Tech-based Solutions are Transforming MSME

We often come across technical terms such as Internet of Things, data analytics, cloud, Software as a Service, Automation, and the list continues. Also, we hear about Medium, Small, and Micro enterprises in India (MSMEs) and how they contribute to India’s economic growth, around 30% to be precise. But how often do we come across a cross-over between technology and MSMEs? Not so common, right? Well, this is the major factor due to which Indian MSMEs lag in achieving their full potential. So, the question is “Can tech-based solutions transform the MSME landscape in India?” If yes, then how will they channelize opportunities for MSME in India? Do we have some MSMEs that have already done so? Let us see. 

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What is the future of MSME in India?

The MSME sector employs a huge chunk of both the skilled and unskilled workforce of India. It targets micro and remote sectors’ development and fosters poverty eradication on the social front. For India’s economic growth, the sector generates huge foreign investments and contributes around 30% to our GDP. By making a huge part of India’s exports, MSMEs help in bridging the trade deficit as well. 

Talking in digits, the sector contributes around 45% of India’s manufacturing output and 40% of total exports. According to reports, we need to generate around 10-15 million jobs each year till 2030 to make the best use of the demographic dividend. An upward growth trajectory for MSMEs will be imperative to achieve our aim of a $5 trillion Indian economy.

What is Pushing Indian Adoption?

In digital India, tech solutions caught speed after the Covid-19 pandemic in 2020. The pandemic had devastating impacts on MSMEs in India. Especially the small and micro enterprises faced a brutal hit because of constraints on technological, financial, and innovational fronts. This shift has arrived in almost all the working domains of enterprises ranging from communication, registration, hiring processes, procurement of raw materials, services outsourcing, transactions, funding, and other day-to-day activities. The only issue is that the transformation in the MSME landscape due to tech-based solutions is not only slow-paced but also still limited to medium and some small enterprises.

Contribution of tech-based solutions for MSMEs in India

The schemes and programs by the government for enterprises have been restricted to solve financing issues and not to innovative solutions. Recently, there has been a focus shift towards MSME technology centers and MSME clusters. At present, India has 18 MSME technology centers offering various courses to stimulate tech solutions for MSMEs. Moreover, digital platforms such as MSME sampark are excellent tools that bring jobseekers, recruiters, and MNCs for seamless hiring. Also, the new-age startups are filling these gaps by introducing merging tech-based platforms to upscale and consolidate the operational capabilities of Indian MSMEs. 

Here are a few examples of tech enablers and solutions driving digital adoption in the MSME landscape:

Brego 

Brego provides MSMEs with real-time insights based on their financial data using a mobile-based SaaS application. The MSME can analyze key financial parameters such as sales, profit and profit margins, financial operations, etc. Moreover, the MSME owner can also share the reports with their team allowing for better analysis and comprehensive results. Regular assessment on the financial front has been a big issue for small and medium enterprises that Brego tries to solve for them.

PayNearBy

This app is providing financial and non-financial services to around 1.5 billion retailers today. Financial services such as cash deposit, cash withdrawal, money transactions, savings, insurance, benefits under various government schemes are being made available by the PayNearBy platform.

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Alignbook

It is a cloud-based accounting software working to automate the invoicing process in Indian enterprises. The software is available as offline as well as online versions to cater even to the remote and rural MSMEs with little to no internet availability.

Meesho

It is an e-commerce unicorn that enables small businesses including MSMEs to sell their products at their marketplace along with social media platforms. Meesho has been providing a brilliant platform for small and micro enterprises to market their products and reach every nook and corner of the country.

Credlix 

Credlix launched by Moglix is a financing platform that integrates digital supply chain to give collateral-free working capital throughout the supply chain. Along with enterprises, the platform also covers exporters. Its supply chain platforms harbour around 700 enterprises and 15,000 SMEs. The platform enables the suppliers to request the buyers for early payments based on some discounts. The aim is to keep working capital available to keep the supply chain running and a healthy cash conversion chain. Moreover, the vendors and suppliers can also apply for credit and risk assessment, payment approval, cash disbursement; everything on Credlix.

Locus

A global B2B SaaS platform that uses machine learning and trend algorithms for automating complex supply chain choices. Locus also offers a free tool ‘QuickStart,’ that is a self-serve version of Locus developed to enhance the supply chain efficiency for startups and MSMEs.

Crediwatch

Creditwatch is an information intelligence tool that uses new-age technologies such as big data and data analytics to highlight financial risks to corporates, lenders, and enterprises. By providing data analysis as a service, the platform enables the MSMEs and other users to harness credit intelligence and improve their lending and trading.  

Instamojo

Instamojo is a fintech solution that provides capital to financially empower Indian enterprises. Its main product, an online payment link, provides a solution to the issue of digital payments. Instamojo also provides logistics (MojoXpress) and lending services (mojoCapital) to enterprises. The platform helped the small businesses during the peak of pandemic and lockdowns to bounce back with the help of tools such as Priority KYC. Priority KYC helps small businesses to form their online store in minutes.

Tech and e-Commerce platforms like Amazon and Flipkart are also leaving no stone unturned to help Indian MSMEs. While Flipkart launched Samarth Programme for bringing artisans, weavers and handicraft makers on their e-commerce platform, Amazon also launched “Digital Kendras” to spread awareness among MSMEs on the advantages of technology adoption and digitization. Flipkart and the Federation of Indian Chambers of Commerce & Industry (FICCI) organized several workshops for MSMEs.

Benefits of Tech-based solutions for MSMEs

MSME sector is known for its multi-modal requirements, multi-channel distributions, and complicated supply chains. MSMEs in India uses tech-based solutions to foster the vision of digital India, tech solutions and new-age innovations can help MSMEs in:

• Install consolidated operations across the supply chains
• Plan and track their logistics and enable smooth flow
• Enhancing operational capabilities, plan execution, and fostering collaborations
• Cut production costs, better profit margins, and boost revenue growth

According to a study conducted by Google and KPMG, the digitally-empowered enterprises witnessed 2X revenue growth projections as compared to offline enterprises. A survey by Dun and Bradsheet suggests that digitizing the day-to-day operations decreased the operational cost by a massive 54%. Also, impressive growth in MSMEs’ competitiveness and working efficiency was noticed. The estimates show that small and medium enterprises in India have the potential to add around USD 216 billion to GDP by 2024.  

The Road Ahead

Around 51% of MSMEs in India hail from rural areas making it necessary for them to make use of digital solutions, no matter how tough it would be. The presence of rural and remote MSMEs on the internet-based platforms is quite low. The technology can provide Indian MSMEs with a competitive edge by elevating the quality of their products, decreasing production costs, enhancing supply chains, and boosting profit margins. Enterprises must harness the new-age deep technologies to hurry business flow and choices. A balanced growth outlook for the Indian MSME sector will include tech-based platforms and digital transformation stimulated by the advent of the new-age economy and a host of modern tech-based solutions.

 A survey by Endurance International Group suggests that almost 30% of MSMEs are on the internet. The online presence is either in the form of business websites or tied up with e-commerce platforms for selling their products. Moreover, more than 50% of MSMEs are using video conferencing platforms for facilitating smooth business continuity during the pandemic caused disruptions. By providing digital solutions such as MSME sampark, ASEEM, e-Shram, etc., the government has also been fostering technology for MSMEs.

Written by,

Prasad P. Patkar