Rate (CAGR) of 2.5%. The Micro, Small, and Medium Enterprises (MSMEs) sector is playing a crucial role in driving socio-economic progress, employment generation, and entrepreneurial prowess within the country. MSMEs have created over 120 million jobs across all sectors. The PLI scheme has further boosted this agenda and led to the creation of about 7 lakh jobs recently. Women-owned MSMEs have also gained prominence over the last five years and recent studies indicate that women-led enterprises hired 11% more women as compared to male-owned MSMEs. 

At Honeywell India, we recognize the MSME sector as the backbone of the Indian economy. Over the past few years, we have witnessed a surge in digitization across MSMEs. We are witnessing a surge in MSMEs adopting digital technologies like Cloud Computing, the Industrial Internet of Things, Artificial Intelligence, Machine Learning, Automation & Robotics. These technologies are empowering MSMEs to optimize costs, enhance quality, increase agility, and expand reach. Our focus through our IMPACT by Honeywell (NASDAQ: HON) business, which we launched in 2020, has been to empower MSMEs with affordable technology products that can augment and optimize their businesses.

2. IMPACT by Honeywell was conceptualized in 2020, with the dedicated objective to focus on the MSME sector, could you elaborate on how IMPACT by Honeywell has been contributing to the MSME ecosystem of India? 

Since 2020, IMPACT by Honeywell has been at the forefront of driving innovation, actively supporting the Indian MSME community. We understand the specific challenges confronting these enterprises and, consequently, tailor comprehensive solutions aimed at enhancing their performance, cost efficiency, and compliance.

Our suite of solutions addresses key facets of MSME operations, making businesses more efficient, and productive, and commercial buildings and industries more safe, secure, and sustainable. Ranging from electrical safety and building security to fire safety, energy management, Personal Protective Equipment (PPE), and more, our solutions are crafted to elevate productivity, manage costs, mitigate revenue loss, and enhance quality. These encompass surveillance, access control, and energy management systems, all crucial in optimizing business processes and bolstering efficiency. Moreover, we go beyond conventional offerings by addressing burgeoning concerns surrounding cybersecurity, extending support to MSMEs in critical realms such as data protection and analytics.

3. Please share some insights on the comprehensive solutions that IMPACT offers and the benefits it is yielding for Indian MSMEs.
   

Our success is propelled by key solutions such as intelligent surveillance, point-of-sale products, and PPE, which collectively contribute approximately 60% to our total revenue. Our Smart AI Camera, distinguished by its cloud storage, integrated edge analytics, exceptional night vision, and intuitive mobile application, has emerged as a transformative tool. In the domain of retail and distribution, our point-of-sale products, featuring advanced barcode scanners and mobile computing devices, have significantly boosted operational efficiency, speed, and precision. Furthermore, our top-tier PPE, developed under the 'Make in India Initiative,' is meticulously crafted to safeguard workers across various industries.

We are further aiming to expand our portfolio to serve the unmet needs of both small and medium commercial businesses and industrial MSMEs, across digital commerce, digital factory, and digital supply chains.

4. Cost optimization is a key concern for the MSME business life cycle. How do your products align with this core requirement and empower MSMEs in the long run? 

At Honeywell, we recognize the paramount importance of cost optimization throughout the entire business journey of an MSME. Our tailored products and solutions are meticulously crafted to tackle this challenge head-on, enabling MSMEs to achieve sustainable success in the long run, through our extensive product range which is accessible to them at optimal costs. 

IMPACT is committed to delivering precisely tailored solutions that cater to the scale and intricacies of their operations. We designed this entire business model to be local, ensuring a cost-effective yet high-quality value proposition for MSME customers. 

We at IMPACT understand that MSMEs focus on providing high value and need solutions at the right price point for the value offered. With our products and digital solutions, we help MSMEs reduce errors, and make their operations more efficient, safe, secure, and compliant, delivering tremendous value and making their operations cost-efficient. 

5. What are the key MSME industries that IMPACT is catering to? Are there any plans to foray into new sectors? 

IMPACT by Honeywell is currently offering a range of products and solutions tailored for healthcare, e-commerce, and supply chain sectors. These encompass warehouse automation, digital safety and productivity tools, and asset health monitoring systems.

While our current business focus lies predominantly within commercial buildings and manufacturing industries, we envision expanding into additional sectors such as Retail, Hospitality, Logistics, and Warehousing as we progress forward.

6. Please share a view of IMPACT by Honeywell’s business trajectory so far and outlook for the coming years in terms of revenue aspirations, market expansion, product category diversification, R&D focus, hiring plans, etc. 

Our business trajectory has been robust since our inception, and we have registered an annual growth rate of 50-60% since 2020. Currently, we operate with our extensive network of 80 to 100 distributors and plan to expand further in the future. We have established a strong presence across 50 cities, with Delhi NCR, Mumbai, Pune, Bangalore, and Chennai emerging as our top revenue-generating markets. Looking ahead, we are planning to extend our reach to more than 80 locations and aim to venture into Tier 2 markets by 2026. 

Our objective is to strengthen our foothold in emerging markets by expanding our customer base, diversifying our product portfolio, and entering new segments. We have already established our foothold across cities like Ahmedabad, Kochi, Chandigarh, Lucknow, Coimbatore, Indore, Jaipur, Kolkata, and Guwahati and plan to further penetrate Tier 2 and Tier market landscape over the next 2 years. Our expansion into these markets will be instrumental in doubling our revenue by 2026, leveraging our strong position in building technologies, with a specific focus on the point-of-sale product range through e-commerce channels.

In addition to our expansion efforts, we are committing significant investments towards product development, with a particular emphasis on environmentally friendly and energy-efficient solutions. Concurrently, we are intensifying our focus on digitization, delivering tools and IoT solutions to streamline business operations and empower MSMEs to make informed, data-driven decisions.

Our dedicated professional team comprises of over 100 individuals, actively fostering opportunities for engineering talent in India. Approximately 35-40% of our workforce consists of engineers leading the charge in innovation, research, and development, and delivering quality solutions.

7. What is Honeywell’s go-to-market strategy for the Indian MSME/SME segment?
   

Honeywell is focusing its growth strategy on two key areas: people and the mid-market segment, with a particular emphasis on capturing emerging opportunities within the MSME segment. Recognizing the immense potential within the mass mid-market segment, Honeywell intends to allocate significant investments toward product development and enhance its commercial go-to-market strategy to capitalize on these opportunities.

Historically, Honeywell has predominantly focused on serving enterprise clients; however, we will also capitalize on the mid-market through the IMPACT business. Honeywell is committed to making substantial investments in both its commercial operations and product development to effectively penetrate and cater to this segment.

8. Lastly, can you provide insights into the future roadmap of IMPACT by Honeywell in terms of innovation and support for MSMEs, particularly in emerging sectors like manufacturing, retail, hospitality, and logistics?

Our future aspiration is to establish ourselves as the preferred brand for mid-segment customers, aiming to capture 20-25% of the market share by 2030. With robust growth anticipated, we forecast our revenues to double by 2026. While our current focus has been on commercial buildings and manufacturing, we are strategically planning to expand into the Retail, Hospitality, Logistics, and Warehousing segments as we progress forward.