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Dr Vivek Bindra

The author is Founder and CEO, Bada Business Pvt Ltd

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Need For Technology Adoption In MSME Sector

What are the ways in which the MSME sector can adopt a quick ‘technological turnaround’ for itself?

As humanity stands on the cusp of the Fourth Industrial Revolution or Industry 4.0, businesses worldwide including in India are reinventing themselves. Ironically enough, the MSME sector in the country has remained on the periphery of this industrial resurgence and reinvention.Limited to basic level technologies and processes adopted by manufacturing and services, it is time for the MSME sector to take that technological leap of faith and pick up its pace in keeping with the rest of the industry and indeed the world.For a sector which contributes to 29% of GDP, 45% of manufacturing and 40% of exports employing over 11 crore people,the recent fallout from Covid has made it all the more pressing. Various surveys have reported that majority of MSMEs have not only faced plummeting sales but even closures in the face of precipitous fall in demand as well as disrupted supplies.Estimates have been made that the sector as a whole would take at least 7 to 8 months to recover depending on the nature of the economic activity itself as well as swiftness in adoption of new-age technologies.

At a time when Covid-driven transition of embracing all-round digitisation and latest technologies by businesses across sectors and industries has continued apace,the MSME sector can’t and must not remain a passive bystander. Despite the inevitable teething troubles, they must press ahead with new-age technology adoption with full vigour and focus. The end-customer has increasingly displayed an appetite for online purchases and payments – spurred by Covid-19 – must become an added guiding force and motivation for MSME businesses in this respect.

What are the ways in which the MSME sector can adopt a quick ‘technological turnaround’ for itself?

Digital technologies can scale up manufacturing & revenues in no time

First, digital technologies can give an instant stimulus to scaling up of MSME’s manufacturing processes and operations and bring in revenues. For an average budget, your business must go online with integrated sales and marketing channels linked on a common digital platform. Digitisation also expands your reach across borders exponentially and immediately. Additionally, while allowing you to keep abreast with the latest trends, offerings and innovations in your sphere of business, it enables you to keep track of competition. Digital marketing tools such as search engine optimisation (SEO),search engine marketing (SEM), content marketing, e-mail marketing, Pay-Per-Click and Google Analytics can in no time translate visibility and traffic into a large pool of subscribers and vastly enhanced revenues. Significantly, a survey had reported 30% of MSMEs commencing e-commerce website since the beginning of the lockdown on account of COVID-19.Importantly, because everyone else in the value chain is taking to digitalisation, if an MSME firm decides to stay away, it risks falling behind and even dying out permanently.

Technology catalyses incredible ease of business

For MSMEs whose business operations are often slow and inefficient due to a great deal of dependence on manual and traditional non-machine mode of sales, marketing and customer engagement; technology can turn out to be the proverbial godsend in terms of improving ease of business. Whether it is supply management, logistics and procurement or manufacturing operations or even human resources, it can enable ease of business across functions and workflows. Keeping this in mind, small businesses must also prioritise and select a set of software solutions that would provide the ‘soft backbone’ for the running of their operations. For instance, customer relationship management (CRM) software would help them maintain a comprehensive digital record of customer engagement. In addition to helping them design and customise offerings, it would also ease handling of orders while keep a tab on sales. Similarly, the human resource management (HRM) system would execute the entire process involving recruitment, staffing, training, compensation, performance appraisal, retention strategies etc. For invoicing and payments, accounting software would do the job. What MSMEs should remember that many of these software packages are available at fairly competitive rates with some even being free of cost.

Cloud technologies and services make digitisation convenient and cost-effective

For an MSME faced with a cash-strapped budget, instead of setting up the traditional IT infrastructure, cloud technologies and services can be a natural go-to-market strategy. Cloud services not only remove the need for capital expenditure on hardware and their subsequent maintenance, they also free the businesses from the task of software patch-ups and updating.Evidently, this reduces hardware expenditure and cuts down on maintenance costs making digitisation cost-effective.  As an on-demand service, they also allow flexibility enabling quick scaling up or modification ensuring data backup and business continuity.

Computer Aided Design (CAD) critical to MSMEs

Given that almost 31% of MSMEs by nature of activity are involved in manufacturing, CAD can be an asset to those firms. With over 6000 products ranging from auto parts and bicycles to sewing machines to electric e-rickshaws to healthcare-related disposables to textile products and accessories, MSMEs carry a significant manufacturing imprint. In that context, exemplifying automation at its best, a combination of CAD with Computer Aided Manufacturing (CAM) can not only solve the usual design issues that MSME manufacturers face but also facilitate integrated design and manufacturing planning. Through elaborate visualization and detailing and by way of offering an infinite range of choices, it saves time, improves quality while also allowing simulation and improvisations.

Explore collaboration with technology start-ups

While Covid-19 has spelled disaster for businesses, ironically enough, it has also catalysed the rise of several new-age technology start-ups. In fact, even before Covid struck, according to a KPMG report, the number of startups had grown seven-fold to 50,000 by last year itself. In the aftermath of Covid-dictated pivot to digitalisation, several new-age technology start ups have cropped up offering digital, remote work, office automation services,cloud connect, healthcare services, education, financial services, gaming, grocery and essentials delivery services, among many others. These new-age technology startups are eager to offer solutions at competitive costs. All that the MSMEs have to do is to find the right partner.

Make full-use of government-backed Lean Manufacturing (LM)Techniques

The MSMEs must also participate actively in sessions and programmes periodically conducted by the government for introducing and educating them on LM techniques with a view to eventually bring about technology upgradation as well as enhancing their competitiveness. Often conducted cluster-wise, the objective of these programmes is to encourage the MSMEs to acquire product certification/licences from national/International bodies and embrace other technologies based on global standards.

In proliferation of new advanced technologies also lies a manufacturing opportunity

The MSMEs can not only adopt technologies for galvanizing their businesses, but can even enter the technology component manufacturing space. The advent of advanced technologies such as AI, advanced robotics, IoT and machine learning has spawned the need for production of a new array of technology sub-components. Herein lies a tremendous opportunity for MSME manufacturing businesses.MSMEs particularly those in manufacturing can enter this tech manufacturing space and benefit from its growing demand. For example, printed circuit boards (PCBs) form the core of electronics, yet only 30% of their total demand is met indigenously.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house


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