Just half a million of India’s nearly 40 million small and medium business enterprises (SMBs) are leveraging the low-cost online medium to expand their consumer base, a top official from search giant Google said.
“India has about 40 million small and medium businesses (SMBs) of which only around 500,000 are online. This figure needs to rise if these entities want to reach their consumers at lowest cost and raise their profits,” Google Asia Pacific President Karim Temsamani told reporters here.
Today, Internet is one of the most effective and cheapest mediums. It is the most profitable medium for SMBs which involves low advertising costs and covers as many customers as possible in the geographies of their choice, he added.
“In India, Google has helped 200,000 such SMBs realise their potential online through our online advertising programme, AdWords,” Temsamani said.
Google’s AdWords is an advertising platform which allows enterprises to show advertisements to individuals who type in keywords related to the products or services it offers.
More businesses in Asian economies like India, China, Indonesia, Malaysia, etc are smaller in size compared to the Western economies and they are driving the change faster than the big companies, he said.
Commenting on the growth bottlenecks faced by SMBs in India, Temsamani said lack of infrastructure available for these businesses to have an online presence and use of advertising to enhance awareness of their offerings through the Internet, is a major issue.
“Besides, infrastructure another factor, which can be considered as a major bottleneck is that India being a country of diverse languages and dialects lacks representation of such languages on the Internet and this also restricts the growth of these businesses,” he added.
According to Indian Government data, Micro, Small and Medium Enterprises (MSMEs) accounts for about 45 per cent of the manufacturing output of the country and 40 per cent of the total exports.
The sector is estimated to employ about 69 million people in over 26 million units across India, which offers more than 6,000 products ranging from traditional to hi-tech items.
Temsamani said low investment on mobile technology or platforms is also limiting the growth of SMBs.
“One needs to understand the fact that more and more consumers are using mobile devices. If your’s is a small business, then not only is it your opportunity, but the capability of these devices have will provide you a great business advantage,” he added.
Google is trying to help SMBs strategise in context of what their customers are thinking while looking for services on the Internet and handheld devices that they use, Temsamani said.
Citing examples, he said Google has been seeing more traffic on its mobile maps services than the desktop version globally since 2011 and the mobile traffic on its video sharing site YouTube outgrew desktop access in South Korea in 2011 and in Japan a year later.
On the competition from Yahoo, Microsoft, Facebook in providing similar services to SMBs, he said, “I only see this as a benefit as more users will be utilising services to expand their businesses.”
According to a report ‘Online and upcoming: The Internet and small business in Asia’ by McKinsey and Company, SMBs contribute about 25 per cent to India’s GDP, while in the case of China it is 60 per cent.
In the case of exports, SMBs contribute 40 per cent in India and 69 per cent in China, whereas, in terms of workforce SMBs account for about 60 per cent of employees in both the emerging economies, the report added.
However, the report citing 2011 data for India said that Internet adoption has reached only 10 per cent of the SMBs.
“Across Asia, SMEs who use the Internet say it has helped them gain revenue and reduce costs. SMEs also reported an average 13 per cent improvement in productivity from using web technologies,” the report said.
McKinsey Global Institute Senior Fellow Anu Madgavkar said Indian SMBs can generate more business leveraging the services of web technologies and this phenomenon will increase as more and more people start accessing the Internet.
“Internet users in India are expected to touch 350-450 million by 2015-16 and this will act as a catalyst in the growth of SMBs as they will find more and more of their target users online,” she added.