COVID-19 has led Indian corporates to prioritize digital transformation

The rigorous lockdown during the COVID-19 pandemic has pushed corporates to digitize its business structure in order to keep up with the challenges. The small and medium enterprises in India are also following the trend.

In India, 48% of large corporates with annual turnover $1 billion and middle-market companies with annual turnover $200 million to $1 billion in India have a digital transformation strategy in place.

The Asia-Pacific (APAC) region has witnessed 70% of large corporates and middle-market companies has adopted digital transformation, with Taiwan leading the way at 95%, as per DBS survey.

Digitization by APAC companies have risen as it stood at 57% last year. In India, the survey reports that 62% of the companies have just taken up digital transformation.

Indian companies are looking to regain lost ground to compete with the other markets as small and medium-sized enterprises (SMEs) make up more than 96% of all Asian businesses and are integral to the success of the region’s economy, DBS found out.

"If there was any doubt about key benefits of digitalisation, the pandemic has only eliminated it. Embracing digital transformation is no longer a 'good to have' but critical for corporate entities to maintain a competitive edge and improve business drivers,” Divyesh Dalal, Head of Global Transaction Services, DBS Bank India, said.

In terms of digital progression in Asia, Singapore leads the way.

• Singapore 72%
• Hong Kong 47%
• China 44%
• Taiwan 38%
• India 25%
• Indonesia 20%

India is at the bottom but it managed to digitize 23% of their payment collection volumes, an increase from 18% a year ago.

Demand for contact-free services and questions regarding the flexibility in supply chains increased during this period. These are some of the externalities which has forced Indian SMEs to digitize.

Another key external pressure is supply chain complexities, customers and market demand. Almost 34% of SMEs in India said growing supply chain complexities is a source of digitization pressure.

Although digitization is the way forward, it still has its drawbacks. About 54% of Indian corporates said cybersecurity, availability of digital talent 53%, and cost 51% are the problems which restricts them to adopt new technology. For SMEs 80%, the high costs of adopting new technology was the leading challenge.

Moving onto cybersecurity concerns, DDoS attacks (77%), cloud infrastructure security (76%) and theft of customer data (72%) were the most concerning issues identified by more than half of the large corporates and middle-market companies, the survey reported.

The financial health of these companies irrespective of its size has taken a hit during the pandemic. It has therefore affected its digital spending, around half the large corporates and middle-market companies in India that trade and supply chain financing (82%), ongoing cash management (58%) and back-office operations (55%) represent the three most significant digital investment areas.

“A rise in the adoption of digitized payment collection amongst SMEs in India is an encouraging indicator of the value these businesses see in digitalization. More than half of these SMEs identified banking relationships and apps as the function they would focus on during their digital transformation journey,” Sudarshan Chari, Business Banking Head, DBS Bank India, said.

The companies believe the use of smart contracts, digital ledger technology (DLT), and application programming interface (API) to insert banking products and services into key digital touchpoints is the right path.

API connectivity with banks is expected to increase in the next 12 months. Wherein 39% of SMEs and 80% of large corporates want to adopt APIs in banking.

In terms of digital support, banks remain the preferred partner for Indian businesses and matching with fintech innovations to find the ideal balance.