SME’s- Their significant role in the Indian economy and the challenges they face.
Small and medium-sized enterprises (SMEs) at a global level, all over the world, have become the backbone of struggling and developing economies. These are constantly in search of a solution for recession and unemployment. Governments are encouraging entrepreneurship at a great scale for providing multiple benefits, including job opportunity creation, increasing the productivity, increasing industrial output & exports, the development of entrepreneurship, developing rural economy, healthy competitiveness, gradually eradicating poverty and achieving various societal goals. One of the universal concerns is to facilitate the creation of such enterprises.
In spite of playing the key role in the Indian economic development, Indian SME’s have to deal with major challenges such as inadequate credit facilities, unavailability of proper technology and skilled manpower. Meanwhile, facing competition from both, national as well international sectors of their respective industry or the organizations associated with them.
India’s technology sector, inclusive of the large Indian Corporation, also small and medium organizations have aided companies worldwide. An evaluative look at technology adoption by SME’s would present that the manufacturing and service sectors are comparatively slow in technology adoption. They still depend heavily on the traditional non-technical systems for the purpose of sales, marketing, and finance and for maintaining interaction with customers.
India’s ambitious growth targets and economic goals can be achieved by providing, proper support, training and for the SMEs. Technology adoption may be the single most important factor in this growth strategy.
Some major challenges faced by SME’s are discussed below:
Limited Equity Flow
Mostly SME sector is formulated by individuals getting in their own expertise and manpower with limited capital.
The workforce is comprised of mostly family and friends also the same for general support and capital source. Owners, financial institutions could only incorporate limited equity investments. There is a lot of pressure on revenues and profit margins for SME’s. All these further create extreme competition amongst them.
The landscape of Indian businesses is rapidly changing. Not just for large enterprises but also for the SMEs. One of the biggest drivers is technology and communication for this long-lasting and rapidly developing change. If the adoption of technology by SMEs in India is evaluated, it is clearly evitable that they have multiple barriers that come in their way. The most significant hurdles to technology adoption in SMEs are as follows
• Lack of awareness of beneficiaries
• Unfamiliarity with technology
• Lack of proper guidance
• Lack of credible support from Governmental institutions
• Very poor technology adoption.
The technology is extremely important in every sector like selling an online marketplace, management of inventory, post-sales support, financial reporting etc.
SMEs, somehow do not give technology adoption the attention that it deserves. SMEs are not enough convinced about the return on investment in technology and cost is the biggest obstacle.
Several rules and regulations are established by governments, that guide business. Organizations normally change the way they function when the government changes policies. Economic policy and market regulations by the government have an influence on the business profitability. Regulations established by federal, state and local governments must be compiled by the owners. As technologies are rapidly changing, it’s important for organizations to innovate.
Technology challenges for SME can be dealt easily by IT consultants. They consult and integrate new technologies, particularly in mobile, for app development, and in cloud computing.
Dependence on physical IT resources
Enabling employees to work productively and ensuring the security of the IT network and data is one major challenge for SME’s. Systems should be actively working to aid employees to work effectively. Cloud computing and IT Managed Services have helped enterprises enormously. Some organizations also outsource IT services.
Not staying up with changing technology
Rapidly advancing technology demands these organizations to keep up with its pace. Purchasing latest smartphones, tablets, routers and other such utility devices for an entire team could be expensive. It is very expensive to subscribe to Software-as-a-Service applications that are very important for much functionality like accounting, customer relationship management, invoicing etc. Because of budget constraints, SMEs can’t upgrade technology frequently, hence technology budgeting is one of the biggest technology challenges for SME.
Upgrading technology is very crucial as it helps businesses to be competitive and enable employees to work better and efficiently. Establishing a precise annual budget is essential to keep technology up to date.
Inappropriate backup systems
Power outage, server crash, files getting deleted accidentally, or any such data disaster can demolish important data in the system. SMEs don’t have massive budgets to spend on data backup, storage, and protection. They do not have a plan for backup and disaster recovery. The appropriate backup solution and disaster recovery steps can help to deal and overcome these events thus eliminating the expenses that come along with them. There are various data solutions available.
Unclear device policies
The security of Information technology systems is one such duty for which every employee is responsible. Policies should be implemented and precisely communicated to the employees.
To make SMEs aware of all the resources available for technology adoption, it is important that the Government of India, private sectors and training institutions and other such stakeholders must work together to develop the SME’s an effective communication program.
The government today is highly concerned for the growth of SMEs like never before. Subsidies and other cost benefits are being offered to SMEs. With increasing awareness about these benefits including reduced costs, our Indian economy will see more advanced technology adoption. A realization must be brought in amongst these organizations that technology is not just an option but a necessity.