The digitalization of small and medium businesses (SMBs) could add US$ 158 to 216 billion to India's GDP by 2024 and contribute to the country's economic recovery post COVID-19, according to the Cisco India SMB Digital Maturity Study 2020.
The study, based on a survey of SMBs from across the Asia Pacific region conducted by IDC and commissioned by Cisco, shows that SMBs that are more digitally mature enjoy twice as many benefits in terms of revenue and productivity compared to those that have an indifferent approach to digitalization.
The study highlights that 68% of Indian SMBs seek to digitally transform to introduce new products and services, differentiate themselves from the competition, and grow, while 60% recognize that competition is transforming and they must keep pace, and 50% seek digital transformation due to customer demand for change.
"During this time, small businesses have been grappling with drastically reduced liquidity, disrupted supply chains, and lending challenges. To bounce back, they need to pivot and adapt swiftly, reimagine their business models, and identify their place and role in the new normal. In these efforts, most small businesses have realized that going digital is critical and are displaying a willingness to disrupt themselves. At Cisco, we understand the complex world of SMBs, and have been innovating products aimed at helping small and medium-sized businesses digitize quickly and sustainably," said Panish PK, Managing Director, SMB, Cisco India and SAARC.
The results of the study show that cloud, a foundational pillar for digitalization, is the top technology investment priority for SMBs in India (16 percent), followed by security (13 percent) and purchase or upgrade of IT infrastructure software (12 percent).
However, SMBs are also facing challenges on this front. According to the respondents, a shortage of digital skills and access to talent, and lack of necessary technologies are the top hurdles for SMBs in their digital transformation efforts (16 percent each).
"While technology will serve as the greatest enabler in helping SMBs leverage the opportunities created by the emerging low-touch economy, this crisis is far too complex for anyone to solve alone. Now more than ever, we need to work together to navigate these uncharted waters. For us at Cisco, small businesses are a top focus area. To help address their challenge of talent, our Networking Academy has so far trained more than 182,000 students across India in FY20. And to accelerate their digitization efforts, our aim is to provide small businesses access to a suite of simple, secure, and smart enterprise-class technologies, specifically tailored to their evolving needs," Panish added.
For the Asia Pacific region in general, SMBs continue to make progress in their digitalization journeys, despite challenges. According to the study, 16 percent of SMBs in the region are now in the advanced digital maturity stages (3 and 4), compared to 11 percent in 2019. Slightly more than half of SMBs have embraced digitalization to become Digital Observers (stage 2). Only 31 percent of SMBs are still reactive to market changes and have made hardly any efforts to transform digitally (stage 1).
"Digitalization is no longer an option for SMBs – it's a matter of survival. COVID-19 has forced them to move to digital-first, becoming more dependent on technologies to ensure business continuity and resiliency. As SMBs rethink processes, operations and customer engagements, they are looking at cloud services and cybersecurity first, but also have increased their focus on customer experience, video conferencing and AI/Analytics solutions. Given the rapidly changing market conditions and speed of technology evolution, SMBs should work with the right industry partners to ensure they can maximize their technology investments and thrive in their digitalization journeys," said Daniel-Zoe Jimenez, AVP, Head Digital Transformation & SMB research at IDC.
This year's study is a follow-up to the 2019 'SMB Digital Maturity Index' that looked at the state of digital adoption of SMBs across the region. The 2020 study aims to further the understanding of how SMBs can progress in their digital transformation journey and the impact of digitalization among SMBs to drive economic activity.