Alarm for SMEs to Go Digital

SME ecosystem in this country acts as a backbone of economy, yet Indian SMEs are among still among those who are lagging behind on multiple fronts.

There are nearly 48 million SMEs in the country who provide a variety of critical and important services in the manufacturing industry. That said, while the sector employs 40% of India’s workforce, it contributes only about 17% to the country’s GDP. There are several issues that makes this sector a challenged one.

One of the primary reasons for such below par performance has been SME’s slow adoption of technology. The real challenge is to scale the business and the real challenge for any entrepreneur is to stay prepared and equipped for growth. Investing in technologies and tools such as an ERP, CRM or even cloud based offerings that promise cost efficiencies, is fairly expensive and a lack of scale can inhibit such an investment. But the realities can narrate some other story.

So consider this – the internet, to a large extent, can solve the problem of scale by creating an online outlet for goods and services of all kinds. The Indian e-commerce industry is by far the finest example of this.

The e-commerce market has witnessed exponential growth since 2009 when it was worth about $2.5 billion to reach $16 billion by the end of 2013. Data from an ASSOCHAM report indicates that the same will reach a whopping $56 billion by 2023, making it 6.5 percent of the total retail market. This scale comes from the fact that there are around 200 million internet users in India, slated to grow to 500 million by 2015, according to consulting firm McKinsey & Co.

So the above mentioned data indicates, that having a robust and dynamic web presence can fetch great results for SMEs. This is a proven method.

Internet penetration in turn is getting its scale from the country’s mobile revolution where the cellular phone is ubiquitous. But the more interesting fact is that for the whole year of 2013, the internet user base grew 42% to 213 million (from 150 million in 2012). Of the total user base, mobile internet users accounted for 130 million in 2013 (over 60%), a growth of about 92% from 68 million in 2012.

There is even more to look forward to when one looks at the expected growth; by June 2014, IAMAI forecasts that the internet user base will touch 243 million. The number of mobile internet users is expected to touch 185 million in the same time-frame accounting for a massive 76% of the internet user base in the country.

While this requires a major shift of mindset, entrepreneurs must remain open minded towards next level growth. Now, the country has entered into a growth trajectory. Opportunities are surely going to come in. There will be global opportunity as well as growing domestic market opportunity. All this will also allow competition to become even more cut-throat. So the major message for every entrepreneur is to raise an alarm that there is no scope of ignorance.