Why Indian SMEs Are Not Ready Yet

CIOL Bureau
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With over six years of first hand interactions with the SME community through the PCQuest SMB Forum series, PCQuest has seen SME communities across India through close quarters. A fraternity that provides employment to almost 50% of India's total workforce (an estimated 90% of which is unorganized labor) and is a contributor to the tune of 50% of India's GDP. All the right ingredients to get the maximum focus of all concerned---government, entrepreneurs, IT vendors and media. However, what we have observed and continue to observe, borders close to it if not downright contrary.

Entrepreneurs are and with due respect can't be expected to be 'tech-aware'. So, new tech and even the 'IT essentials' for an organization is viewed primarily as an expense rather than a necessity. Whatever, IT is used is more a case of passive reaction to the change seen around than as an initiative. A key stakeholder for this fraternity are the large IT vendors, with their increased focus on this segment. However, reaching out to and understanding the needs of this community is clearly a challenge for them, and most times seem to be fiddling with strategies in trying to make the right pitch. Partly, because nobody is clear what and how much to sell to the SME community.

Also read: What is there in Google+ for SMBs?


The nature of businesses, products and services being sold, psyche of entrepreneurs varies so much from one state to the other, that no vendor has been able to come up with a 'winning formula'. 'RoI' is the most popular term used in discussions but the challenge is to demonstrate a clear relationship between tech and business growth. Perhaps there can never be any. One of the key benefits that tech enables is transparent information access. The absence of 'instant' information access across various stages is a serious roadblock in business process optimization.

Practically, though, entrepreneurs do not want transparency. Especially the smaller businesses. For they fear putting all information on record might increase their outgo in the form of taxes than any significant revenue growth. So, business transactions on a 'chit' of paper continues to be the preferred mode. How much these transactions contribute to the 'black' economy, we can't hazard a guess but for sure, it does take a lot of sheen out of India's success story. A story, which according to the latest government draft on manufacturing has the potential to significantly increase India's GDP and provide employment to even more people.