Small doesn’t mean necessarily insignificant. India’s Micro, Small, and Medium Enterprises (MSMEs) are a case in point. The last few years have witnessed an undeniable emergence of the MSMEs as a considerable contributor to its economy. It accounts for 30% of India’s GDP, 33.4% of the total manufacturing output, and 45% of the exports.
A crucial parameter of MSME’s growing strength is that it is an integral part of the Government’s vision to become a $5 trillion economy. Further, this segment is going to play a vital role in helping the country become Atmanirbhar (self-reliant) in line with the self-reliance push of the Government’s plan to revive the economy’s from the impact of the COVID-19 pandemic.
Even as the sector continues to play a crucial role in the Indian economy, it stands to gain by digitizing its processes and operations. The industry is plagued by low adoption of digital tools and technologies. It is unable to realize its true potential by not leveraging the efficiencies offered by technologies. A recent study by YES Bank says that digital empowerment can enable the MSME sector to enhance its profits, operational efficiencies, and customer engagement.
Digital Push For MSMEs
The Indian Government has taken several initiatives to encourage the MSMEs to digitize their operations. The Government believes that the adoption of digital technologies is crucial to enable the sector to increase its contribution to the country’s GDP from 30% to 50% over the next five years.
The Government has built 18 tool rooms, located across the country, to help MSMEs learn and adopt new digital technologies. It allows the MSMEs to develop skills and expertise in the new technologies, thus making it easier for them to use digital tools for their growth. These centers also advise the MSMEs about the new technologies which might be best suited for their business. The Government hopes to increase the number of tool rooms to 153 to help MSMEs in smaller towns and cities as well. They will promote entrepreneurship by training more than eight lakh youth.
Last year, the Government collaborated with the Confederation of Indian Industry (CII) to launch Tech Saksham, a three-year project to promote technology adoption in this sector. The project is likely to help more than 10,000 MSMEs in different parts of the country. The initiative also includes a technology portal with e-learning modules to help reach around 500,000 MSMEs.
The ongoing COVID-19 pandemic seems to have accelerated the process of digitization of the MSMEs. The enterprises, across the country, were forced to quickly move to digital platforms to maintain business continuity.
Digitization is actually crucial for the survival of the sector now. The recent Financial Stability Report July 2020 says that 60% of the MSMEs are likely to struggle for survival because of economic distress. The PriceWaterhouse Coopers report says the pandemic has adversely impacted 63 million MSMEs.
Overhauling the business model to adopt digital tools will help them survive and thrive in the new normal. Further, digitization is also essential for them as their consumers are also likely to migrate their operations to digital platforms.
Massive Opportunity For Telcos
All these changes offer an enormous opportunity for the country’s communications service providers. Starting from providing basic connectivity to video conferencing to accounting packages to payments to cloud solutions, telcos are ideally placed to service this growing market. According to industry estimates, about 20% of a telco’s enterprise business revenue comes from MSME customers. The changing market is likely to help telcos enhance the contribution of MSME to its revenue.
One of the most significant advantages for telcos is that they have a presence across the country, and MSMEs are possibly using their services at a personal level. The telcos are realizing the potential in this segment and are changing their market strategy to address this market. For instance, Bharti Airtel, India’s second-largest service provider, recently tied up with Blue Jeans, part of Verizon, to offer video conferencing solutions to the enterprises. Airtel has also formed a partnership with Google Cloud to offer its G Suite, which includes Gmail, Google Drive, and Calendar, to cater to the MSME’s requirements. The company already caters to more than 500,000 small and medium enterprises in the country.
Airtel has also tied Amazon Web Services (AWS), and Jio has collaborated with Microsoft Azure cloud services to offer cloud and data center solutions to the enterprises. The MSMEs can adopt cloud solutions to enhance the operational efficiency of the organizations. Airtel has also partnered with Cisco to bring networking and connectivity solutions to the SMEs in the country.
On the other hand, Jio has only recently forayed in the enterprise segment and is targeting to get more than two million SMEs as customers Jio’s recent tie-up with social media giant Facebook is also likely to play a crucial role in its strategy to cater to the requirements of this segment. The social messaging platform, WhatsApp, part of Facebook, in partnership with Jio, through its JioMart app, is likely to bring 20-25 million small businesses online in the near future. Jio has also launched its JioMeet app to help SMEs and MSMEs conduct business meetings on virtual platforms.
“Jio’s enterprise-grade voice and data services… and cloud-based solutions… are bringing Indian SMEs from zero connectivity and zero technology… to operating with the same efficiency as large connected enterprises,” Mukesh Ambani said at the recently held Annual General Meeting of Reliance Industries, the parent company of Reliance Jio.
Vodafone Idea is offering a customized solution to SMBs from various business verticals. The operator’s key offerings include communications solutions, managed internet of things (IoT) connectivity, analytics, Wi-Fi, conferencing, and cloud telephony.
The growing technology-savviness of the MSME segment has opened up new and emerging opportunities for the telecom sector. The service providers need to come up with unique and compelling offerings at a good value proposition to appeal to small and medium enterprises. The increasing digitalization of the MSMEs will drive the country in becoming self-reliant and will help the country in realizing the vision of Digital India.