SMBs Leveraging The Tech Advantage: Trends And Challenges For 2020

India has been one of the fastest-growing economies in the world over the past decade. Much of this GDP growth has come through the right and necessary push from small and medium businesses in India.

According to a Zinnov report of September 2019, SMBs contributed to 40% of India’s GDP, 50% of the exports and provided employment to over 180 Mn in 2019. Thanks to these contributions, the SMB sector has been known as the backbone of the Indian economy for years.

While India rides and benefits from the tech wave in the context of consumer services, fintech, digital media and ecommerce, the tech disruption is also helping boost the prospect of SMBs. From the digitisation wave, SMBs are likely to see 2x profits, be able to provide 5x more jobs and also sell across borders according to a study by KPMG.

With the proliferation of new-age technology in India such as AI, machine learning and more, SMBs stand to gain much in terms of scaling up their operations and products. From fintech players providing easy ways to file taxes and manage accounts to HRtech players simplifying employee management, to automation making manufacturing and supply chain more robust—technology is helping SMBs grow and scale-up across operations.

While many startups such as KhataBook, NowFloats, SellerApp and others are helping SMBs leverage tech for their operations, the major push has come from tech giants such as Google, Amazon, Dell and others. These giants are proactively helping small businesses with computing products, software solutions, cloud solutions, personalised partnerships and more. Additionally, thanks to their wide business network and international presence, tech giants are able to offer SMBs greater reach and improved deal flow.

SMBs And Tech Adoption 2020: Are We There Yet?

India is said to have over 75 Mn SMBs out of which 70% or 52 Mn have claimed to be digitally influenced—i.e. having access to PCs or smartphones and internet connectivity—in the Zinnov report.

Among these SMBs, the most widespread use-case is for payments through UPI or wallet-based apps. The report reveals that almost 21 Mn SMBs in the country are actively using digital payments, while only around 16 Mn SMBs make use of online discoverability—websites, social media and more.

While speaking to Inc42, SMBs revealed more about the challenges in adoption and the trends they are seeing in the market. While some SMBs have gone beyond just laptops and leveraging digital payments, others have stayed behind, not being able to cope with the changes that tech adoption brings in.

Bharath Chordia, manager, IT and finance, Studio Y, a fashion and retail business in Bengaluru, which has been operational for over 3 years, said that he saw the importance of technology in a small business early on, which was a key factor. “Right in the initial few months of our journey, we understood the importance of technology. We started working towards how we can adopt technology and make it easier for us to fulfil orders, send or receive them from the warehouse and retail store and more,” Chordia told Inc42.

Chordia conducted most of the business online before moving to offline and setting up retail stores in Bengaluru. Studio Y has leveraged tech solutions to enable seamless operations and to scale-up more efficiently, the manager explained.

While there are many businesses such as Studio Y, blending online and offline presence, there are others that have not yet been able to put tech to good use for their businesses. Traditional and family-run businesses seem to make up the bulk of this segment.

Running a family-owned business in Delhi, Shivane Pahwa, head of marketing at SOL COLLECTION, explained, “When you think about adopting new tech or undertaking a new investment, you have to consider a lot of things, such as the feasibility of the investment, how it will affect the business or how is it making the current processes more efficient. And of course, putting a lot of money into a tech that you don’t understand is also not possible for SMBs.”

This is where the role of a tech giant becomes all the more important. Not only do the tech giants offer direct and indirect tech support, but also provide access to services and products at a cheaper rate to enable faster adoption and not damage the margins in a small business.

Can Tech Giants Solve SMB’s Challenges?

Pahwa told Inc42 that labour-intensive businesses in the sector have troubles adopting and implementing the right tech as they have to consider the various levels of impact on the management and employees. Cookie-cutter tech approach that ensures smoother implementation may not fit well in actual day-to-day operations and custom implementation is capital intensive. More often than not, these businesses lack the right tech talent to understand how to customise each tech solution for their need.

Additionally, thanks to the cost as well as the complexity of the tech, SMBs are further hesitant to adopt it. SMBs told us that most such businesses are unable to grasp the benefits of tech, let alone use them. And this is exactly the pain point that tech giants are looking to solve.

With tech giants supporting young startups and SMBs, the struggles of adopting and leveraging tech are slowly being solved and countered.

“We have seen a lot of advancements and help from the tech giants, though I am yet to experience the same in my field. I know many people that are today taking their help to solve the needs of their business,” said Pahwa.

Giants such as Dell, with their understanding of the pain points of SMBs over the past decade, have come up with various initiatives and ways to help and support their growth. Besides hardware and software solutions, SMBs can leverage dedicated Small Business Advisors and get access to a one-stop-shop platform for all tech requirements. It has also rolled out a new budget offer for SMBs, providing them with free Zoho subscription, 10% cashback and more with its Vostro 5000.

Additionally, the SMB advisors in Dell’s portfolio ensure that clients and customers are aware of the implications of adopting every tech solution and that the business is using it in the right manner for its use-cases. As more such tech majors join the SMB support ecosystem, the expectations of small businesses are changing and tech complexities are likely to be solved. In fact, with increased adoption, the challenges will evolve and become more advanced.

The year 2020 has begun on a positive note for the SMB ecosystem with major announcements from most companies about their focus on SMBs. Will this see a change in tech adoption and integration?

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