The Value of Internet for Small and Medium Enterprises in India

Anup Varier June 25, 2012
The Value of Internet for Small and Medium Enterprises in India
The most powerful advantage of the Internet for the SMEs is an improved level of customer interaction which is achieved by exploiting the participatory nature of today’s internet.

In multiple countries small and medium enterprises (SMEs) that have engaged actively with consumers on the Internet have experienced three-year sales growth rates up to 22 percentage points higher than those of companies with low or no Internet presence, according to the 'Internet Economy in the G-20' report by the Boston Consulting Group.

While SMEs constitute 17 percent of India's GDP they are responsible for 25 percent of private-sector employment. Almost all the high and medium web SMEs added jobs during the last three years but 17 percent of low- or no-web companies did not, says the report.Given that the SMEs have such a track record of job creation, policies that encourage more of these companies to develop an online presence could help address the lingering unemployment that currently plagues developing countries.

But the report finds that a surprising number of SMEs have not grasped the power of the Internet to build their businesses- or have ventured only to a very limited extent. Half of SMEs in India cited local business culture a significant barrier keeping SMEs from engaging more broadly or deeply online. While most of the hurdles need to be overcome by SMEs themselves, policy makers should take note that two in five SMEs cited access issues and government regulations as impediments to internet adoption.


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