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Why is technology essential for the growth of SME’s

By on December 13, 2016 in SMEs Insights with 0 Comments

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Any nation’s growth relies heavily on SMEs, with these being the setups that are based even in small towns, employing large number of skilled and unskilled workers there, overall contributing majorly to a country’s GDP. It can be said that for a nation to achieve the requisite urbanization and industrial growth, the continuous development of it’s SME sector is the most warranted. As for India, although plagued by inherent structural problems and overlapping regulations that lack clarity, the SME sector here has still been growing at a steadfast rate. According to a recent research, India currently has over 48 million SMEs, contributing to more than 45 percent of India’s industrial output, 40 percent of the country’s total exports, while creating 1.3 million jobs every year.

The problems faced by a majority of SMEs can be solved to a large extent by integrating technology into their functioning. In fact after analyzing recent surveys of SME owners in India, one can easily conclude that most owners believe technology will have a very positive effect on their company. To put it succinctly, technology is essential for SMEs due to a host of factors. Lets look at some of them in detail.

Technology simplifies various material handling issues

SMEs spend a great deal of their precious ( sometimes limited ) resources in material handling issues such as sourcing of raw materials, checking them for any defects, transporting the raw materials to the production facility, payment of vendors and many more. Through integrating technology, these processes can be streamlined. For example, through using a software that provides results based on empirical evidence regarding which vendors to source from, past defects in raw materials sourced from the vendor, the most cost effective way to transport the raw materials etc., SMEs can simplify the persistent material handling issues faced by them. Further, the software can be integrated with a payment gateway ensuring online payments to all the vendors.

Technology ensures increased production efficiency

Issues such as lack of accuracy, wastage of resources and man hours can be tackled by the use of technology. Technology will enable the production of products up to the minutest preciseness possible, with the possibility of increase in output. Moreover, technology will also enable the full utilization of resources, an example being an automated machine with an ability to combine leftover raw materials from a previous production process with raw materials that are meant for a current production process.

Technology ensures a much better client interaction

Suppose an SME owner has to discuss something important with a client based 100 kilometers away. Rather than flying down to meet him/ her or talking over a telephone, the SME owner can simply have a virtual meeting with the client through video conferencing and discuss on samples if required. Similarly, through the use of internet, the client can also remain updated and suggest changes if required in the product being manufactured.

Technology will help to pay employee salaries on time

For all SMEs, keeping their employees happy and satisfied is a major task. Recurring external issues ( the most recent being demonetization ) hinders the monthly salary payments of their employees. Going cashless and using bank account transfers to pay salaries will prevent any such turbulence in the future. Along with salary, this mode of payment can be used to pay bonuses and even be used to pay part time workers. Further, this will also prevent the man hours wasted in arranging the cash, paying each employee his/ her salary and keeping a record in a diary.

Technology will also help in advertising and marketing endeavors of the SMEs

The traditional marketing mediums like electronic and print media are too much costly, simply not affordable for most SMEs. By using online media, such as YouTube, Facebook, Twitter etc., SMEs can increase awareness about themselves and can also overcome their geographical limitations. Moreover, most of the advertising mediums mentioned above are pretty much inexpensive when compared to traditional advertising mediums and as the world isĀ  increasingly becoming technology centric, these are much more potent, with higher possibility of positive results.

 

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