IndiaMART Partners with XLRI for MAXI Fair 2014

The marketing association of XLRI popularly known as MAXI is proud to host its flagship consumer research event, MAXI Fair on the 18th-19th January, 2014. We have been conducting this event for over 3 decades now, with this year’s edition being our 35th anniversary. This is also the Biggest Marketing event in India & the biggest event on the XLRI Calender.

MAXI Fair as it is more popularly known, is an innovative tool for conducting market research and consumer behavior pioneered by XLRI. The fair is organized, supervised and conducted by MAXI – the Marketing Association of XLRI. Games and events are designed to surrogate actual research questions.

This helps us to elicit unbiased and accurate information about consumer perceptions and preferences. Born out of the vision of one of XLRI’s most eminent professors Dr Sharad Sarin in 1979, the novel concept of the Marketing Fair is today an accredited marketing research tool. This brilliant and innovative method goes beyond the blind testing concept and uses a carnival milieu to conduct meaningful consumer behavior research. The underlying concept involves designing games and events as surrogates to actual research questions to elicit unbiased and accurate information from customers regarding their preferences and perceptions. The consumer is attracted by the fun element and enjoys the series of carefully designed games, unaware that his responses and actions are being tracked.

The concept has received great acclaim both in India and abroad. Over the years, stalwarts such as Philip Kotler of the Kellogg School of Management, Theodore Levitt of the Harvard Business School and Dr. Philip Adler of the DuPree College of Management, among others, have all personally commended the unique concept. The concept has been presented at several US universities and has met with great success.

The University of Rhode Island has conducted this fair with very successful results. Several Indian Business schools such as IIM Ahmedabad, IIM Lucknow and MDI have adopted the idea and conduct variants of the original marketing fair idea.

This innovative concept finds supporters and followers in the corporate world. Several Indian and Multinational corporate giants have presented research problems to XLRI for study. The greatest testament to the power of this MR tool lies in the fact that these companies have based their strategic business decisions on the research results which have emanated from Maxi fair.

This year’s event would see performance by Ahsaan Qureshi of the Great Indian Laughter challenge fame .People of Jamshedpur would get to attend Workshops on diverse topics such as paper quilling,origami,portrait sketching.Fancy dress competition for kids and an online marketing quiz for students in association with Mynewsstudio have been planned for this year. For the young college going and young working people we have events like paintball, zorbing, a food festival, and other such features.

The event this year is being partnered by ITC, HUL, Star India and Airtel. The event also sees participation from Pepsico, GoAir, Tata Steel, Peter England, Gift XOXO. Our media partners for the event are IndiaMART, The Pioneer and Radio Dhoom.

SME Knowledge Interchange – India SME Forum

The Indian SMEs are a vibrant and dynamic community that have contributed immensely to India's growth and stability. They have been prevented from realising their full potential due to various external factors such as liquidity crunch, absence of technology, access to markets etc.

The most glaring issue that the Indian SMEs face today is access to capital, avenues for which are very limited. To address and discuss this, SBI in association with Business Standard along with its B2B marketplace partner IndiaMART have come together to present SME Knowledge Interchange. It is a 25 event series and is aimed at driving the interest of SMEs with respect to banking and finance.

Through this forum, experts from finance and banking sectors will discuss issues and strategies to lead SMEs towards empowerment.

In order to ensure that the SMEs gain maximum out of such interchange, SME Knowledge discussion will also focus on related topics catering to Finance with Debt which will highlight:

• State of SME banking as Priority Sector Lending Fiscal Integrity, Financial Discipline and Ratings.

• Central and State Government Incentive Programs and subsidies & Collateral free borrowing from PSU banks.

• Raising finance from the Banking and Non Banking Channel – (Do’s and Don’ts)

The other discipline will highlight Financing with Equity concerning areas such as:

• Raising Equity as Seed Capital, Private and Venture Investments: Issues and opportunities.

• Raising Equity Issues and listing on SME Stock Exchanges, the Road Ahead.

In its first edition, the forum will focus on clusters such as F&B, refined petroleum products, chemicals, rubber and plastic industry, non-metallic mineral products, machinery & equipments in the markets of Aurangabad on 6th August 2013 followed by 11th August 2013 at Vishakhapatnam tapping fisheries, mining coffee, fabrication, packaged drinking water cotton textile, woolen, jute, horticulture rice mills, coconut processing unit etc.

About India SME:

The India SME Forum, a not for profit initiative was formed in 2011 to propel the SMEmovement, by nurturing entrepreneurship and support innovative, globally competitive SMEs in India. The initiative was accorded Support by the DC (MSME), Union Ministry of Micro, Small and Medium Enterprises, Government of India on 28th August 2012 vide their letter no. 7(35)/2012-MSME Poll, received from the Office of the Development Commissioner.

“India Sme “The propellers of the Knowledge interchange initiative Enjoys support of over 72 Indian industrial Associations & manufacturers federations All Initiatives are supported by Ministry of Micro, Small and Medium Enterprises, Government of India which captivates the standing and ascendancy.

Detailed information on the contents, mentors and speakers is available on our website: www.indiasmeforum.org.

Industry status to gems & jewellery sector may help SMEs to get bank loans, says Bachhraj Bamalwa of All Indian Gems & Jewellery Trade Federation

Expressing discontentment on government's plan to increase the import duty on gold yet gain from 4% to 5%, All Indian Gems & Jewellery Trade Federation's Chairman Bachhraj Bamalwa, said the move will encourage smuggling activities and there are possibilities that the income generated from these activities might be used in various illegal activities, thereby threatening the national security as well it will destabilize the overall economy of the country.

 

Besides elaborating on current status and opportunities available in gems & jewellery sector for SMEs, he also suggested various measures to promote country's gems and jewellery sector, in an exclusive interview.

 

 

 

Please shed some light on the current status of Indian Gems & Jewellery Industry, which has been declared as 'a thrust area of exports' by the government?

 

Bachhraj Bamalwa: The global recession and economic slowdown has its impact also on the India's gems and jewellery sector. The Indian government is struggling with the widening trade gap. Gems and jewellery is one of the most important sector and is the 2nd or 3rd highest foreign exchange earner for the country. So the government has declared it as a thrust area for export to reduce its trade gap. Despite slowdown in USA and Europe, we hope to achieve a 10% growth in the sector.

 

 

 

According to a report released by GJEPC and KPMG, the global jewellery industry has the potential to grow to USD 280 bn by 2015. What is your take on this?

 

Bachhraj Bamalwa: It is our objective to reach USD 280 billion by 2015. But considering the current economic scenario, it looks quite difficult to achieve the target but we hope things will prove in coming years and we will be able to close to our target.

 

 

 

The gems and jewellery industry in India is a fragmented one. In how much time do you think it would become organised?

 

Bachhraj Bamalwa: At present, only 15-20% of the industry is organized. At GJF we are desperately trying to organize it since past 5 years or so. It is an herculean task given the fact that India is a huge country with varying cultures in different parts of the country and mainly the jewellery is handcrafted and it reflects the culture and tradition of that particular region. With little help from the government we hope it could be organized in 20-25 years.

 

 

 

Kindly mention some bottlenecks plaguing the industry?

 

Bachhraj Bamalwa: Lack of formal education for artisans, lack of infrastructure in manufacturing, poor working environments for artisans, the negative approach of govt towards the sector.

 

 

 

What are the growth opportunities for the SMEs available in the gems and jewellery industry?

 

Bachhraj Bamalwa: The sector is capital intensive requiring comparatively large capital with low margin. The sector lacks industry status which is a resistance in getting bank loans. But the sector holds huge potential and SMEs have huge scope and have many opportunities in near future.

 

 

 

Signalling a new setback for the gems & jewellery industry, the government is planning to raise the import duty on gold from 4% to 5%. According to you, how the move will suppress the industry's growth?

 

Bachhraj Bamalwa: Import duty on gold was increased from 1% to 4% prior to and in the budget 2012-13.The smuggling of gold was practically nil before this period but have increased ever since the import duty has been increased. Gold worth Rs 942 crores was seized during a brief period of three months Further increase in the import duty will encourage smuggling and the income generated from these activities might be used in various illegal activities, threatening the national security as well it will destabilize the overall economy of the country. Further, despite a steep hike in the import duty approximately 600 tonnes of god was imported into the country during the 1ST three quarters of 2012-2013 and the country’s trade gap has also not reduced and the governments foreign exchange reserve has also came down.

 

 

 

A ban should also be imposed on banks selling gold coins. In most cases the banks forcibly sells gold coins to its high net worth clients and the gold keeps on lying idle with the consumers for years. Coins are not same as jewellery and hence coin sales are similar to investment options and consumption is recommended to be reduced.

 

 

 

What measures should government, in terms of pragmatic policies, to sustain global competition?

 

Bachhraj Bamalwa: Setting up jewellery parks in major manufacturing areas like West Bengal, Kerala, Rajasthan, Gujarat etc.

 

 

 

The government should also encourage, enact and speak positively on gems and jwellery sector. The sector is already facing the problem of sluggish economy and the skilled artisans are fleeing from the industry. I also request the government to ban trade in ETF, e-gold, and Gold mutual Funds which are backed by physical gold till such time the current account deficit of the country is reduced to a satisfactory level.

 

 

 

What is the outlook for the sector in the next 6 months?

 

Bachhraj Bamalwa: With wedding season in place the next 6 months looks good provided the govt do not shock us with some negative news in budget 2013-14.

 

 

 

What are the key priorities of GJF. Please share your roadmap for the remaining quarter of the current fiscal (2012-13).

 

Bachhraj Bamalwa: Liaison with the government for some pending issues, converting GJF into a National Council under ministry of commerce, creating awareness among smaller jewellers to be organized, creating infrastructure for the formal training of Artisans.

Limited access to credit, infrastructure facilities affecting small enterprises in Handicraft industry, says Amita Puri of AIACA

In a bid to understand the technicalities and challenges faced by Micro, Small and Medium Enterprise engaged in Handicraft Industry or Craft works, Amita Puri, Executive Director of All India Artisans and Craftworkers Welfare Association (AIACA) exclusively to capture her views on the various opportunities for the segment and AIACA's aim for the promotion of India's handicraft industry.

 

 

-What are the obstacles faced by artisans and small manufacturers to meet the high industry standards?

 

Amita Puri: Artisans have limited access to credit, infrastructure facilities, or even information about market demands resulting in their marginalization of the artisan and their reduced capacities to access resources or meet specifications. Besides, insufficient investment for the skill development is also a major challenge.

 

 

 

-How do handicraft fairs and exhibitions help micro and small entrepreneurs?

 

Amita Puri: Fairs and exhibitions provide a direct platform for sale of goods (direct market channel), leading to a strengthening of livelihood especially for small entrepreneurs who cannot invest in a space of their own. They also provide a direct connect with consumers leading to a better understanding of current trends and preferences; in addition to providing an opportunity to connect with other entrepreneurs in the same field.

 

 

 

-What are the future goals of AIACA for the elevation of small craftworkers and artisans?

 

Amita Puri: AIACA seeks to touch lives of craft workers by:- a) Policy advocacy for a favourable environment towards enterprise growth and enhancing livelihoods of craftworkers
b) Providing capacity building support to help producer groups and enterprises establish and run viable businesses that are able to compete in the mainstream economy.

c) Through the 'Craftmark Initiative' under which artisans are able to differentiate their products as hand-made and therefore improve their incomes.

 

 

 

-Finance is a major challenge to most Micro, Small and Medium Enterprises. What kind of approach should be taken up to moderate the situation in this particular sector?

 

Amita Puri: It should be tailored to the needs of the enterprises and be easily accessible. Also, sufficient linkages and awareness should be created for the enterprises to avail of the same.

 

 

 

-Chinese goods are giving tough competition to Indian goods. Please share your inputs on this.

 

Amita Puri: The Chinese government has managed to provide an environment and physical infrastructure conducive for the growth of the industry, which is still absent in India to a large extent. In addition, the mass production leads to economies of scale and lower prices resulting in a virtual swamp of the market by Chinese goods. Therefore, the government needs to do more in terms of regulatory provisions to promote small scale enterprises and in terms of availability of infrastructure. It also needs to create disincentives and enforce them for dumping of goods by other countries.

 

 

 

-Do you think that developing handicrafts as an organized sector will add value to the current status?

 

Amita Puri: As a result of being organized, it will definitely affect the sector’s ability to ask for, and influence environment favourable to its growth. It will also enhance the sectors ability to access resources. Moreover, with regulations pertaining to organized sector applying here, it will support an enhancement in the artisan’s earnings.

 

 

 

-Despite the growth of handicrafts industry in India, the average earnings of the craftsmen when compared to other fields is very low. Hence the younger generation is moving onto other fields with only the elder craftsmen left over. Comment

 

Amita Puri: It is true that the remuneration to craftspeople is low as compared to other professions which toppled with other issues is leading to migration from this sector. There is a strong need to use an approach that knits together craft techniques, market forces, culture, environment and the aspirations of the craft workers to create regular work and increased income levels for the artisans. A sense of dignity and pride in their skill will help not only to retain existing but also grow the number of craftspeople associated with the sector.

 

 

 

-What are the policies and measures needed for the upliftment of Handicraft industry?

 

Amita Puri: A higher financial allocation in the budget for its activities will help this sector. Ensuring regular supply of raw material at reasonable rates, easy access to finance, technology and information, capacity building to ensure skill development, strong marketing support with separate branding for the sector, proper implementation of government schemes, tax structures and regulatory policies that facilitate growth would all lead to ensuring a healthier industry.

Money matters: Basic cost cutting strategies for start ups

In wake of global economic uncertainty as well as financial recession operating a small enterprise may appear to be a daunting task. Under such circumstances, start ups are left to confront with the necessity to watch over costs to remain competitive, maintain profitability, or many a times even survive.

 

While, the market is flooded with innovative and creative concepts and great business models, without efficient cost cutting strategies, many challenges will appear in the long run. Hence, integration of efficient cost cutting measures becomes crucial to handle the drying cash flows.

 

 

 

 

Financial Management:

 

Dwelling on the current economic scenario, managing expenses becomes imperative for sustenance of the enterprise. The added competition in the environment also works like fuel to the fire.

 

 

 

Keeping constant assessment on the items that affect the liquidity of the business, like the level of debtors, stock of raw materials and finished goods can go a long way in managing finances. 

 

 

 

Managing a way to have optimum working capital rather than minimum or maximum working capital can works well for processing the cash flows.

 

 

 

Maintaining a record of financial transactions on a regular basis; at the same time maintaining relevant documents and preparing financial statements from time to time is essential.

 

 

 

 

Analyzing the financial statements:

 

Systematic analysis as well as understanding financial issues will have a far reaching affect for start ups. As it will ensure that the businesses are well informed regarding assimilation of developing trends, early warning signs, also ideas to reach out to wider areas.

 

 

 

 

Cloud computing:

 

Cloud computing holds key to minimising costs as well increasing profits for the small enterprises. It includes movement of localised software and digitized files to a cloud available over the web, it will ensure major savings by removing the need to upgrade the hardware and software frequently.

 

 

 

It is efficient technology which is also available on multiple devices.

 

 

 

 

Credit management:

 

Developing proper credit management is very important tool for the SMEs as it not only shrinks the unnecessary costs and avoidable debts, but can be a very important way of branding for the small business.

 

 

 

While offering credit is an important part of the start ups, it does not associate with the quality of services provided. Hence, it is advisable to work on a low-cost but good quality credit system to maintain business.

 

 

 

 

Future plans:

 

This is very important for any business to nurture and grow. Planning future can actually enable well established system, ensuring cost management in avoidable areas. Drafting out a proper plan will make sure that there are no unnecessary cost escalations, at the same time; it leaves enough room for charting out effective strategies to counter any uncertainties.

 

 

 

 

In the end, every entrepreneur starts with a different idea and business model; but it boils down to how well they are able to manage their business.

Not just hiring, retaining talent is crucial too

While on one hand the organizations are coping with the global economic uncertainties, the other side of the coin shows a dearth of good talent in the marketplace. Under such circumstances both hiring and retention of talent becomes vital for the survival of any firm.

 

As we all know an establishment is made by its people. When these individuals get together and collaborate as a team the organizational vehicle functions in a smooth manner. Any glitches or slowdown means that the vehicle either stops functioning or requires more push to function. In contrast, like a well-oiled vehicle when the team works in a better manner it ensures better output. The story remains similar of organizations of any size. For smaller organizations and start-ups, getting the right people and retaining them becomes even more crucial due to the scale of their operations. Any gap which is not filled in time can lead to immense lose in productivity and profits. Research shows that companies are losing top talent by not adopting some basic trade-tricks.

 

 

 

 

Communication

 

Communication tops the list due to obvious reasons. Many employees are unable to understand their role and responsibilities as they struggle to clearly understand their work expectation. A proper understanding can be achieved through two way communication between the employers and the employees. Two-way communication not only helps in clearing out doubtful situations, it also enables employees to freely share their views and opinions which can be beneficial for the growth of the firm.

 

 

 

Motivation

 

We all know that motivation is intrinsic to every activity and plays an extremely vital role in maximising employee productivity and efficiency. This in turn acts as a catalyst in the growth and development of the company or the enterprise. Therefore, It is imperative for any organization to constantly work towards keeping their employees motivated.

 

 

 

Reward & Recognition

 

Rewarding and applauding are perhaps the easiest yet the most forgotten means of employee motivation. Recognition brings with it a sense of ownership and encourages employees to work towards their set goals. It has been observed that team recognition enables groups to bond better and create a positive environment. It works as an esteem booster and makes employees liable for their work and subsequent growth.

 

 

 

It is important to note that contrary to popular belief, reward need not always be in terms of incentives or allowances. A simple pat on the back or a good job done mail can do wonders for an individual or a team.

 

 

 

Understanding employee aspirations & goals

 

For an establishment it is important to recognize the goals and aspirations of its employees. By recognizing employee ambitions, the firm can create a sense of loyalty and make individuals feel part of the bigger establishment. People need to know that their future matters to the firm and its management for them to stay back and put in their best in their work. In addition it helps if the goals and aspirations of the employees can be matched to those of the establishment.

 

 

 

Empowering Employee

 

A number of times firms give their employees the responsibility to do some work sans the authority. Empowering the employees to make certain decisions as well as take charge for getting the expected outcome is essential. Merely by delegating work and not ensuring optimum freedom can lead to management disaster. Empowering employees makes them feel like an integral part of the working family and encourages them to go that extra mile. Various surveys prove that employees that are able to have control over the work environment have a higher level of job satisfaction and tend to stay longer with a firm.

 

 

 

Conclusion

 

Employees are a company’s greatest asset and go a long way in making a firm successful. Building a good team can be a task but constant changes are required to ensure productivity and efficiency. Collective ideas, feedbacks and enthusiasm for work can help a business grow and succeed in today’s competitive environment. While many people naturally lead and give their best to their work in any circumstances, others require the guidance of skilled managers to lead them to growth. Employee satisfaction is related to how connected an employee feels to the firm and hence it becomes the responsibility of the management to keep employees engaged and encouraged.

SMEs need to find a niche for themselves, says Genpact's Pramod Bhasin

In order to deliver excellent services to clients and edifying a influential position in the market, the small and medium enterprises (SMEs) should focus on building real expertise, said Pramod Bhasin, the non-executive vice chairman and former president and CEO of Genpact in an exclusive interview.

 

 

Where are you right now in your business process management (BPM) journey?

 

Pramod Bhasin: The BPM journey is still in its infancy. There are a few clear reasons for this. Clients are just beginning to realize the full potential offered by companies that deliver BPM services, which one day will be bought just as you might buy manufactured parts or courier or banking services. The penetration levels into these services is still very low both in terms of usage by individual customers as well as by geography. In addition as the service providers mature and build real expertise in their chosen areas, the value they can deliver to customers will continue to increase. BPM is a relatively new science and we will be able to pioneer a new way of managing business processes for the world.

 

 

 

What are key challenges that SMEs face in the BPM sector today? What should be done to overcome the same?

 

Pramod Bhasin: The key challenges that SMEs face in this area are go to market and finding the right niche to play in. SMEs need to find a niche for themselves - there is no point trying to imitate companies many times their size but they must use their own nimbleness and speed and ability to serve a unique set of customers really well, to carve a place for themselves. Going to market and reaching customers across the world is also expensive and hard to do for people without that experience - so partnering with businesses or individuals who are based where the customers are can really help accelerate the process of finding customers and working with them over the long term. This is not an area where SMEs, even though they are strapped for cash, should try and save expenses- this is compulsory and needs careful thought and attention.

 

 

 

What kind of opportunities exist for them?

 

Pramod Bhasin: The opportunity for SMEs in the area of BPM is enormous - there are so many niches and areas of expertise that can allow them to build a business and deliver excellent value and information to customers - such as Analytics, or Supply Chains, or Legal Support or SOX compliance. There are many more areas which provide really compelling opportunities. SMEs must really focus on building real expertise so that they can deliver value to clients which customers may not be able to do themselves.

 

 

 

What importance a specific marketing strategy holds in a business?

 

Pramod Bhasin: SMEs must have very focused marketing strategies built upon a clear set of expertise or niche services they plan to offer, given limited funds you have to optimize the strike rates with which you win clients and cannot afford to be broad and generic in their marketing efforts. However all marketing has to be built on a foundation of real value - if not it can't sustain any momentum. Building real expertise and then picking customers who can really use your services and then delivering excellent service to them can be extremely rewarding. Finding innovative ways to get to market can become a real differentiator as they compete for customers.

 

 

 

How do you observe the growth of Indian economy at the moment?

 

Pramod Bhasin: The overall lack of growth of the Indian economy has really hit the SME sector hard but the situation is now improving and will give rise to plenty of opportunity be it in the area of skills or energy or healthcare and many more. I do think the worst is behind us as the Governmentt seems to be getting its act together. All companies across the world will increasingly focus on the SME sector - in the past, it has been the cost of acquiring each new customer and the relative lack of profitability from the SME sector that has held businesses back - but now with the advent of 4G, social media and increased digitization this will change.

Govt's reformist role in textile industry

The small enterprises' prevalency in textile industry is second-highest after agriculture. It has generated huge employment for both skilled and unskilled labor. The industry does not only holds importance in terms of employment generation, but also hold weightage in terms of output, investment. Industry's vital role in the nation's economy can easily be judged with its contribution margins as it accounts for nearly 14 per cent contribution to industrial production, 4 per cent to country's GDP and 16.63 percent to total export earnings, 9 per cent of excise collections, 18 per cent of employment in the industrial sector and more importantly it employs around 35 million people.

 

Going with reports, it has been estimated that one of every six households in the country depends on textile sector, either directly or indirectly, for its livelihood.

 

 

 

Earlier, the textile industry was highly unorganised industry, SME-dominated and had limited scope for growth due to the conservative government policies. But a drastic transformation has been observed in the industry dynamics after dismantlement of the Agreement on Textile and Clothing (ATC) in January, 2005. ATC was aimed to secure the removal of restrictions applied by some developed countries to imports of textiles and clothing.

 

 

 

The break down of ATC had opened tremendous growth opportunities for India and cleared the deck for the global players to enter India.

 

 

 

Investment Scenario

 

The Indian government allows up to 100 per cent foreign direct investment (FDI) in the textiles sector through the automatic route. In order to attract investment in the sector, the Ministry of Textiles has also instituted a FDI cell at the Economic Division.

 

 

 

Besides, investments in various schemes namely Technology Upgradation Fund Scheme (TUFS), The Scheme for Integrated Textile Park (SITP) and Integrated Skill Development Scheme also speak a lot about government's considerations towards the growth of the sector.

 

 

 

Technology Upgradation Fund Scheme (TUFS) - The TUFS provides plan support for modernization of textiles industry in the form of interest reimbursement and capital subsidy. It has been one of the popular schemes among the sectors like spinning, weaving, processing, technical textiles, jute, silk, garmenting, cotton ginning, wool and powerlooms. Under the scheme, the government offers subsidies to the industry for modernisation by installing new machinery, among other things.

 

 

 

Scheme for Integrated Textile Parks (SITP) – With an aim to provide world-class infrastructure for textile industries, the Indian government has envisaged the Scheme of Integrated Textile Park (SITP). SITP, which was formed with the merger of two schemes namely Scheme for Apparel Parks for Exports (APE), and the Textile Center Infrastructure Development Scheme (TCIDS), aimed to provide infrastructure facilities for setting up textile units in potential growth areas matching with the international social and environmental standards.

 

 

 

Integrated Skill Development Scheme (ISDS) - The Textile Ministry has launched ISDS in 2010 as a pilot scheme for two years with an objective to cater to skilled manpower needs of textile and related segments through skill development training programmes. The scheme envisages participation of training institutes within the Ministry and private sector as implementing agencies. The scheme has two Components– Component-I for training Institutes within the Ministry and Component II for private sector. The average cost per trainee to be borne by the government is limited to Rs 7,300 for Component-I and Rs 7,500 for Component-II. The implementing agencies directly receive funds under the scheme. The scheme has covered 24 states in all the sub-sectors of Textiles and clothing.

 

 

 

So far, the governments has sanctioned Rs 594.84 crore for 30 projects targeting 5.87 lakh trainees. As on October this year, 74094 persons have been trained under the scheme. Moreover, in the 12th Five Year Plan (2012-17), the ISDS has an allocation of Rs 1,900 crore and seeks to train 15 lakhs textiles workers.

 

 

 

Textile SMEs & Challenges

 

Indian textile SMEs are presently inundated with various problems like obsolescence in technological terms, low labour productivity and insufficient raw material. In today's scenario, technological upgradation is important anyway, but the entry of international players in the textile sector makes its a mandatory choice for SMEs in order to achieve global competence.

 

 

 

Besides, the small enterprises in textile industry has the lowest investment to labour ratio and are capable to provide employment to the poorer sections of society. Some practical solutions from SMEs-end are highly required in order achieve global competence. The industry is highly affected by variables like policy, technology, operations and the market.

 

 

 

Although, the government is serious towards the upliftment of the sector, but should put some extra effort in the promotion of textile SMEs, like:

 

 

 

(i) Policy initiatives in the sector are the need of the hour. The government should device long-term policies for refunding taxes and should provide tax exemptions on imported goods and machinery to help both SMEs and large players.

 

 

 

(ii) Deregulation of the garment sector is also of vital importance as it also help small units to grew and increase benefits in terms of high-margins, thus making investments in technology and marketing more feasible.

 

 

 

(iii) FDI in the Indian garment retailing market should also be increased which will provide the much-needed boost to the Indian fashion garment market along with stimulating competition among domestic and international players.

 

 

 

(iv) The government should provide low interest loans and financing schemes to the SMEs.

 

 

 

(v) Last but not least, the government should come up with a indigenous infrastructure so as to increase the competitiveness of textile SMEs.

Automobile dealers should consider to improve vehicle penetration in rural areas, says Mohan Himatsingka of FADA

Expressing confidence on the growth prospects of Indian automotive aftermarket industry in the years to come, Mohan Himatsingka, president of Federation of Automobile Dealers Associations (FADA) explored various opportunities and challenges available in the Indian automotive market during an exclusive interview.

 

He elaborated on the issues like opportunities available in automobile dealership business, green tax in diesel cars, burgeoning spurious auto parts market in India and FADA's proactive role to boost the automobile dealership market.

 

 

 

 

What is current status of Indian automotive market ?

 

Mohan Himatsingka: The situation is uncomfortable. All OEMs had been ramping up their capacity, thinking that the industry will grow at around 15 to 17% over last year. With virtually flat growth, suddenly we find that there is more production than sales and in turn either the inventory of manufacturers are increasing or they are reducing their production. Similarly with dealers inventory is also increasing and also, because of pressure from competitive Co-Dealers / Manufacturer, selling expenses and discounts are also increasing which in turn is eroding the dealership’s margin.

 

 

 

Many automobile dealers now find that one dealership of a product / company or only one enterprise dealing in automobile business will not be sufficient to take care of their social status and either they are switching from these businesses or are adding more businesses to their dealerships.

 

 

 

Manufacturers and dealers are now required to learn and prepare themselves for a situation where sales of vehicles alone will not keep them economically viable. Now Dealers has to undertake virtually all allied activities and have to put serious efforts in developing allied business for survival. This industry is currently passing through troubled period where dealer will have to learn to increase their delta profit from all other activities other than sale of vehicle, they will also have to ensure that profit from other activity of dealership continuously increases apart from the improvement in margin on vehicles. I foresee a lot of consolidation in near future among the dealership fraternity like larger dealership will be opening up more branches, so they cover their territory better and small dealership will be closing down their set up, if OEMs does not create support system /hand holding system in their favour.

 

 

 

What role FADA plays to help auto dealers in boosting profits. What sorts of training and consulting services FADA provides to the dealers for healthy growth ?

 

Mohan Himatsingka: FADA is National Body of automobile dealers with prime objective to protect their interest and ensure healthy growth of automobile dealer fraternity. It had been regularly taking up the dealership profitability issue with manufacturers but has not been very successful in past, so FADA is now organizing many activities for automobile dealership, so that they remain economically viable and relevant to the society. Some of the subjects on which training is being imparted / organized in last year is described below:

 

 

 

A. Effective Management of Auto Dealership

 

B. Simplifying Finance

 

C. Improving Aftersales Profitability

 

D. Maximizing Sales

 

So that at different regions of India, dealership personals are equipped to face the challenging and changing situation and in spite of pressure from all corners, survive the down turn successfully.

 

 

 

What are the current projects being undertaken by FADA?

 

Mohan Himatsingka:

 

a. FADA is working with Society of Indian Automobile Manufacturers (SIAM) and ACMA to improve automotive related skill of nation. SIAM, ACMA and FADA has collaborated and have created automotive skill Development Council with 9 Crores budget to ensure fast improvement in automotive related skill of the nation. Training courses and syllabus are being designed for classes in ITI, few ITIs has been identified for imparting automotive related skills. This will improve the individual’s serviceability and an individual will be able to generate more revenue for himself in automobile aftersales service area.

 

 

 

b. To encourage automobile dealers to improve their performance in customer’s satisfaction from sales and services and fulfill social responsibilities towards the country as a whole, FADA has instituted award for excellence given annually. This award is an All India Award for excellence in various activities given to automobile dealers.

 

 

 

c. FADA has recently entered into an agreement with IndiaFirst Life Insurance Company, which is Joint Venture amongst Bank of Baroda, Andhra Bank and European entity. Now automobile dealers can also insure life of vehicles owners and drivers and also will be able to create awareness in the society as whole on road safety.

 

 

 

d. FADA is also studying the dealer’s satisfaction with the respective OEMs, so that manufacturers can be encouraged to adopt the best practices available in the industry on dealer’s commission, inventory, warranty policy, spare parts return, vehicle margin, spare parts margin etc.

 

 

 

e. FADA is also organizing business to business meet where manufactures of accessories, workshop equipments suppliers, gift items manufacturers, office furniture manufacturers, lubricant manufacturers, Insurance Company, finance company etc. will be able to interact directly with the dealers and negotiate to close the deal which is mutually beneficial to dealership as well as to them.

 

 

 

f. FADA is organizing training classes as mentioned above, so that the dealership’s ability to run their business improves. FADA is also organizing courses for next generation of dealership owners, so that the next generation is interested and also able to manage their family business in a more efficient way.

 

 

 

g. FADA is also organizing study tour for Automobile Dealers, so that they study, they spent time learning with the best dealers of India or outside.

 

 

 

h. FADA is also trying to ensure that the dealership agreement between manufactures and dealers are balanced. The dealership agreement at present is in favour of OEMs.

 

 

 

i. FADA Journal a monthly magazine is very informative and keep the dealership owner enlightened on recent decision of Consumer Courts, Service tax laws etc. It has published few book which are of interest to automobile dealers.

 

 

 

Do you think entrepreneurs can reap profits in auto dealership?

 

Mohan Himatsingka: Now automobile dealership business is a complex activity, an automobile dealer has to compete in sales of vehicle, spare parts, accessories finance, insurance, extended warranty, value added services etc. Every activity gives different challenge, virtually each line of business is a separate business and different competitor and the dealer has to compete with entirely different set of people. Today the automobile dealers by stand alone sale of vehicle is not in profit but to be in profit, a dealer has to undertake many of the above activities with full zeal. The dealership future will be secured and they will be in profit only if he gives one window service to customers. Now vehicle selling is buyers market, and for customers delight the dealer principal’s involvement, organizational culture and system driven approach is required. The dealership is required to consistently put in a part of revenue into expanding the business and reach, so that rural penetrations improve then only dealer can be economically viable in the long run.

 

 

 

FADA is helping new comers to learn from the experience of older dealers, so that there is an improvement for the performance and profitability of new automobile dealership.

 

 

 

What major challenges currently posed before FADA? How are you dealing with them?

 

Mohan Himatsingka: Being involved in virtually many activities simultaneously FADA is becoming the respected brand amongst the manufacturers and Government bodies. FADA has to ensure the initiatives taken by it continues and it remains relevant to automobile dealers and community as whole. FADA is the only National Body representing the interest of automobile dealers, it has to ensure that that more than 80% of the two-wheelers, four-wheelers and Commercial vehicle dealers should be its member. Seeing the diversity of our country, its geography, language barrier, size of dealership etc. protecting interest of all section of dealership becomes a challenge for FADA. A new dealership has different challenge than an old dealership. Similarly the dealership of two-wheelers has different challenge than dealership of four-wheelers. FADA has to take care of all its member and stake holders. As a FADA President I have to ensure that FADA works in the interest of all and do something more for rural areas dealership, so that they also catch up fast in sales and profitability.

 

 

 

According to CII-McKinsey report, the Indian automotive aftermarket industry may grow to Rs.370 billion by 2015. What is your take in this?

 

Mohan Himatsingka: I fully subscribe India growth story. I am confident that if not by 2015, by 2017 Indian automotive aftermarket industry will grow to Rs 370 billion. The industry is passing through bad patch of time, but this is cyclic. This cyclic down turn has come after many years, so the industry should not fear. Dealership and industry should try to consolidate and put more efforts to reach out to the customers. I would suggest that the automobile dealers should reduce their take home and invest and redeploy the money in their business in creating necessary service related infrastructure in the rural areas, so that vehicle penetration can improve in a rural area. Automobile dealers are not traders, they are rather entrepreneurs. They have many business under one banner. They should be prepared to take more challenges. Probably manufactures have shown more entrepreneurship, than automobile dealers. We have to prepare the dealership fraternity to face this challenge, so that Indian Automotive aftermarket industry grows to the desired level.

 

 

 

In your opinion is it required to put green tax on diesel cars?

 

Mohan Himatsingka: No, diesel is less polluting and less hazardous than petrol. Gradually Govt. should increase the price of diesel, so that the subsidy is reduced, instead of putting tax on manufacturers of diesel car. Govt. should ensure that badly maintained vehicle or matter more than 12 years old vehicle are condemned. They should encourage exchange policies, so that fuel efficient cars are on Indian road. This will create opportunity of business for manufacturers, dealers and also improve the revenue of Govt. Govt. should put a part of excise duly received on new cars for such exchange programme, which will ultimately reduce fuel consumption save - foreign currency and reduce road accident.

 

 

 

What according to you major reason behind the growth of spurious auto parts market. Do you think, the government should come up with a concrete policy so as to curb the growing menace.

 

Mohan Himatsingka: We find that automobile manufacturers keep the price of genuine parts very high, there is huge difference between their dealer price vrs. the price which they purchase the parts from their venders. The manufacturers should keep the spare parts margin low, so that their volume can increase. Consumers are not interested in buying bad and riskier non-genuine parts from the grey market, but when they find that spare parts manufacturers are buying the parts from the same vendors whose parts are available with the local retail shop at much lesser price, the customer gets incline to purchase such parts. Our suggestion will be that manufacturers should reduce their price of spare parts in general and particularly those parts which are related to vehicles safety. Parts needed for vehicle safety should be sold at no profit, so that at least with immediate effect, such spurious parts are out of market. They should also create awareness in the market regarding advantages of the genuine parts. Lot of money is being spent by them on advertisement the features of their car, new introduction, monthly scheme etc., a part of advertisement should also be directed to reduce nuisance of non genuine parts. Govt. has already a policy against spurious auto parts, so more support from Govt. may not be possible but NGOs who are involved in road safety should also be encouraged to campaign against spurious parts and they should also play a role in convincing general purchase for not using spurious parts.

 

 

 

Please share some of the major targets FADA aims to achieve in the upcoming fiscal (2013-14).

Mohan Himatsingka: FADA will be trying to increase its member base, so that it becomes more relevant to automobile industry as a whole. It will also coming forward in support of manufacturers during this recessionary time in getting the Govt. policies evolved in benefit of automobile industry. As a whole it will be working with banks that they should finance more and enlarge their budget for financing of cars and commercial vehicle, two-wheelers and three-wheelers to public etc.

Indian women and entrepreneurship

An entrepreneur is anyone who is setting up business or reviving the existing business, these businesses may vary in sizes. In today's world, entrepreneurs work in shaping the economy by creating new jobs and by inventing new products and services, in turn increasing the wealth of the nation.

 

Concept of women entrepreneurship

 

The concept of woman entrepreneurship is relatively new. Women have had to fight battles to step out to work place in the past. Having said that, women who have made their mark outside of their homes are no longer unheard of.  According to Zenith, an International Journal of Multidisciplinary Research, the entry of women into business in India is traced out of an extension of their kitchen activities, mainly 3 P's namely, Pickle, Powder and Papad. But with the spread of education and passage of time, women have shifted to 3E's, Energy, Electronics and Engineering. Businesses owned by women are increasing in economies all over the world today.

 

 

 

Overcoming constraints and restrictions

 

 

1.    The gender issue: One of the greatest problems faced by Women Entrepreneurs is the fact that they are Women. Patriarchal societies have a set stereotype and many even at the top level still conform to this medieval social order. So proper awareness programmes need to be designed for both men and women so as to eradicate any kind of prejudices as participation of women will lead to a more successful economy.

 

 

 

2.    Sense of freedom: Entrepreneurship provides a sense of freedom like nothing else does, as this is one’s own business. One can learn and grow and this idea works well for women's independence. Hence, continuous motivation and inspiration is the key.

 

 

 

3.    Educational background: Education is an integral part of life in today's world. Proper training at very basic level should be encouraged in order to develop proper professional competency.

 

 

 

4.    Finance: Access to finance has been termed as one of the biggest obstacles among the entrepreneurs and so, women businesses should be provided with easy access to loans and subsidies and various seminars at national and international levels to encourage entrepreneurship.

 

 

 

5.    Subsidies: Banks and other financial institutions should make provisions for both large and small business start-ups.

 

 

 

 

6.    Strong belief system: Starting a new project is a mind boggling task and it is imperative that women observe strong perseverance and command self confidence in their work.

 

 

 

7.    Provisions: Special provisions should be designed by both government and non-government organisation about various strategies and policies for the overall development of women entrepreneurs.

 

 

 

8.    Groups: Self-help groups play a vital role in helping women entrepreneurs make important business decisions, mobilize resources and pump in money for various small as well big scale projects.

 

 

 

9.    Proper exposure: Exposure to various training programmes, awareness about financial assistance, skill-training programmes in the necessary field of work should also be a part.

 

 

 

 

10. Lack of information: Special awareness programmes and seminars should be held in order to let women entrepreneurs be able explore the options available regarding various technological advances, new government policies, concessions, alternative markets and etc.

 

 

 

 

Women have come a long way in overcoming the shackles that past put them through. And there has been a significant rise in the women entrepreneurs across the country. According to the Women and Entrepreneurship in India survey, the majority of women-owned businesses are micro-enterprises or small/mid-sized businesses. Hence, women play a major part in the SME and MSME sector.

 

 

 

Government as well as other non-government organisations are taking measures to ensure that women entrepreneurs too are equally and adequately represented in the economy. At present, the Government of India has over 27 schemes for women operated by different departments and ministries. Some of them are as follows:

 

 

 

- Integrated Rural Development Programme (IRDP)

 

- Khadi And Village Industries Commission (KVIC)

 

- Training of Rural Youth for Self-Employment (TRYSEM)

 

- Women‘s Development Corporations (WDCs)

 

- Trade Related Entrepreneurship Assistance and Development (TREAD)

 

- Micro & Small Enterprises Cluster Development Programmes (MSE-CDP).

 

- Mahila Vikas Nidhi

 

- SBI‘s Stree Shakti Scheme

 

- NGO‘s Credit Schemes

 

- Working Women‘s Forum

 

- Indira Mahila Yojana

 

- Mahila Samiti Yojana

 

- Micro Credit Schemes

 

 

 

 

Conclusion

 

 

Women occupy nearly 45 per cent of the Indian population and the role of women entrepreneurs has finally been recognized. Highly educated and professionally qualified women are taking over the world today in almost every social stratum. Whether it is about starting a small backyard enterprise like Mrs. Bector’s Cremica, which started as an SME but today it is one of the most celebrated food brands which does sales of over Rs.400 crore or it is about Pepsico CEO Indira Nooyi, women are making their mark felt everywhere. It is high time that women come forward and explore various opportunities available today.

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.

Govt should reduce interest rates, energy costs to protect SME forging units, says Babu Rao, president, AIFI

Immoderate increase in energy costs on the back of rising fuel oil prices and power tariff increases over the last year amid deteriorating value of domestic currency is one of the  challenges among various currently faced by SME forging units, as explored by M Babu Rao, president of Association of Indian Forging Industry (AIFI) who is also the MD of GSB Forge Pvt Ltd, in an exclusive interview.

 

What is the role that Association of Indian Forging Industry (AIFI) aims to play in India's SME sector?

 

M Babu Rao: Since over 80% of the members of the AIFI are SMEs, supplying mainly to the automotive sector, the Association plays a pivotal role in updating and guiding the members on the latest developments and meeting the challenges to the industry on the cost and market fronts. 

 

 

 

The Association also enables interaction of the members with members of various international forging associations by hosting and mounting delegations to International Forging and Asian Forging Congresses being held periodically in various countries.

 

 

 

AIFI recently had the distinction of hosting the largest ever International Forging Congress IFC 2011 in Hyderabad with a record participation of over 1000 delegates and presentation of  66 technical papers besides an exhibition of the equipment manufacturers showcasing the latest technology.

 

 

 

What are the current projects being undertaken by AIFI?

 

M Babu Rao: Currently AIFI has initiated an “Energy Audit” programme for the benefit of the SMEs to tackle the problem of increasing energy costs in the sector. The programme is being funded by the “World Bank” and conducted by the BEE-GIZ for the Pune Forging Cluster of SMEs. The project has established the energy saving potential for the SMEs in the region, free of cost to the units.

 

 

 

The Association has also initiated steps to make an instructional video film to create awareness of the Indian Forging Industry among the students and teachers of Engineering Colleges with the help of the Government of India funded agency NITTTR.

 

 

 

In your opinion what are the key challenges that small-scale forging units face today. Please do provide some solutions to overcome the challenges.

 

 

 

M Babu Rao: The key challenges faced by the SME forging units are: a) Abnormal increase in energy costs due to balooning fuel oil prices and power tariff increases over the last year, following devaluation of the rupee

 

b) High interest rates affecting up gradation

 

c) Cyclical recessionary trends in the auto sector

 

d) Shortage of trained / skilled manpower

 

Government needs to intervene and prevent abnormal variations of fuel and power prices by suitably adjusting the taxes and duties on fuel oils and take steps to strengthen the power sector so that chronic shortages in the south and west of the country are overcome. Interest rates for the SMEs need to be brought down.

 

 

 

How the low-cost imported Chinese products are hurting the profit margins of small-scale forging units?

 

M Babu Rao: The bogey of low cost imported Chinese products is being used by OEMs in the country to deny genuine cost increases in the forging sector thereby hurting the financials of the SMEs in the sector.

 

 

 

In the wake of slowdown in auto industry, the domestic forging industry is turning its focus to alternative markets. What do you think, the diversification into other segments would be able to contribute in the revenues of forging industry?

 

M Babu Rao: The auto sector has traditionally been the largest consumer of forgings – 60 to 70%. However the cyclical variations in the demand of this sector has prompted the forging industry to gradually decrease its over-dependence on the auto sector and diversify to new & emerging sectors like Energy, Oil & Gas, Aerospace, Power, Defence and Heavy Engineering. Over the next few years, it is expected that these sectors will contribute to over 50% of the market for forgings.

 

 

 

Is the imposition of stringent anti-dumping laws and more tariff barriers on Chinese goods the need of the hour?

M Babu Rao: Yes, to protect the SMEs in the sector.

 

 

 

In your opinion, what measures should government take over the to promote India's forging industry?

 

M Babu Rao: Since the forging industry is both capital intensive and energy-intensive, Government should initiate steps to protect the industry SMEs by suitably cushioning the interest rates and energy costs against abnormal increases as has happened in the last 2 years. Inflation and devaluation of the rupee, which have aggravated the problems for the SMEs need corrective action from the government by way of reduction in duties and taxes and ushering in of GST at the earliest.

 

 

 

Kindly share the roadmap of AIFI for the ongoing financial year 2012-13.

 

M Babu Rao: In the current financial year 2012-13, AIFI intends to sensitise its members to the challenges being faced in the current recessionary scenario by conducting programmes for up gradation  in design / quality / technology and energy conservation besides laying emphasis on IT / CAD / CAM an other forms of computer based technologies to produce quality based forgings confronting to international standards with best yields, reduction in rejections & plant inventory & prompt deliveries to further the confidence of the customers.

 

 

 

Being the president of AIFI, what is your vision for this association for next coming years?

 

M Babu Rao: My vision for the AIFI is to strengthen the membership through interaction with members in all the regions of the country and unitedly work to contribute to the manufacturing / industrial growth of the country through innovative product & process development for the engineering sectors in general and automotive sector in particular.

Outsourcing can build better business for SMEs

Any organisation, either small or big, faces problem to keep pace with the technological development. Even though, big players can overcome with the technology-led transformations but for small enterprises an up-to-date technology platform is still a constraint. Every entrepreneur or businessman eyes for a top-most position for his/her organisation but the quick course of technology makes it difficult for SMEs to remain on top of trends.

 

In such scenario, small businesses may consider to pass on or outsource some or all of their IT systems or processes. With the adoption of outsourcing practice, SMEs will not only experience mass reduction in cost but it also allows them to focus on their core expertise like IT, Hotels, Health etc while hiring other people or respective organizations to manage other services like data entry, employee database, housekeeping, customer support and so on.

 

 

 

What is Outsourcing?

 

Outsourcing is the process of contracting out certain non-essential or non-core processes of a company to a third-party with proven expertise in the field.

 

 

 

The key market segments in outsourcing are business process outsourcing (BPO), IT outsourcing (ITO), knowledge process outsourcing (KPO) and HR outsourcing.

 

 

 

Business Process Outsourcing (BPO): In this segment, business-related activities or the non-core business like data backup, customer service and maintenance are outsourced.

 

 

 

Technology Outsourcing: This segment incorporates the outsourcing of  IT-related activities of the company. Various IT companies have started dedicated business practice focused small and medium businesses (SMBs) and offer complete outsourced solutions including hardware, software and applications designed for small businesses. IT outsourcing reduces initial capital constraint of the SMEs.

 

 

 

Knowledge Process Outsourcing (KPO): Over the years, KPO emerged as a new process to outsource knowledge-related work to third party service providers who holds specialization in this field. This includes processes of high level of domains like data analytics and investment research.

 

 

 

Finance and Accounts Outsourcing: The financial aspects of a company including account keeping and auditing are outsourced to the professional service providers within or outside one's country. For SMEs, cost of hiring CFO is a larger problem so now-a-days several SMEs are opting for outsourced CFOs.

 

 

 

Human Resource (HR) Outsourcing: The outsourcing of the basic HR functions like payroll processing, formulating and implementing

HR policies, hiring and induction, employee training, performance management system, etc. to an external service provider, is in today. The outsourced HR function makes it affordable for SMEs to have systems and processes that are hitherto utilised only by large corporations.

 

 

 

Why to outsource?

 

It is believed that single-mindedly concentration on the most important task is the key to great success, achievement in businesses. Besides, various business theories also indicate that focus on core areas of the business provides advantage over the rivals sending-off non-core activities to be performed by other firms.

 

 

 

Apart from this, there are other reasons that why companies opt outsourcing:

 

(a) Perks up company’s focus on core business – The adoption of outsourcing allows owner to concentrate on core business activities. It not only allows managers to set priorities of business more clearly and reap more profits out of it.

 

 

 

(b) Reduces operating costs – This is best part of outsourcing that it reduces overhead costs and capital expenditures of the company. For instance, by outsourcing, a firm could not only save salary costs but also pension and other benefit costs.

 

 

 

(c) To deploy competitively priced resources – Outsourcing also lets companies to deploy resources that are cheaper than that offered by the competitors and those are more attractive on the back of added incentives.

 

 

 

(d) Reduce risk – Outsourcing also reduces peril s like appointing right person for project, capital cost, labor cost, and focus on core business.

 

 

 

(e) Quick initiation of new projects – This is an another positive aspect of outsourcing strategy. A proposed business idea for the enrichment of the company may be outsourced for quick implementation because starting a new project in an organization may take months.

 

 

 

Why has the SME market not embraced outsourcing to a greater extent?

 

Outsourcing practice is under utilized by SMEs as small businesses contracting with outsources is a costly deal. But it is not important to contract with big outsource service providers, SMEs can turn up to micro outsourcers, wherein firms can attain  process efficiencies and cost savings by outsourcing tasks  to skilled freelancers or independent businesses (service providers) based locally, nationally.

 

 

 

Benefits of micro outsourcing for SMEs:

 

- To gain process efficiencies and increased effectiveness

 

- Reduces overhead costs and capital expenditure

 

- Firms can deploy resources which are more attractive because of added incentives

 

- Access to skilled resources

 

In the wake of technological development, outsourcing strategy has become more accessible tool for small businesses and has made it a powerful impact on their growth, productivity and bottom lines.

 

 

 

Right time to Outsource

 

Small companies are short in time and workforce and in order to grow their business they opt to outsource their regular work like accounting, payroll processing, distribution and many other functions. SMEs should adopt outsourcing practice so as to take advantage of this emerging phenomenon.

 

 

 

Some companies have in-house staff to handle daily activities, but in order to undertake new projects that don't call for another full-time employee companies may need outside help. To be more precise, when current employees are unable to manage the day-to-day business and are also not capable to build the business satisfactorily, then the company should mull over outsourcing strategy.

 

 

 

Conclusion

 

Several small companies outsource their regular work like accounting, payroll processing, distribution and many other functions. However, big companies outsource to cut down the cost. SMEs should adopt outsourcing practice so as to capitalise on this emerging phenomenon as it is an effective method to help businesses to reduce costs and improve processes.

SME collaborations open doors for untapped opportunities

Indian small and medium enterprises (SMEs) are poised to witness fast growth in the coming decade. If the predictions of the analysts are to be believed, the Indian small enterprises offer immense scope to push growth that will lead to an all round development of the country's economy despite the presence of various grey areas.



 

The Indian entrepreneurs are of the opinion that the availability of infrastructure and other aids assume significance as they can enhance the growth of small businesses or start up players.

 

 

Although, Centre has been taking concerted efforts, India is still reeling under the pressure of different concerns and constraints in the path of growth and development of small businesses. It is not practically possible for government to clear the obstacles instantly as it is also not feasible for any SME to solve these problems single-handedly. The only solution that is workable is 'Collaboration or Partnerships'.

 

 

Why Indian companies need to focus on 'collaborations'
 

As Indian economy has decided to continue its growth at a good speed in the coming decade, in this situation the SMEs will also aim to grow by bringing improvement in the productivity levels and business processes. To attain these goals, it is important for the small businesses to realise the importance of incorporating technology-driven collaboration among them.

 

 

With the onset of economic slowdown, SMEs should eye for technological collaboration since it is the primary ingredient for improving productivity. The small enterprises feel that it can play the role of an efficient tool that can increase the financial sustainability of enterprises effectively.

 

 

In the past few years, voice mails, video conferencing, mobile file sharing applications, online presentations are some of the off-shoots of partnerships.

 

 

What approach SMEs should adopt
 

The most important factor which needs to be kept in mind while exploring the potential of 'partnership' is to give an appropriate direction to the approach for undertaking this practice. Prominent areas and activities where partnership can lower costs besides increasing productivity should be stressed upon from time to time.

 

 

Proper research needs to be done for strengthening ties that will be mutually benefit the partners. The most important elements of collaboration is the partners' willingness. The SMEs should keep these factors in mind while working out 'partnerships'. Moreover, the international trends in technology and logistics partnerships can act as a parameter for deciding the strategies for collaboration among the SMEs.

 

 

How 'two-way collaboration' can be an option
 

The common aspect of any collaboration is that it should follow a 'two-way' approach since it should be inside as well as outside the establishment. In other words, it means that the collaboration should be both intra-enterprise level and inter-enterprise level.

 

 

This brings the importance of 'networking' for employees to the fore front as it is significant for efficient cooperation among the various streams inside the organisation for smoother and better operations. Communications and mobility are the key technology areas that enjoy tremendous potential for boosting the concept of collaboration inside any organisation, thus offering freedom to the employees.

 

 

What are the possible areas of collaboration
 

Today, new areas are opening regularly where scope of partnership among small businesses can be found. In most of the technology driven SMEs, the scope of a tie up is greater since new technology has potential to replace the older ones on regular basis. Few of the key factors which need to be focussed upon while inking collaboration are as follows -

 

 

-  Space

The rising commercial rentals across the globe have forced the small businesses to join hands in developing collaborative business spaces that are in favor of the participating collaborators. Common spaces means lower spending. 

 

 

-  Marketing Media

 

Marketing and publicity are few of the concerned areas for the small businesses, mainly the start ups as the over head expenditure often pose as a problem. Collaboration is possible in this areas in regard to the sharing common agencies and events for the promotion of multiple businesses. This concept has worked for the small businesses in US and Europe during the economic slowdown and can prove helpful for the Indian SMEs too.

 

-  Technology

 

Although, there are growing concerns over the security of information in cloud computing, but it is believed to be the most efficient partnership platform that many SMEs are benefiting from. The technological partnership are taking various forms such as sharing of knowledge, information, computational systems and online platforms for marketing and branding.

 

-  Human Resources
It is possible for hiring few of the professionals on part-time or temporary basis which will help in bringing down the expenses. 

 

 

 

-  Logistics
Over the years, it has been found the price of transportation, sharing and leasing equipment act as key expenditures for SMEs. This is where collaboration gains prominence as it helps in lowering the costs.

 

 

Understanding the benefits of collaboration
 

Analysts feel that collaboration among SMEs is beneficial for everyone engaged in the arrangement. The direct benefits out of 'partnership among SMEs' is endless. Few of the obvious benefits of teaming up are 

 

 

 

-  Space sharing

Sharing of space can bring down cost while the collaborating ventures can post good results. For instance, a petrol pump can house a fast food joint in its premise and it can be beneficial for both the partners. 

 

 

 

-  Platform for mutual support

The like-minded businessmen can offer physical, mental and financial support to each other whenever the need comes up. Regular meetings, online forums and also business communities can act as morale booster apart from motivating the members as well. 

 

 

 

- Networking

In today's business world, everything and everybody depends hugely on effective networking. Partnership among SMEs offer scope to strengthen network and also benefit the participating members.

 

 

 

- Ownership

Fractional partnership assume significance as many SMEs need expensive equipment but it can be afforded by just few. Fractional ownership allows it to be used on time sharing basis. For instance, it is a common practice that many SMEs jointly purchase a helicopter in the west and this trend can be implemented in India as well. 

 

 

 

-  Opportunities for marketing and sales

The participants can access each others client base with the help of mutual cooperation. It has been found that shared marketing platforms can prove helpful in lowering costs considerably.

 

 

 

-  Importance of cost sharing

The collaborating small businesses have potential to raise the scale of operations by sharing costs and it increases competitiveness with the bigger players. Although, the efforts taken by both the parties are not of humongous proportion but the operations grow manifold with the help of partnership.

 

 

 

What Research tells us

 

According to a survey of 300 business leaders carried out by Deloitte Consulting, 75% of the surveyed gave priority to partnerships. Those with linked partners and suppliers to internal business processes posted 70% improved profitability as compared to players that did not opt for collaborations. 45% of the respondents stated that they are worried about the complexity of implementing collaborative tools.

 

 

Conclusion
 

It is becoming increasingly important in the present time for the small businesses to maintain their competitive edge and also relevance in the market where the big players are eyeing to tap every available opportunity.

 

 

As competition continues to remain as the top concern for the entrepreneurs, collaborative efforts have potential to effectively help every business attain its target despite the presence of constraints such as finance, resources and economic crisis. It is a common belief that the collaborative power can prove helpful for the creation of platforms that is not within the reach of a specific unit.

 

 

For the SMEs, the creation of partnerships and business relationships are gaining prominence due to the globalisation of the market. The MNCs are infusing capital in strategic procurement programmes to bring down their supply bases apart from stressing on risen expenditure with the help of strategic partners.