Why are 68 percent of small & medium companies still not leveraging the internet, asks Rajan Anandan.
This is a series of articles by leaders on how India can raise its Business Quotient.
With a marked improvement in connectivity and the recent spate of affordable data plans and public WiFi initiatives, access to technology and connectivity to the internet is no longer the privilege of a few but presents an opportunity for many.
Today, India has 400 million people who are online and this number is expected to reach 650 million by 2020. Indians are embracing the web; spending more time online and the digital world is playing an ever-growing role in their lives. Today, we could not be more excited about the long-term prospects for India’s economy, its people, and its technology sector.
As exciting as the long term prospects are, there are challenges too.
The Global Information Technology Report by the World Economic Forum ranks India in the 91st place in its network readiness index.
One of the findings of the report is clear, the way businesses adopt information and communication technology is key for development. Related to this is that innovation is increasingly based on digital technologies and business models.
While the government has recognised the internet as a key driver for progress and economic growth and larger businesses have adopted technology and innovative business models; we are yet to see businesses, especially small and medium enterprises, truly embrace digital as a key enabler for growth.
There are an estimated 51 million small and medium enterprises in India but only 32 percent of businesses are leveraging the power of digital. This is despite the fact that SMEs that leverage digital platforms grow both profit and revenue twice as fast as businesses that are offline. And, this is when we look at companies using basic web-based tools. The numbers will be higher for companies using advanced cloud and analytics technologies versus those that aren’t.
Of the SMEs that have embraced digital, they are able to grow their customer base significantly. 52 percent cater to customers beyond their city versus only 29 percent of SMEs that are offline.
And we have seen this in action, a water pump retailer in Chandigarh – Pumpkart – whose primary business was limited to the city, went digital to create a water pumps marketplace and now sells a wide range of water pumps for agricultural, residential and commercial uses. Today, it features around 250 vendors and more than 100 registered brands and is India’s leading online marketplace for these pumps, with a nationwide business presence.
As India’s internet penetration grows, and SMEs uptake for digital increases, the WEF report estimates that their contribution to India’s GDP can grow by 10 percentage points to reach 46-48 percent by 2020. So, encouraging businesses to fully embrace the powers of digital technologies should be a priority.
At Google India, we worked with KPMG to look at the reasons that inhibit a large number of Indian SMEs from coming online. Essentially it is the lack of understanding of the benefits of digital technologies and technical skills that have still kept most SMEs offline.
The fact is, this is not a hard journey. But it’s one that most SMEs in India haven’t begun because they don’t think the internet is for everyone. But it should be. And it can be. It requires creating an ecosystem, both public and private, to support SMEs to leverage IT and digital tools and service platforms. And we would like to help.
We have always believed technology is an incredibly democratising force, and getting it into the hands of as many people as possible is something which we really want to push hard on doing. SMEs have always been key users of our platforms – right from the beginning. In fact, the first advertiser on Google search was an SME.
We have now reinforced our commitment to helping Indian SMEs realise their dreams by going digital and have launched Digital Unlocked, a training program for business owners that will empower them with essential digital skills. Today, anyone with a net connection can sign up and get trained. And if they want an offline experience, that too is available across the country with FICCI as our partner. In the last six months, over 500,000 individuals have engaged with the skilling platform and 20,000 businesses have been trained. And Primer, a mobile web for self-learning, has been downloaded over two million times.
We have thoughtfully launched initiatives and support eco-system that handholds the SMEs, from the most basic needs of creating an online presence through a Maps listing (over 1,60,000 Indian businesses are leveraging this) to building a website, automation and office productivity solutions from Google to going online with full stack cloud support.
Today, the internet offers as many opportunities for the established local merchant for growth, as it does for the high-flying startup. It is the single largest growth and business multiplier that small businesses can adopt to become large businesses in the shortest span of time.
Rajan Anandan is Vice President, South East Asia and India at Google.
The views expressed here are those of the author’s and do not necessarily represent the views of The Better India or BloombergQuint or its editorial team.
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