Bengaluru: Startups play an important role in the digitalization of small and medium businesses (SMBs) in India, enabling them in areas such as discoverability, customer engagement, and digital transactions, and will continue to do so, says a study by global management consulting firm, Zinnov. The study forecast that Indian SMBs will spend $14-16 billion this year on digital technologies.
The Zinnov study pointed out that small businesses are transitioning from traditional to digital with the use of technology - smartphone, PC or Internet - to conduct their business. India is home to approximately 75 million such businesses that employ over 180 million people, the study said. Apart from traditional industries such as retail, manufacturing and logistics, new categories such as cab drivers, delivery partners, and media content creators are expanding the SMB base rapidly, and account for 10% of such businesses in India.
Digitally-empowered SMBs are leveraging a combination of connectivity and communications, transactions and payments, discoverability, productivity-focused technologies, and are starting to extend into the world of Artificial Intelligence (AI), Automation, and Internet of Things (IOT), the study said.
SMB digitalization has made rapid progress, with over 50 million Indian SMBs using digital technologies in their business workflows. The study pointed out that over 600 aggregators, many of them new-age start-ups such as Udaan, Oyo, Meesho, Ola, Swiggy, and Rivigo have enabled over 10 million SMBs across discoverability, customer engagement, and digital transactions, and will continue to play an important role in SMB digitalization.
Of the total digital expenditure of Indian SMBs this year, the spending on productivity solutions accounted for 40%, followed by connectivity and communication technology at 30%, digital discoverability solutions accounted for 20%, and 10% on payment solutions and applications.
The study also described the Indian government’s role in SMB digitalization through investments in building digital payment infrastructure, subsidies for technology adoption, and access to capital. Large enterprises are also encouraging their SMB partners and suppliers to go digital, and also investing in skill development and technology platform infrastructure, the study said.
The Indian SMB base is expected to increase to 105 million by 2024, it added.