ase of Doing Business for MSMEs: The next decade is going to be about SMEs. There are two ways of looking at this idea. SME as a whole is over $950-billion market in India contributing to 34 per cent of the GDP and 48 per cent to exports and employing more than 110 million people while achieving all this. The nation’s growth is explicitly linked to this sector’s continued performance. The other angle is the IT SMEs, which we have powered through deep-tech adoption and best-in-class talent, that are solving for India and mirroring for RoW. A Niti Aayog study says that India can be the AI Garage to 40 per cent of the world.
Every year we publish the Strategic Review which is among the widely read reports in the tech sector. We slice and dice the tech sector and give our view about future trends. This year, it was released before the pandemic struck and we coined the term Techade to describe the 20’s decade – one that would be massively impacted by technology in every area imaginable. 10 months down the line this particular prediction hasn’t changed at all, but only this: tech adoption will be exponentially higher than what we could have imagined andit’s more on the lines of ‘techade’ on steroids now. The industry came up with the term “hyper-digital”. And, why not? The level of digitization we witnessed in the last six months would have normally taken a few years to materialize, notwithstanding our ‘techade’ prediction earlier. A recent study with McKinsey revealed that during 2009 – 19, the global outsourced technology services spending grew one-and-a-half times to reach almost a trillion dollars.
This means business models will continue to change massively. We’ve entered a contactless world and it’s going to be this way for some time to come. When the vaccine is ready for use, as it will be very soon, it will still take a while for 1.3 billion Indians to get inoculated. A hybrid model with greatly reduced in-person contact is what we are looking at for the foreseeable future and we have to continue to build the new playbook, the creation of which has already started. Long gone are the days when businesses could look at customers through a transactional lens. The experience-led economy and more so in the last few months, customer experience has taken off to a whole new level.
A frictionless customer journey is not a new idea but when businesses go more than 90 per cent virtual, it acquires a much higher dimension through digitization which is data-led and tech-enabled. The NASSCOM SME Council’s recent survey revealed more than 63 per cent of the SME companies interviewed have launched a new solution/product or made a substantial change to their business model during this crisis period. The interesting aspect is that 41 per cent of the companies are in the process of reducing their office infrastructure. The common adage, “doing more with less” has yet again been highlighted
This brings us to the most powerful idea today – TRUST! I would even say it’s the single-most-important currency. The four cornerstones of trust remain firm – competence, reliability, integrity, and empathy. In an environment where in-person communication is greatly reduced, this attains a higher meaning. Employers trusting their employees (and vice-versa); end-customers trusting their solution providers, individuals trusting organizations with their data; businesses putting their faith in governments to do the right things, etc. are all prominent examples. In an environment of great uncertainty and volatility (VUCA++) people only want to interact and do business with entities they can trust.
The SME survey also reveals that 42.7 per cent of the companies made no changes to their workforce and 22 per cent actually increased their headcount. In a highly disrupted world business will go where talent is. For many SMEs, investing in skilling is fraught with apprehension. What if they leave? Well, money and bigger brand aren’t the only reasons why people leave. Career growth prospects, quality of work, and learning opportunities are more powerful reasons why people stay. Our studies indicate that there will be 20X demand in digital skills by 2024 leading up to 1.3 million upcoming jobs and a trillion-dollar opportunity we simply can’t afford to miss. SMEs have a massive role to play in grabbing the right opportunities and taking the country forward by leaps and bounds.
Amidst the friction caused by the crisis, there’s also a strong tailwind at play. I am referring to the way the tech landscape is shaping up and providing impetus to digital attacker companies. For instance, India’s Public Cloud market is at Rs 170 billion and is estimated to grow at 30 per cent CAGR. Right now, SMEs have a market share of 28 per cent and clearly, this is an area for greater adoption. Cost pressures are real – 34 per cent of SME companies surveyed lost a few major contracts. Cloud computing makes it possible for companies to access cutting-edge technology without being saddled by high CAPEX.
During the early months, sectors such as aviation, travel & tourism, manufacturing, brick n mortar retail, etc. took a major hit. But at the same time, there was unprecedented growth in areas such as e-learning, e-health, e-gaming, e-entertainment, and e-retail. Black Swan moments disrupt the status quo but they also provide newer opportunities. SMEs would do well to be agile and resilient enough to pivot into new areas when opportunity beckons.