Wednesday, July 24, 2024

68% MSME Retail Owners Witness Growth in Business Post Digital Tech Adoption: PayNearby Report

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The MSME sector in India has experienced significant growth in adopting technology recently, driven by a notable shift in small business owners’ perspectives. According to PayNearby’s ‘MSME Digital Index 2024,’ a Pan-India report detailing technology consumption by MSMEs at the grassroots level, over 65% of Micro, Small, and Medium Enterprises (MSMEs) utilize some form of digital technology for daily operations. The report emphasized that 68% of MSMEs acknowledged the beneficial impact of adopting digital technology on their businesses and personal lives.

Regarding the positive impact of technology on their businesses, 31% of respondents indicated that it has enhanced business growth by improving operational efficiency, while 27% reported increased sales and income due to technology adoption. However, the main challenges in using technology for business operations included resistance to adopting new technology (36%) and the high costs associated with implementation (18%).

Language preferences for understanding technology and conducting business transactions showed that 52% favored English, followed by Hindi at 21%. In the financial services category, UPI (43%) and Aadhaar banking (38%) were the most popular banking services used by MSMEs at the last mile. WhatsApp and WhatsApp Business were the most widely used messaging apps, with a usage rate of 97%.

The survey indicated that 75% of small business owners aged 18-30 were the most digitally adept, with over 87% in this age group using smartphones for daily business operations and accessing digital content. This age group was closely followed by those aged 31-40 years. Notably, 36% of respondents in this age group reported a monthly income of more than Rs 15,000.

The widespread adoption of smartphones underscores the internet’s crucial role in bridging infrastructure gaps and promoting tech inclusion among MSMEs at the grassroots level. Smartphones emerged as the most popular digital device, preferred by 70% of users. Among the respondents, 68% reported using smartphones for business activities, consuming between 2GB to 5GB of internet daily. Over 51% of these businesses spend less than Rs 500 per month on internet usage. For internet access at work, approximately 66% used mobile hotspots, followed by Wi-Fi routers at 26%. Ethernet cables and dongles were used by only 5% and 3%, respectively. At home, 75% relied on mobile internet for connectivity. The Digital India mission and BharatNet initiative have accelerated internet penetration in rural areas, making it affordable and bridging the digital divide.

The report also stated that among all tech-savvy MSMEs, 29% used accounting software, followed by POS software and Customer Relationship Management (CRM) software at 17% and 14%, respectively, to manage their business operations. Meanwhile, 6% indicated they do not use any software and instead rely on manual methods.

When asked about the purpose of using digital devices in business operations, 41% used them to streamline financial transactions and efficiently track business expenses, while 18% stated that technology was used to accelerate processes. This highlights the necessity of fostering a thriving tech ecosystem to empower MSMEs and drive their growth for a stronger Bharat.

Commenting on the report findings, Anand Kumar Bajaj, Founder, MD, and CEO, PayNearby, said, “The MSME sector is pivotal to our economy, and their adoption of digital technologies is crucial for India’s growth. The MSME Digital Index 2024 showcases significant progress in technology adoption while highlighting persistent challenges. We believe that MSMEs should be supported in their digital transformation journey and ensure that technology’s benefits reach every corner. By leveraging artificial intelligence (AI), augmented reality (AR), and machine learning (ML), MSMEs in rural India can thrive in a digital-first economy. We must foster an inclusive ecosystem that enhances skills and removes barriers, enabling all businesses to embrace digitalization. Together, we must envision a future of limitless opportunities, driving economic growth and social upliftment in the real Bharat.”

Jayatri Dasgupta, CMOPayNearby, added, “Focusing on women respondents, who represent 32% of the survey, the data highlights the pivotal role technology plays in fostering women’s empowerment and financial independence. Among the female respondents, 85% own smartphones, enabling their engagement in digital transactions. The growing usage of digital payments, at 40% among women entrepreneurs, underscores their confidence in leveraging technology for business growth. PayNearby’s Digital Naari initiative aims to further empower women by enhancing their digital literacy and providing them with the tools needed to achieve financial independence, ultimately contributing to a more inclusive and prosperous Bharat.”

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