Biztech Jun 8, 2014
Tech-savvy small and medium-sized enterprises (SMEs) created more new jobs and drove more revenue gains over the past three years than SMEs using little technology, according to research commissioned by Microsoft Corp. and independently conducted by The Boston Consulting Group (BCG), a global management consulting firm and a leading adviser on business strategy.
The BCG report, Ahead of the Curve: Lessons on Technology and Growth from Small Business Leaders, found if more SMEs in India adopted the latest IT tools there is potential for SME revenue to grow by $56 billion and create 1.1 million new jobs.
“SMEs are a critical growth engine for jobs and economies today,” said Karan Bajwa, Managing Director of Microsoft India. “There is tremendous opportunity for economic growth. Our objective is to help more SMEs transition to, and benefit from, modern IT. For customers, it means providing product training and helping SMEs understand the full range of available devices and services, but it also means community and industry investments such as skills training,” Bajwa added.
BCG’s research found that over the past three years, IT-enabled SMEs, which BCG refers to as “technology leaders”, grew revenues 15 percentage points faster and created twice as many jobs as SMEs that use less technology.
The research also revealed that across nearly all product categories, these fast-growing SMEs use more Microsoft solutions than any other products, and that SMEs view Microsoft as the top partner for new and future technology needs.
In fact, when asked what technologies survey respondents could not live without, they chose Microsoft Office as the top productivity application over all others. Moreover, SMEs that adopted Microsoft Cloud services grew faster than SMEs that do not use any Microsoft products. These companies also reported greatly improved employee mobility, scalability and agility.
“The BCG research revealed that Microsoft products and services are the No. 1 choice of these technology leaders,” said Meetul Patel, Microsoft’s General Manager of Small and Mid-Market Solutions and Partners organisation in India.
“Microsoft and its broad ecosystem of partners in India have helped SMEs grow, compete and become more profitable through the effective use of office productivity tools, cloud-based services and mobile technology. We are committed to helping businesses across the country access, use and benefit from the latest advances in information technology” Patel added.
“We and our partners in India have designed several programmes to help SMEs transform their business by the effective use of office productivity tools, cloud-based services and mobile technology,” Patel added.
The BCG report argued that the latest wave of technological advancement, such as cloud services, brings potential for the most far-reaching innovation and business growth ever, creating an opportunity for more SMEs to achieve the growth rates of technology leaders by leveraging technology to fuel productivity and growth.
The research revealed that high-performing SMEs stayed ahead of mainstream IT adoption, riding new waves of advancement to improve productivity, connect with new customers and markets, particularly outside their own region or country, and compete with much larger players. These companies employ the full range of available tools — from productivity software to Internet connectivity and cloud-based services.
“In India and other economies, SMEs play a vital role, often acting as the primary drivers of job and economic growth,” said Neeraj Aggarwal, a BCG senior partner and a coauthor of the report. “The large informal economy in India means this potential is not always reflected in official statistics, but there is nonetheless a big opportunity for both SMEs and policymakers to increase output and employment substantially. More tech leaders would also help lead to a more vibrant economy because leaders outperform in innovation,” he added.
But at the same time, the research revealed a risk, because SMEs’ adoption of IT is decidedly uneven. Across the world, many SMEs, and their customers, don’t have access to modern broadband networks, and many lack the skills to get the most out of IT. Many SMEs are also still using large amounts of old and less efficient hardware and software. New devices are also sometimes very expensive due to high import duties, and SMEs are concerned about online security and privacy. But the growth prospects described in the study are too important for governments and the IT industry to ignore.
The research revealed nearly 90 percent of SMEs in India have no access to the Internet, compared with only 22 percent of SMEs in China and 5 percent of SMEs in the US.
The risk of a growing technology gulf is relevant to governments looking to maximise economic growth, and it is an opportunity for policymakers and the IT industry to implement strategies to remove barriers to IT adoption by addressing small businesses’ top concerns about using more technology.