At a time when the Covid-19 pandemic has disrupted the economy, digitalisation of small and medium businesses (SMBs) may add between $158 billion and $216 billion to India's gross domestic product (GDP) by 2024, a study showed.
The study, which San Jose, California headquartered networking major Cisco commissioned market research company IDC to conduct, analysed data from over 1,400 SMBs across 14 countries in the Asia Pacific region.
About 68% of Indian SMBs are already digitalising themselves to bring in new products and services to the market, the study showed. While 60% of the respondents recognised that their competition was transforming and they must keep pace, 50% sought digital transformation due to customer demand for change.
“During this time, small businesses have been grappling with drastically reduced liquidity, disrupted supply chains and lending challenges. To bounce back, they need to pivot and adapt swiftly, reimagine their business models and identify their place and role in the new normal,” Panish PK, managing director of SMBs for Cisco India and SAARC, said.
“We understand the complex world of SMBs and have been innovating products aimed at helping small and medium-sized businesses digitalise quickly and sustainably,” he said.
At 16%, most SMBs prioritised investments in technology, followed by 13% for security and 12% to purchase or upgrade IT infrastructure. However, 16% of the respondents said they faced hurdles such as shortage of digital skills, access to talent and lack of necessary technologies during their digital transformation efforts.
“To help address the challenge of talent, our Networking Academy has so far trained more than 1,82,000 students across India in FY20. To accelerate their digitalisation efforts, our aim is to provide small businesses access to a suite of simple, secure and smart enterprise-class technologies, specifically tailored to their evolving needs," Panish said.
SMBs in the Asia Pacific region continue to progress with their digitalisation journeys -- nearly 16% of businesses in the region are in the advanced digital maturity stages, an increase from 11% a year ago, the report said. However, 31% of SMBs in the region are still reactive to market changes and have hardly made any effort to transform digitally, it said.
“Digitalisation is no longer an option for SMBs – it's a matter of survival. Covid-19 has forced them to move to digital-first, becoming more dependent on technologies to ensure business continuity and resiliency,” Daniel-Zoe Jimenez, assistant vice president, head of digital transformation and SMB research at IDC, said.
“As SMBs rethink processes, operations, and customer engagements, they are looking at cloud services and cybersecurity first, but also have increased their focus on customer experience, video conferencing, and artificial intelligence/analytics solutions. Given the rapidly changing market conditions and speed of technology evolution, SMBs should work with the right industry partners to ensure they can maximise their technology investments and thrive in their digitalisation journeys," he said.