Why SMEs fear technology?

The contribution of the small and medium business enterprises has increased significantly to India’s manufacturing output, export and also GDP. But a major area where they SMEs lack in competitiveness to their western counterparts is technology employment and upgradation. 

“The progress of the SMEs in terms of technology adoption is pretty slow. Even if considering the basics, they have a long way to go. In fact, most of them haven’t started properly using technology, yet,” said Mr Abhijeet Ranade, Associate Director, Technology Advisory Services at PricewaterhouseCoopers.

While most of the large companies have financial as well as technical capacity to identify technological sources and evaluate alternate technologies that would suit their requirements, unfortunately, this capacity is missing in the case of most small and medium enterprises (SMEs).

“IT budget being a discretionary spend most of the small and medium companies usually cut down on it most of the time,” says Mr Ranade.

Citing other reasons for SMEs lagging behind in the usage of technology Mr Ranade says, “Cultural issues are the main reasons behind it. Most of the small businesses in India are either owned by families or proprietors. This results in lack of transparency and thereby hesitation in giving funds on part of lenders.”

Mr Ranade further adds, “Another reason behind the slower rate of technology adoption by the SMEs is that they are still stuck in basic transactions and business development and have yet to develop a strategic mindset, which involves a plan and growth by design.”

The SMEs face immense lack of support from vendors. Most vendors are interested in working with bigger companies rather than smaller ones. Readymade solutions for these problems are not available at least in the Indian market.

But with the awareness about the potential of the sector and the hindrance that technology is posing in its way increasing, the government as well as large IT players like TCS, Dell, Microsoft and many others is working towards it.

PwC also works towards providing consultancy as well as other services to SMEs with regard to technology. “PwC offers a variety of services for SMEs, starting from developing strategy for business growth to market share expansion, cost optimization and implementation of solutions like ERP. We work with SME’s in all industry sectors,” says Mr Ranade while elaborating on the kind of services PwC provides to SMEs in term s of technology.

Since all the small and medium businesses are not set-up by techies, most of those who do not have a technology background are unable to understand their technological requirements. Mr Ranade suggests, “By planning with a perspective of 5-7 years. It should assess its size, operations and needs both with the present and future perspective and then decide which technology to buy. After they have decided on the technology they should then implement as per a roadmap to get the quick gains, to start with and move towards the strategic elements over time.”