IT adoption among SMEs can drive revenue growth, job creation: BCG
Nandagopal Rajan October 8, 2013IT adoption among small and medium enterprises (SMEs) could be a driver for revenue and employment growth in India, according to a research conducted by business strategy adviser Boston Consulting Group (BCG) for Microsoft Corp.
The study, which covered 4,000 SMEs in Brazil, India, China, Germany and the US, found that the revenue growth in India could be as high as $56 billion and create 1.1 million new jobs. For all the five economies this figure could be $770 billion and 6.2 million new jobs, the study showed.
Neeraj Aggarwal, a BCG senior partner and a co-author of the report 'Ahead of the Curve: Lessons on Technology and Growth from Small Business Leaders', said SMEs can be categorised into leaders, followers and laggards based on their adoption of technology.
The BCG research found that the so-called leaders, who are early adopters of new technologies, outpace the other two categories in revenue and job growth, especially in emerging economies where they grew 15 per cent faster. If 15 per cent of the laggards and 30 per cent of the followers increased their adoption there could be a dramatic spurt in revenue growth and job creation.
Karan Bajwa, Managing Director of Microsoft India, said in India five out of eight critical apps used by SMEs belonged to the Microsoft stables. He said the study had found that price was not a primary criterion when it came to adoption of a certain technology with only 6 per cent respondents citing it as a factor. He, however, accepted that in this sector it was necessary to providing product training and helping the prospective customers understand the full range of available services.
The research also found that nearly 90 per cent of Indian companies have no access to the Internet. In comparison, this figure was a low 22 per cent in China and just 5 per cent in the US. The study identified Skype as a leading enabler for SMEs to grow to in external markets, while those adopting cloud grew at least 10 per cent faster than other SMEs.
Bajwa said almost 99 per cent of all businesses in India are SMEs, but they employ just 25 per cent of the workforce and generate just 22 per cent of the GDP. "That is a huge growth potential. Imagine the growth if this mass where to adopt technology for their growth."