Tech savvy SMEs to lead from front

The increasing awareness and adoption of new production and processing technologies by the small and medium enterprise (SME) segment is likely to account for more than one third contribution in the total information technology (IT) spending of India by 2015. This had been revealed by an advisory firm Zinnov, in its study titled 'Indian SMB ICT Adoption Insights' earlier this year. Usage of technology has been proven revolutionary in modern businesses as they result in the structural transformation of the enterprises.

SMEs are considered as engines to economic growth of a country. Adoption of technology by them will not only promote their businesses but will also create new opportunities for employment thereby mounting country’s economy further. Moreover, the technology usage will not only make them spirited, but will also build their confidence to produce high added value products and develop competitive strategies within a business, regionally and internationally. Now-a-days Internet presence has become pre-requisite for the growth of the global businesses.

SMEs across the world are using Internet can as an effective business channel. Indian SMEs are also using Internet as a medium to grow their businesses. The firms use Internet to enhance internal and external communication, expansion of markets by breaking geographical boundaries, export at low costs and provide support to customers. Furthermore, Internet usage also provides them to triumph over the disadvantage of being small in size to reach customers especially in international markets.

The advanced SMEs are spending heavily on tools like PCs, Internet and website in a view to get prepared for the growing competition. Zinnov's study on the present state of IT adoption in the SME segment in India pointed out that out of current 50 million SMBs present in the country, 10 million small and medium businessmen are technology-ready. The trend of IT adoption by the Indian SMEs is expected to undergo upward trend in future.

The study offers a thorough analysis of the different opportunities; challenges and available scope being connected to IT spending and technology adoption in the sector which may take SMEs' contribution to over one third of the total domestic IT spend by 2015. According to the study, the entire domestic IT spending is likely to increase at a CAGR of 12 per cent and may cross $36-billion mark by 2015. In the same fashion, SMEs will grow at a CAGR of 15 per cent and will contribute $15 billion by 2015. The 10 million techno-ready SMEs have put an end to the traditional pen & paper business culture and preferred the adoption of technology, citing business growth. The study estimated that currently 5 lakh Indian SMEs have websites and 2 million SMEs have Internet access.

In addition, SMEs' progressive interest in the adoption of PCs ensures the growth of the sector. Currently, 4 million Indian SMEs are using PCs which is likely to increase at 30 per cent from 2011 to 2015. Although, the SMEs are acknowledging the power of technology and realising that technology adoption is essential to stay competitive in a fast paced global scenario, but there are some challenges which are required to be eliminated in order to uphold the growth rate. The main roadblocks faced by the Indian SMEs comprise insufficient IT knowledge, finances and affordability, accessibility, ill-defined return on investments, dearer technical support and poor physical infrastructure. There is a need that government and industry should come together and address these challenges to drive IT adoption in the manufacturing sector. According to a latest report generated by International Data Corporation (IDC) - India IT Market Overview Report – 2012, the domestic IT spending is expected to grow by 16.3 percent by the end of 2012 notwithstanding the factors like unpredictable economy, pricing pressure and falling rupee.

India is witnessing a phenomenal increase in SME spending on IT. 38% of Enterprise IT spending in 2011 was by the SME segment. The proportion is expected to grow to 43% by 2015. Moreover, the overall IT market is likely to increase to 43.57 billion USD in 2012, up from 37.46 billion USD in 2011. Despite lesser than expected GDP growth figures during the last fiscal, India still commands a high growth rate, following China among the BRIC countries. In order to revolutionise the SME sector with the adoption of technologies, the government should come forth with new measures like additional investment in information technology, e-business and new business models in order to provide friendly environment to support and help SMEs to better use information technology and increase the countries competitiveness, productivity and growth.