E-commerce, Data management and BPO service provider - NextWealth

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Assisted Digitization Part 2 - Impact on MSMEs
In the first post I talked about unequal impact
of digitization (or digital technologies) on
different sections of consumers. I had emphasized
that people living in rural areas need assistance
to extract the benefits of digital technologies.
Assistance that would help them bridge gap with
digitally-savvy urban consumers who share the
enormous benefits. Like rural consumers, the
industry group of Micro, Small and Medium
Enterprises (MSMEs) too need assistance to
extract the benefits of digitization. The MSME
sector has emerged as a highly vibrant and
dynamic part of the Indian economy. It continues
to play a crucial role by providing vast
employment opportunities at comparatively lower
capital cost as compared to large industries.
The sector also helps in industrialization of
rural and backward areas, thereby assuring more
equitable distribution of national income and
wealth. The MSME sector contributes around 37 of
Indias Gross Domestic Product (GDP) and
encompasses over fifty million companies and
entrepreneurs accounting for a vast bouquet of
products/services that address both domestic and
export markets. When digital upsets the
equilibrium Today, all businesses, large and
small, are getting impacted by digital
technologies and they cannot afford to ignore
the sweeping change. The MSME sector too is
struggling to make sense of the opportunities
and challenges presented. This is in contrast to
the confidence and ability of large enterprises
that have the wherewithal to invest in the
necessary infrastructure and get the best advice
in the business. For example, organized retail
(like Reliance Fresh, More, Heritage Fresh and
others) and online e-commerce firms (Flipkart,
Amazon etc.) have employed digital technologies
to cut into the business of millions of kirana
shops dotting the country, especially the rural
markets. By themselves, MSMEs do not have the
ability or the capacity to face the onslaught on
their livelihoods. In short, this exciting and
vast sector is essentially isolated from
harvesting the benefits of digital technologies.
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• The fundamental problem
• MSMEs are either unable, or slow to adopt digital
  technologies, not because they do not want to.
  The problem arises because solutions are not
  specifically designed and built for this sector.
  Some of the main impediments include
• Lack of MSME-specific and cost-effective
  solutions
• Lack of technology in-house skills and
  infrastructure
• Lack of easy-to-use interfaces
• Lack of financial capacity to invest in capital
  expenditure
• The assistance MSMEs need
• In the context of MSMEs, the need of the hour is
  assistance in the form of a Total Solution to
  their problems. This can be largely accomplished
  by re-purposing the same digital technologies
  used by larger enterprises. This comprises
  hardware, software, applications, communication
  bandwidth, simple user interface, training,
  support, and ease of use all in a box. This
  solution package needs to be offered at a very
  low, affordable and variable cost.
• Importantly, there should be no fixed capital
  costs.
• Assistance is here
• Fortunately, such assistance is coming from
  different sources in different forms. Both the
  Governments (center and state) are giving strong
  support to address the above problems. Industry
  associations and trade bodies are responding to
  some of the issues by reducing the friction that
  occurs on course of adopting digital
  technologies. Finally, a slew of new- generation
  companies and start-ups are working overtime to
  capture a big slice of the opportunity to
  provide digital solutions to MSMEs.
• The Government of India is giving high priority
  to the role of MSMEs in nation building by
  creating a separate department of MSME under a
  cabinet ranked minister. The department
  evangelizes the use of digital technologies
  through many initiatives for the sector and also
  coordinates with other departments and state
  Governments.

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• A case in point is the recent launch of an online
  portal and mobile MyMSME app to monitor
  different schemes promoted by the Government. The
  Government has also decided to implement
  Digital MSME scheme for the promotion of
  digital technologies by adopting Cloud
  computing. The objectives are to improve their
  competitiveness, business process
  standardization and productivity improvement
  all through the Cloud platform, thus reducing
  the burden of investment.
• The roll out of Goods and Services Tax (GST)
  the new tax regime driven by the Government of
  India is a good example. It has come up with a
  Government-to-Business (G2B) portal that acts as
  a comprehensive platform for taxpayers to
  conveniently interact with and access the GST
  System. The portal has opened its application
  programming interfaces (APIs) so that third
  party application developers can use them to
  develop new and innovative solutions for GST
  compliance and also integrate with existing
  applications like SAP, Tally and other. Some of
  these new applications help MSMEs in uploading
  invoices, information and filing returns as
  required by GST. Taxpayers can access the secure
  GST system via desktop, mobile and multiple
  applications.
• Recognizing the crucial need for assistance, the
  Government has introduced GST Suvidha Provider
  or GSP. The Governments endeavor is to build a
  vibrant GSP ecosystem and ensure its success by
  putting in place an open, transparent and
  participative framework for capable and
  motivated enterprises and entrepreneurs.
• Confederation of Indian Industry (CII), Indias
  premier industry association, has created an
  online business resource center called MyCII
  covering four critical aspects of business
  operation
• Business leads
• Industry and regulatory information
• Global and local networking
• Latest industry research and knowledge

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This platform has proved to be very valuable to
MSMEs. NASSCOM, not-for-profit industry
association representing Information Technology
(IT) and Business Process Management (BPM)
industry in India, initiated the E-Marketplace
(under beta testing) specifically for their MSME
members. This platform helps members with their
marketing activities and generates leads from
United States and Asia Pacific markets. Even
private sector enterprises and new-age startups
are offering assistance to MSMEs. For example,
CoreLogs offers to help identify potential
clients in the IT sector for products and
services. Another StartUp, Power2SME is on a
mission to empower SMEs and enhance their
overall productivity and deliver measurable
business value. The portal helps SMEs to focus
on their core business of accelerating growth
both in terms of revenue and development. The
challenge is in creating awareness, and then
acceptance. This calls for an elaborate and
broad-based plan to educate the target audience
on the advantages of new digital technologies
and their benefits. Smart MSMEs will do well for
themselves if they latch on to opportunities
provided by digitization with assistance coming
from the government agencies, trade bodies and
Start-Up ecosystem.