IT fuels revenue and job growth in Indian SMEs: BCG

NEW DELHI, INDIA: Tech-savvy small and medium-sized enterprises (SMEs) created more new jobs and drove more revenue gains over the past three years than SMEs using little technology, according to new research commissioned by Microsoft Corp. and independently conducted by The Boston Consulting Group (BCG).

The study found if more SMEs in India adopted the latest IT tools there is potential for SME revenue to grow by $56 billion and create 1.1 million new jobs. BCG's research found that over the past three years, IT-enabled SMEs, which BCG refers to as "technology leaders", grew revenues 15 percentage points faster and created twice as many jobs as SMEs that use less technology.

The research also revealed that across nearly all product categories, these fast-growing SMEs use more Microsoft solutions than any other products, and that SMEs view Microsoft as the top partner for new and future technology needs. SMEs that adopted Microsoft Cloud services grew faster than SMEs that do not use any Microsoft products.

The BCG report argued that the latest wave of technological advancement, such as cloud services, brings potential for the most far-reaching innovation and business growth ever, creating an opportunity for more SMEs to achieve the growth rates of technology leaders by leveraging technology to fuel productivity and growth.

The research revealed that high-performing SMEs stayed ahead of mainstream IT adoption, riding new waves of advancement to improve productivity, connect with new customers and markets, particularly outside their own region or country, and compete with much larger players. These companies employ the full range of available tools - from productivity software to Internet connectivity and cloud-based services.

But at the same time, the research revealed a risk, because SMEs' adoption of IT is decidedly uneven. Across the world, many SMEs, and their customers, don't have access to modern broadband networks, and many lack the skills to get the most out of IT.

Many SMEs are also still using large amounts of old and less efficient hardware and software. New devices are also sometimes very expensive due to high import duties, and SMEs are concerned about online security and privacy. But the growth prospects described in the study are too important for governments and the IT industry to ignore.

The research revealed nearly 90 per cent of SMEs in India have no access to the Internet, compared with only 22 per cent of SMEs in China and 5 per cent of SMEs in the US.

The risk of a growing technology gulf is relevant to governments looking to maximize economic growth, and it is an opportunity for policymakers and the IT industry to implement strategies to remove barriers to IT adoption by addressing small businesses' top concerns about using more technology.