94% of MSMEs Relied on IT Infrastructure during the lockdown to stay afloat: Tally Study

The COVID-19 pandemic has driven digital transformation of micro, small and medium enterprises (MSMEs) in India, as these businesses are now adopting technology for business continuity and growth. At the heart and backbone of the Indian economy, these 6.8 million businesses contribute to about 30% of the country’s gross domestic product. Therefore, the prudence with which MSMEs manage themselves in a post-pandemic environment becomes critical. The COVID-19 Lockdown: Business Owner's Sentiments Study by Tally Solutions encapsulates how micro, small and medium businesses embraced technology and handled business operations to come out resilient and ensure business stability. The study highlights that 82% of small businesses are optimistic about the outlook of business continuity with current cash flow getting better, allowing 66% of them to pay salaries on time after Unlock 3.0.

Key Findings

• Business Operations:

o   Mainly in the Manufacturing, Trading, Retail and Service Industry:

• During lockdown: 38% of businesses were not operating at all, while 35% of businesses were operating daily with limited hours and only 23% of businesses operated with regular hours
• Post lockdown: 48% of businesses operated daily with limited hours and 38% operated with regular hours. Only 5% businesses are unable to operate
• IT Infrastructure Assistance:

o   94% business owners state that adopting technology (IT Infrastructure) helped their business operations during lockdown

o   67% respondents from West adopted a full-fledged IT infrastructure in their business post lockdown as compared to just 29% during lockdown

o   Similarly, 60% respondents from South adopted a complete IT infrastructure post lockdown as compared to only 24% during lockdown

• Cash flow Management: Dependency of savings to manage business operations reduced post lockdown

o   During Lockdown:

• 62% of business owners managed business operations by tapping into savings
• 22% of business owners took a loan/extension of payments
• 5% managed with current cash flows

o   Post Lockdown:

• 43% of business owners managed business operations by tapping into savings
• 16% of business owners took a loan/extension of payments
• A good 34% business owners managed with current cash flows
• Implementing Policies to Support Workforce:

o   During Lockdown:

• 57% of business owners were able to pay the employee’s salary on time
• 10% of business owners extended the option for Work from Home

o   Post Lockdown:

• 66% of business owners were able to pay the employee’s salary on time
• 2% of business owners extended the option for Work from Home
• Awareness of Government Relief Schemes:

o   80% of business owners are very well aware of the Government relief and support schemes

• Future Outlook:

o   82% of small businesses are optimistic about outlook of future business operations and that the pandemic will subside in next 6 months to 1 year

Business Outcomes through IT Adoption 

Digital adoption is essential for businesses to leverage opportunities and accelerate business. Business owners have understood the importance of having a good IT Infrastructure, which is resonating in the study findings. 94% of business owners adopted technology that has benefited them extensively in their operations. The number of businesses with IT infrastructure has doubled since the beginning of the lockdown until the recent Unlock 3.0. Moreover, the number of businesses not operating post lockdown has significantly reduced to only 5% as opposed to 38% not operating during lockdown.

 Gaining confidence in the workforce

MSMEs employ about 110 million people across the country but the lockdown saw a surge in reverse migration affecting small businesses who were left with a limited workforce. However, technology adoption enabled businesses to manage their operations as usual with 44% of the employees available to work during the lockdown, which increased to 66% as the lockdown was relaxed. In addition, these owners put their workforce first, as 57% of owners ensured salaries were paid on time even during the lockdown, which scaled up to 66% after the lockdown relaxation.

Mr. Joyce Ray, Head- India Business, Tally Solutions said, “Despite being one of the most adversely impacted sectors, the MSMEs have shown immense resilience and dynamism to overcome this situation through innovation and adaptability. Not only have these businesses ensured sustenance but also shown great moral character by supporting their employees during this time. Their unwavering spirit is an example for us all to follow in the times of adversity.”

Digital adoption is essential for businesses to leverage opportunities and accelerate business. While MSMEs continue to work towards reaching normalcy, to bounce back stronger they must adopt the right technology tools and business management solutions. This will lead to streamlined operations, enabling remote work capabilities, optimizing expenses, and better cash and inventory management – all resulting in business sustenance and growth.

Tally Solutions’ Covid-19 Lockdown: Business Owner's Sentiments Study analyses how businesses handled their operations during the primary COVID 19 lockdown as well as post-Unlock 1.0 time periods and how they managed business operations encompassing employee retention policies, utilisation of IT infrastructure, cash flow management, and more.