• The SMB base is expected to increase from 75Mn in 2019 to 105Mn by 2024 ; Currently, over 70% of Indian SMBs are digitally-enabled
• Indian SMB digitalization will be a USD 80Bn opportunity by 2024; this opportunity will create 4Mn additional new jobs in the next 5 years
Bangalore, India, September 19, 2019 : Zinnov, a leading global management consulting firm, released the findings of its comprehensive study on Small & Medium Businesses (SMBs) in India, today. The study titled, ‘Digital SMBs – Key Pillar of India’s Economy’, takes a look at the ever-evolving Indian SMB landscape with a new lens, and focuses on their transition from traditional SMBs to Digital SMBs. The study categorizes an SMB as a Digital SMB if they use a smartphone or a PC and Internet at the least, to conduct their business. Digitally-empowered SMBs are leveraging a combination of connectivity & communications, transactions & payments, discoverability, productivity-focused technologies, and are starting to extend into the world of Artificial Intelligence (AI), Automation, and Internet of Things (IoT).
The Zinnov study highlighted that India is currently home to a massive base of 75Mn SMBs, and that these SMBs currently provide employment to over 180Mn people. While traditional industries such as Retail, Manufacturing, Logistics, etc. account for a large base of SMBs, it’s the newer categories of SMBs such as Housewife Resellers, Cab Drivers, Delivery Partners, and Media Content Creators that are expanding the SMB base rapidly , and already account for 10% of the total SMBs in India. Given the current trajectory, the Indian SMB base is expected to increase to 105Mn by 2024, the Zinnov study stated.
Further, SMB digitalization is rapidly increasing and over 50Mn Indian SMBs are already using digital technologies (including smartphone / PC and Internet) in their business workflows. The base of digitally-enabled SMBs is expected to increase to 90% by 2024, the study estimated. Interestingly, 600+ Aggregators, many of them new-age start-ups such as Udaan, Oyo, Meesho, Ola, Swiggy, Rivigo, etc., have already enabled over 10Mn SMBs across discoverability, customer engagement, and digital transactions, and will continue to play a vital role in SMB digitalization.
The Zinnov study pegs the 2019 digital expenditure of Indian SMBs at USD 14-16Bn, of which the spend on productivity solutions accounted for 40%, followed by connectivity & communication technology at 30%. Additionally, digital discoverability solutions accounted for 20% of the total SMB digital spend, while another 10% was spent towards payment solutions & applications.
The study pointed to the Indian government’s role as a catalyst for SMB digitalization through bold steps like massive investments in building digital payment infrastructure, subsidies for technology adoption, and frictionless access to capital, to name a few. In addition, large enterprises are also enabling this SMB-led growth by encouraging their SMB partners and suppliers to go digital, and are even investing in skill development and technology platform infrastructure.
Sharing his insights about the study, Praveen Bhadada, Partner & Global Head – Digital Transformation, Zinnov, said, “SMB digitalization in India will be a USD 80Bn opportunity and is already getting significant global attention. Global Tech Giants and tech ISVs are committing huge investments to the Indian SMB market. Private Equity and Venture Capital interest in the SMB aggregators and start-ups is at an all-time high and is resulting in the rapid valuation enhancement of such companies. By 2024, we expect the SMBs’ contribution to the Indian GDP to grow from the current 40% to about 50%, on the back of pervasive digitalization. The rising performance of Digital SMBs will support adding 4Mn new jobs in the next 5 years, anchoring this segment as the linchpin for the Indian economy, especially in light of the purported economic slowdown, in the years to come.”
