Challenge Of Technology Adoption for SMEs In India

Small & Medium Enterprises are usually the biggest employers in a country and play a huge role in job creation, the industrial output & exports, and the development of entrepreneurship and the rural economy. However, though they are the backbone of the economy, Indian SMEs have to contend with systemic challenges such as lack of adequate credit facilities, access to technology and skilled manpower while facing competition both from within the country as well as from global corporations.

- Hamid Farooqui

India's technology sector consisting of large Indian Multinational Corporation, as well as small and medium players has helped companies worldwide in revolutionizing the way they conduct business. However, the variety of benefits somehow has not filtered to the companies in our own country, especially to SME's. Estimate suggests that there are more than 40 million micro, small and medium enterprises (MSME's) in India. Their success is extremely important to the economic growth story of the country. A close look at technology adoption by SME's would show that two most important sectors, manufacturing as well as service sectors are slow in adopting technology. They still rely on old non-tech system to interact with customers and employees and still use only traditional methods for sales and marketing and finance. To meet India's ambitious growth targets and economic goals, significant support, training and resources must be provides to SME's. Technology adoption may be the single most important factor for this growth strategy.

Limited Equity Flow

Most businesses in the SME sector tend to be formed by individuals bringing in their own manpower and expertise with limited capital. Often friends and family act as workforce, capital source and general support. Due to limited equity investments by owners, financial institutions generally view these enterprises as high risk, curtailing lending. Moreover, with little barriers to entry, there is fierce competition thus adding pressure to revenues and profit margins.