How Startups And Tech Giants Are Pushing India’s Digital Transformation For The MSME

All over the world, the micro, small and medium enterprises (MSMEs) sector continues to play a significant role in economic development. Recognising the global role of the sector in promoting innovation, inclusivity and sustainable growth for all, the UN General Assembly, in its 74th Plenary meeting held on April 6, 2017, declared June 27 as the World MSME Day.

In India, the MSME sector has been a solid pillar of the economy for decades.  According to the government’s policy think tank NITI Aayog, the sector manufactures more than 6K products and accounts for 45% of the country’s manufacturing output and 40% of its exports. The MSME sector also contributes 30% of the country’s GDP and employed more than 110 Mn workers in FY20, a number which has steadily increased in the past years. 

As India celebrates the fifth annual MSMEs Day, focussing on how this sector can be the key to an inclusive and sustainable recovery (the theme of 2021), it becomes imperative to understand the challenges in this space so that a strategic road map can be developed to ensure continued growth. Some of this sector’s major challenges include lack of access to credit, market visibility, and more importantly, poor tech adoption. 

Incidentally, the government’s intervention in the past years mostly dealt with the working capital issues. A testament to that is the Emergency Credit Line Guarantee Scheme (ECLGS), kept at INR 3 Lakh Cr until April 2021, was doubled in May. Along with the amount, the scope of the scheme was further broadened by adding the civil aviation sector and loan to health institutions for onsite oxygen generation plants to its ambit. Emphasis was also given to programmes such as Pradhan Mantri Kaushal Vikas Yojana (PMKVY) and courses run by India International Skill Centres (IISC) for skilling the workforce. Although these initiatives may take some time to fructify, they are likely to provide the necessary lift-off to the segment in the long run. However, one challenge may still remain unresolved. Is there enough hand-holding to fulfil the sector’s technology needs, required for business continuity and sustainable growth?

More than a year into the Covid-19 pandemic (a black swan event that has shrunk the global economy as never before), Indian MSMEs remain one of the worst-hit sectors owing to nationwide lockdowns and the subsequent dip in consumer demand. These periods of restrictions also underlined the shortcomings of less-than-adequate tech adoption across the MSME sector.

On the other hand, new-age tech adoption could have reduced many of the challenges during the pandemic and lessened its overall impact. Large-scale digital adoption and better use of technology are bound to empower this sector in terms of improved efficiency, access to a bigger customer pool and reduced operational costs. But that has not been the case. In the second wave of the pandemic that saw fresh restrictions and statewide lockdowns, 8 Cr MSME traders suffered a cumulative business loss of INR 6.25 Lakh Cr

Why wasn’t the SMB market prepared? It could be easily blamed on a lack of budget, a lack of know-how and expertise, security and legacy issues and more. But the core cause lies elsewhere. Due to a lack of tech proficiency, it has been difficult to convince this sector about the benefits of tech adoption and why one should not miss the bus. Understanding and using proper technology to drive business growth is no easy task. But first of all, one should be prepared to embrace and navigate the tech journey.

Resolving Tech Adoption Issues To Benefit MSMEs

As the country reopens slowly after the second wave of the pandemic, the revival strategies for MSMEs gain critical importance. With a third wave already being expected from October onwards, businesses must utilise the time in-between to realign their continuity plans with current and near-future scenarios. 

Making room for technology adoption to stay future-ready may not be too tough as help is at hand. In recent years, the Indian startup ecosystem has emerged as the enabler and the educator of the MSMEs. Startups are developing affordable, easy-to-use solutions for these traditional brick-and-mortar businesses to make the digital transition a smoother process. The time is ripe, too, for an accelerated move towards digital solutions due to the new normal, and enablers from the startup space are more than ready to cater to MSME requirements. 

Today, startups such as Wix Stores and Ecwid offer platforming solutions for businesses to run their online stores and connect to a bigger customer base. Besides, companies like Khatabook and Deskera offer bookkeeping, accounting and inventory management services, while the likes of Shiprocket and Shipway provide logistics and shipping solutions. Together, the enabler ecosystem has been building full-stack solutions for the digital integration of MSMEs. 

These startups not only provide business solutions but also reach out to MSMEs to help them understand the potential of tech adoption in driving business growth. Deskera, for example, hosts regular workshops and webinars so that business owners can get optimum benefits from its products. Similarly, Shiprocket publishes a blog and posts how to use logistic resources and adopt best practices in logistics tech usage. 

Although these efforts by the startup ecosystem have got the digital transformation ball rolling, it has not been enough due to their small operational size. This is where the tech giants enter the picture to assist MSMEs towards tech proficiency. Recently, Amazon announced a $250 Mn fund to help MSMEs go digital in India. Moreover, Amazon’s MSME Accelerate, Google’s $10 Bn digitisation fund and Walmart’s Vriddhi Supplier Development Programme are helping MSMEs take their businesses online. Tech giant Dell has also come up with a host of dedicated initiatives for this purpose.  

How Tech Giants Are Helping MSMEs With Tech Adoption

Working with both consumers and businesses, Dell has developed a deep understanding of MSMEs and their specific technology requirements. Over the years, the computer tech multinational has taken multiple initiatives to help businesses overcome the hurdles of tech adoption and understand what works the best for their particular needs. These include: 

• Small Business Security: Data backup and cybersecurity to protect business information
• Small Business Services: Financing, deployment and equipment maintenance
• Small Business Innovation: Latest tech products to boost productivity
• Small Business Productivity: Optimised software to increase efficiency and productivity

Dell also communicates with MSMEs to understand their challenges and extends support through its technology advisors. Also, the tech giant has been hosting MSMEs Day on its platform since 2019. 

The MSME Day 2021 event, hosted on the Dell platform between June 18 to 27, saw a full-fledged creative campaign, advisory support for MSMEs and discounted pricing for Dell products. Its proactive approach has enabled many businesses to fix the growth bottlenecks and scale up with ease.

Adding to its initiatives for MSMEs, Dell is hosting its Semi Annual Sale offering its range of laptops at a discounted price for the sector.

Despite the pandemic hurdles and other legacy issues, Dell aims to bring the MSME sector back on the growth track and help develop its products, services and innovation culture to full potential. To achieve the same, the tech giant has come out with its Small Business Advisors who guide MSMEs in adopting tech solutions growth and scale-up.