Lack of understanding in choosing the right technology solution and low impact on overall profitability are among the key challenges in adoption of technologies among MSMEs.
Digital adoption among micro, small and medium enterprises (MSME) is still a long way to go as only 5% out of the 2,700 MSMEs, surveyed by the private sector lender Yes Bank, have fully embraced digital adoption. The full-scale technology adoption, according to the survey, includes the use of cloud services, ERP, CRM, account management software, digital banking etc.
Lack of understanding in choosing the right technology solution and low impact on overall profitability are among the key challenges in adoption of technologies followed by lack of skilled manpower to operate technology, lack of trust in technology, and the high cost of equipments.
While 63% of the MSME surveyed said that they are going digital, only 50% perceive profitability and operational efficiency as benefits of going digital and over 80% of all digitized MSMEs indicated overall positive digital experiences, the survey said.’
“The macro business environment that MSMEs are operating under is undergoing a transition. Digitisation is becoming increasingly vital for long term survival and future growth,” said Sumit Gupta, senior group president – mid-segment, multinational corporate banking, government banking, agribusiness & knowledge, Yes Bank.
MSMEs in sectors including IT & ITeS, food processing, engineering, manufacturing, healthcare and pharmaceuticals have high levels of digital adoption, the survey found.
Getting a competitive advantage and increase in productivity are among the key reasons for the adoption among 60% of businesses using advanced technologies.
Interestingly, 56% of respondents believe that the government is doing enough to boost technology adoption among MSMEs. However, around 60% feel that tax incentives and subsidized loans for purchasing equipment would help in better adoption of technology.
Further, the survey says that 51% MSMEs have so far availed digital banking services, using largely internet and mobile banking services followed by digital wallets, payment solutions, and online bill payments.
The survey made key recommendations focusing on a Skill India program for MSMEs to improve their technology know-how, a centralized MSME support centre for services such as finance, HR, marketing etc, building awareness around ICT solutions and government schemes, training programs in association with academia over educating MSMEs to form a basic digital footprint etc.