Small businesses that employ less than 20 employees typically dominate these local services.
Local services for home, business and informal education are a $100 B opportunity in India. This comprises a range of home improvement services (painting contractors, waterproofing contractors, building contractors, architects etc), home services (cleaning, pest control, plumbing, carpeting etc) and informal education (coaching services, computer training services, tuition services etc).
Small businesses that employ less than 20 employees typically dominate these local services. Sulekha estimates that nearly 20 million such businesses operate in local services across the top 100 cities of India. There are typically no Hindustan Levers or General Electrics dominating these categories.
Satya Prabhakar, CEO and Founder of Sulekha says, “MSMEs provide 90% or more of the requirements that consumers need in these categories. They typically have several problems like lack of capital, lack of awareness that hobbles their growth.”
While IT and ITES businesses that serve American and European markets get a lot of media attention, the top 20 companies in these sectors employ only about 1.5 to 2 million people. On the other hand, local businesses employ more than 40-50 million people, as per Sulekha estimates. This offers a tremendous opportunity for both startups and older businesses to serve customers better.
Digital offers a very inexpensive way of local businesses to serve their markets better. Solutions like Google and Facebook can help small businesses to target consumers (eg: Painting contractors in Thane and Navi Mumbai areas) – this can help them attract digitally savvy consumers who want to buy their requirements. There are other digital solutions including those provided by Sulekha, Just Dial etc that can help these local businesses grow fast.
Satya Prabhakar added, “Cloud-based solutions can give valuable insights to small businesses to dramatically grow their business. This is very different from just 5 years ago when these solutions weren’t available. Today small businesses can use Zoho for accounting, Sulekha for generating leads, Bigrock for booking domain names and Amazon for selling products.”
Surveys done by Sulekha show that product and service sellers can easily get to turnover of Rs. 1-2 crores p.a. if they use digital solutions to target local businesses in their city/region. The Government of India is also encouraging a lot of MSME growth through Startup India, Digital India and other initiatives that provide easy credit, easy availability of capital and digital training.
By 2020, Sulekha’s surveys show that more than 60% of all MSMEs will be using such digital solutions to grow local businesses. And these could easily provide local employment, besides growing local businesses.