Technology for MSMEs: Digital adoption never assumed greater significance for small businesses than during current times as it expanded from being an enabler to bring business process efficiency to a survival mechanism against Covid headwinds. According to a Cisco study in July, this year, Indian small and medium businesses may add $158 billion to $216 billion to the GDP in four years led by digitisation of their businesses even as they are looking to digitally transform themselves to bring out new products and services and distance themselves from the competition and grow. “Most small businesses understand this, so while the use cases will vary from business to business, we expect digital technologies to see increased adoption across most Indian industries,” Cisco India and SAARC SMB Managing Director Panish PK told Financial Express Online’s Sandeep Soni in an interview. Edited excerpts below:
Do you see MSMEs realising the significance of technology adoption for survival and not just lowering costs?
While the impact of the pandemic on MSMEs has not been even, most small businesses recognize that digitization is the key to accelerating their recovery and jumpstarting growth. We’re already seeing proclivity for technology rising across sectors. For example, many small farmers are using WhatsApp and digital platforms to sell their products, thus creating new revenue streams; in the retail industry, many are investing in digital storefronts and data analytics to reach a much broader audience and improve customer experience; in healthcare, small and independent clinics are taking to treating more patients virtually, etc.
Going forward, technology will be fundamental to the new normal. While in the pre-crisis era, automation was viewed as a means to reduce cost, it is now essential to damage control and survival. Most small businesses understand this, so while the use cases will vary from business to business, we expect digital technologies to see increased adoption across most Indian industries.
What are the most common challenges, according to you, MSMEs are facing as of now?
We have been working closely with small businesses during the pandemic, and while the details are unique to each company, there are three common challenges that most are trying to address at this time. Firstly, they want to understand how to reimagine their business for the long term. They are looking to carve new revenue streams – or even reconsider or reinvent existing ones – to ensure that they can sustain their businesses beyond the downturn and move quickly onto growth and profitability.
Next, they want to optimize their costs. Given the cash deficit that most small businesses are facing today, cost is the primary concern in making large-scale changes across the company. Thus, they are divesting from redundant areas and implementing cash preservation measures. At the same time, they are looking to reinvest in areas that will drive future growth, like talent, hybrid work models, etc. Lastly, but most importantly, to do all this, MSMEs are looking for technologies that are easy to deploy, use, manage, and scale. Most are looking for solutions that they can be downloaded and used as an app, available in a pay-as-you-go model.
What are the key areas emerging as top technology investment priorities for MSMEs?
According to a Cisco study, almost 70 per cent of Indian small businesses surveyed are looking at digitization to pivot their portfolio and address the evolving demands of increasingly digital and distributed customers, with cloud and security technologies emerging as top technology investment priorities. Over the last few years, we have seen the gap between large enterprises, small businesses, and end-consumers reducing considerably. Today, the need for digital platforms that offer an enhanced, intelligent and “human” collaboration experience accompanied by enterprise-grade security is common to most businesses and entrepreneurs in the country.
With many looking to switch to hybrid work models long-term, the demand for cloud-delivered collaboration tools and security technologies to keep increasingly distributed workforces safe, secure, and productive has sky-rocketed. For instance, Cisco Webex in India has hosted, on average, 12 million meetings with 100 million participants since April – the second-highest Webex usage after the US. Much of this demand originated from small businesses across sectors, and we continue to see traction. In fact, the demand has been so much that we launched an e-commerce portal to make it easier for our small business customers to buy Webex online.
But would you say that MSMEs never got the required attention over the years amid startup culture?
Both startups and MSMEs play a crucial role in the socio-economic development of the country, in terms of job creation, manufacturing, etc. While startups in India have been at the forefront of driving innovation through technology, small businesses in the country will play an important role in ensuring balanced economic growth, considering a significant portion of them operate in Tier-II and rural areas. As the low-touch, contactless economy takes shape, every business, small and big, urban and in rural areas, must take a digital-first strategy and mindset. Those who do and are willing to disrupt themselves will emerge stronger.
How significant is your small business product portfolio in India?
For us at Cisco, small businesses are a top focus area. Earlier this year, we launched Cisco Designed for small businesses to access to a suite of simple, secure, and smart enterprise-class technologies, specifically tailored to their business needs. To further empower small businesses, Cisco is now responding to queries faster with the new Virtual Demand Center (VDC), making it more convenient for customers to engage with Cisco and our partners. We are also supporting our partners who understand the small business market by significantly increasing partner investments to scale and reach many more businesses across the country. Lastly, to help address the challenge of talent, our Networking Academy has so far trained more than 2,70,000 students across India in essential ICT skills in the past year alone.
How was the Covid impact on your MSME business?
At the beginning of the lockdown, as organizations turned their workforces remote almost overnight, we enabled free access to cloud-delivered technologies across our collaboration and security portfolios to help our customers, partners and industry stay safe and productive. In the months that followed, we saw a massive surge in Webex usage, led not only by large enterprises but by small businesses as well. Having launched our e-commerce portal to make it easier for our small business customers to buy Webex online, over 50% of the surge of orders coming in is from small and medium companies. Similarly, we continue to see traction across our security, collaboration, cloud, networking, and other portfolios even as the country opens up, driven in large part by small and mid-sized enterprises.
Any targets you have for FY21 in terms of share from MSME business to Cisco India’s growth or the number of new MSME customers, etc.?
We believe small is the new big. We’ve seen first-hand how digitization can empower MSMEs. We recently conducted a study that found that MSMEs, which are more digitally mature, enjoy twice as many benefits in revenue and productivity. We believe that small businesses will be key growth drivers for Cisco in India over the next few years. We are continuing to innovate offerings that can reduce costs and complexity while improving network operational efficiency and cater to their evolving needs.