Simple business transaction for MSMEs: The next decade will be about SMEs. There are two ways to look at this idea. SMEs as a whole have a market in India of over $ 950 billion, accounting for 34 percent of GDP and 48 percent of exports, and employing more than 110 million people while accomplishing all of this. The nation's growth is specifically related to the continued performance of this sector. The other aspect is the IT SMBs that we have supported through deep tech adoption and top notch talent looking to India and flipping for RoW. A Niti Aayog study says India can be the AI garage for 40 percent of the world.
Every year we publish the Strategic Review, one of the most widely read reports in technology. We cut and dice the technology sector and give our view of future trends. This year it was released before the pandemic broke out, and we coined the term techade to describe the decade of the 20s – one that would be massively impacted by technology in every imaginable area. 10 months later, that particular prediction hasn't changed at all, just this: Technology adoption will be exponentially higher than we imagined, and it is now closer to Techade's steroids. The industry came up with the term “hyperdigital”. And why not? The level of digitization that we have experienced in the past six months would normally have taken a few years to materialize, regardless of our earlier forecast of the “techade”. A recent study with McKinsey found that spending on outsourced technology services increased one and a half times from 2009 to 2009, reaching nearly $ 1 trillion.
This means that the business models will continue to change massively. We have entered a contactless world and will be for some time to come. When the vaccine is ready to use, as it will be very soon, it will be a while before 1.3 billion Indians are vaccinated. A hybrid model with greatly reduced personal contact is what we're looking for for the foreseeable future, and we need to keep building the new game book, which has already begun to be created. Gone are the days when companies could look at customers through a transactional lens. The experience-driven economy, and especially in the last few months, the customer experience has reached a whole new level.
A smooth customer journey is not a new idea, but if companies work more than 90 percent virtually, it takes on a much higher dimension through data-driven and technical digitization. The latest survey by the NASSCOM SME Council found that more than 63 percent of the SME companies surveyed had brought a new solution / product onto the market or significantly changed their business model during this time of crisis. The interesting aspect is that 41 percent of companies are in the process of reducing their office infrastructure. The common adage "Do more with less" has been emphasized again.
Also Read: The Year: The Greatest Newsmakers of India's Glamorous Tech Startup Ecosystem That Defined 2020
This brings us to the most powerful idea today – TRUST! I would even say that this is the main currency. The four cornerstones of trust remain firm – competence, reliability, integrity and empathy. In an environment where personal communication is severely restricted, this becomes more important. Employers who trust their employees (and vice versa); End customers who trust their solution providers, individuals who trust organizations with their data; Companies that rely on governments to do the right things are great examples. In an environment of great uncertainty and volatility (VUCA ++), people only want to interact and do business with companies that they can trust.
The SME survey also shows that 42.7 percent of companies have not made any changes to their workforce and 22 percent have actually increased their workforce. In a severely troubled world, business will go where talent is. For many SMEs, investing in skills is a concern. What if they go Money and a bigger brand aren't the only reasons people leave. Career growth prospects, quality of work, and learning opportunities are stronger reasons people stay. Our studies show that there will be a 20x demand for digital skills by 2024, resulting in 1.3 million upcoming jobs and a trillion-dollar opportunity we just can't afford to miss. SMEs play an important role in seizing the right opportunities and moving the country forward by leaps and bounds.
Amid the friction caused by the crisis, there is also a strong tailwind. I am referring to the way the technology landscape is evolving and giving impetus to digital attackers to businesses. For example, the Indian public cloud market is worth 170 billion rupees and is expected to grow by 30 percent CAGR. Currently, SMEs have a 28 percent market share and this is clearly an area for greater adoption. The cost pressure is real – 34 percent of the SME companies surveyed have lost some major orders. Cloud computing enables companies to access the latest technology without being burdened by high investment costs.
In the first few months, sectors such as aviation, travel and tourism, manufacturing, stationary retail, etc. were badly affected. At the same time, there has been 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 also offer newer possibilities. SMEs would do well to be agile and resilient enough to open up new areas when the opportunity arises.
Gaurav Hazra is Senior Director and Head – India Markets, NASSCOM. The views expressed are those of the author.
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