While the pandemic in 2020 had a devastating impact on businesses across varied sectors, the MSMEs took the hardest downfall. The downfall was primarily caused due to technological, capital, and scalability constraints in the market. With over 63 million MSMEs and entrepreneurs in India that can generate more than 110 million jobs, account for 48% of export and 30% of India's GDP, MSMEs hold a great significance that contributes to the Indian Economy.
MSMEs have a large influence and scope of growth only when they are technologically equipped and are well integrated into the larger ecosystem. Ministry of MSME estimates indicates that the ocean freight footprint can be doubled by MSME and can effectively increase export share by ~60%.
MSMEs have been known to adapt and change effectively according to fluctuating market trends. COVID has acted as any other barrier that influenced MSMEs to adapt to the current market status. Digital transformations are a major contributor to introducing new-age-tech-based platforms with the onset of a new-age economy. It has also been able to influence the MSME ecosystem to bring in a new market, technology, and improved infrastructure.
Digital Impact on MSMEs
MSME sector has grown immensely in the past decade, even without incorporating technology for its growth. But in the ever-evolving market scenario, it becomes important for companies to ensure their visibility in the market. Multi-channel distribution models, high-service requirements, multiple stakeholders are among the common reasons for companies to ensure timely delivery of goods and services with the highest priority to quality.
Operational capabilities can be scaled with uniform transparency across the supply chain once MSMEs feature integrated operations with new-age-tech-based platforms. MSMEs that are digitally empowered are known to generate twice the revenue growth as compared to traditional offline SMEs, based on a Google-KPMG study. MSMEs can plan/monitor logistics or create cross-departmental workflows with tech companies that provide best-in-class technology and domain expertise. This helps MSMEs to improve collaboration, enhance execution, and incur profitability.
Tech-Enabling and Digital Adoption
A Dun and Bradsheet Survey highlighted that operational costs were reduced by 54% and 51% of SMEs experienced enhanced competitiveness by digitizing the daily activities during the pandemic. Embracing technology is an important aspect that needs to be considered by MSME and make it an integral part of their business line as the marketplace evolves. Even though technology may be democratized, it is believed that SMEs can add $158 billion - $216 billion to India’s GDP by 2024 with the help of digital adoption. This can be witnessed with 61% of the SMEs rise to pre-pandemic levels shortly.
Harnessing Deep Technology
Technology can do wonders for a small business and can effectively influence the experience of the end customer. Deep technologies like Augmented Reality, Artificial Intelligence, Machine Learning, Data Intelligence, and much more can greatly empower small businesses if harnessed appropriately. Adoption of these new-age deep technologies by small businesses helps leverage a competitive edge with large businesses.
Technology is ever-evolving and is an effective tool for MSMEs to exponentially enhance business strategy and expand business avenues. The large-scale adoption of these technologies by MSMEs can surely influence the Indian Economy and garner varied opportunities in the market.