Internet, SMBs & the great Indian opportunity

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Article first appeared in ET Rise on 16 September, 2017

Small and medium businesses form the backbone of our economy. Amidst a challenging business environment, Indian SMBs have displayed remarkable strength and resilience by maintaining consistent growth, creating livelihood opportunities for many and becoming a driver of socio­economic development in the country.

According to the annual report published by the Ministry of Micro, Small and Medium Enterprises, India is home to over 51 million SMBs in the last count, and this number is growing rapidly. They have contributed immensely to the Indian GDP and manufacturing output, and employed over 117 million people, next only to that in agriculture.

Challenges aplenty for SMBs

Despite being a critical component of India’s growth story, the SMB ecosystem faces several challenges. Lack of adequate capital and credit, poor infrastructure, inadequate access and constraints on modernization hamper their ability to improve profitability and grow at scale.

At the same time, the economic landscape for SMBs is changing rapidly with a fast­-rising
consumer demand curve. The ecosystem has transformed in a big way over the past
decade with the rise of digital technologies and a more ­evolved consumer. With 400 million active internet users ­ and 250 million more set to join in by 2020, Indians are morphing fast into digital customers who know how to look for products and services online.

The SMB sector is at a critical juncture today.


As it continues to tackle these challenges, the key to meeting consumer demand and solving the problems of profitability and scale, come down to technology, and how they leverage it.

Internet and the great opportunity

It’s never been easier for SMBs to take the plunge, take their businesses online and launch their own digital presence. There are clear benefits in taking a business online that we are witnessing already. Digital SMBs grow twice as fast, can cater to a larger geographical market and generate more revenue when compared to their offline counterparts.

We are seeing great examples of SMBs leveraging digital technologies to cater to customers who access content via mobile, consume content in local languages and via formats like videos. This opens up the outreach channels for Indian businesses that can now set up their digital presence in native languages and offer multi­media content to take their offerings beyond urban and English­ speaking customers.

With the rapid growth of cashless and paperless services, and payment solutions such as mobile wallets, the focus on digitizing financial transactions is definitely helping SMBs take their commerce online. During the recent demonetization drive, we all saw instances of roadside vegetable vendors accepting payments using digital wallets.

Indian SMBs are also exploring online commerce at a time when the business models for the use of SMAC technologies (Social, Mobility, Analytics, Cloud) are relatively stable. Investing in technology like cloud and mobile is helping small businesses reduce costs and scale faster.

Today, one can get a domain name, develop and host a website at a very low cost without any hassles.

The recent GST implementation requires businesses to upload all their business invoices in a digital format to the government portal every month and has started a mini digital­ revolution. These push and pull factors support rapid adoption of Internet and digital technologies in SMBs and propel them towards tremendous growth.

However, a whopping 68% of Indian small businesses are still offline, according to a recent study by KPMG India and Google that analyzed the impact of digital technologies on Indian SMBs. There is a clear lack of access, awareness, exposure and adoption that currently stops them from starting their digital journey.

While small businesses have an understanding of what an online presence can do, many do not realize the importance or value of taking their business online. Limited knowledge, insecurity and false notions of high ­complexity and high­ costs often act as barriers for them. There have been several initiatives launched by the government and the private sector that aim to address these challenges.

As we move forward, it is important for technology players to help small businesses overcome the barriers to adoption and embrace the potential of the Internet and its possibilities. The next wave of growth is on digital.

Nikhil Arora
Nikhil leads strategy, business growth, operations and customer care for GoDaddy in India as its Vice President and Managing Director. In his role at the world’s leading platform dedicated to small businesses, Nikhil is passionate about helping small businesses and entrepreneurs establish and grow their ventures. Connect with Nikhil on LinkedIn.