The MSME sector in India is on an ambitious growth curve and in recent years, there has been a progressive change in the mindsets of small business owners towards technology adoption. In a new study, PayNearby, the digital financial services network, said that more than 71% Micro, Small and Medium Enterprises (MSMEs) in retail, use some form of digital technology for their day-to-day business operations. The report highlighted that more than 80% of MSMEs admitted that the adoption of digital technology has had a positive impact on their businesses and personal lives.
The insight was shared as part of a detailed survey titled – MSME Digital Index 2023 – a Pan-India report showcasing technology consumption by MSMEs at the last mile. The report was prepared basis a nationwide survey conducted by the company among 5,000+ MSMEs in the retail space (kirana stores, mobile recharge stores, medical stores, customer service point (CSPs), travel agents, among others), recording their tech awareness and tech consumption patterns in their professional and personal lives.
According to the survey, the small business owners within the age group of 18-30 years were the most digitally adept, with over 75% of this age bracket owning a smartphone to run their day-to-day business operations and accessing digital content through it. It was immediately followed by the age group 31-40 years. Notably, 32% of them citied that their monthly income is more than Rs 15,000.
In the financial services category, Aadhaar banking and UPI were the two most popular banking services availed by MSMEs at the last mile. Additionally, WhatsApp and WhatsApp Business, cumulatively, were the most widely used messaging apps with 97% usage.
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The uptake of smartphones underlines the critical role played by the internet in helping bridge the infrastructure gap and drive tech inclusion at the last mile by onboarding MSMEs on the digital bandwagon.
Among all digital devices, smartphones were cited as the most popular category, with 68% of the users claiming them as their most preferred choice.
66% MSMEs claimed to use smartphones for business activities consuming 2GB -5GB of the internet in a day. More than 52% of these small businesses spend less than Rs 500 per month on internet consumption.
In terms of connecting to the internet, approximately 55% cited that they used mobile hotspots to connect to the internet at work. This was followed by Wi-Fi routers at 30%. The use cases of ethernet cable and dongle were a mere 10% and 5%, respectively. 73% used mobile internet to connect to the internet at their homes.
Anand Kumar Bajaj, founder, MD and CEO, PayNearby, said, “Riding on the back of the smartphones, internet and fintechs, MSMEs at the last mile are increasingly embracing tech. However, this is just the start. We need to create a strong ecosystem where not only access to technology is made cheaper and easier, but also provide an infrastructure where people can be skilled and their tech inhibitions and apprehensions suitably addressed. For this, technology has to be form factor agnostic, easy-to-use, easy-to-manage and easy-to-scale.”
The use of digital devices was primarily for work purposes, with 32% spending 4-6 hours on their phones. However, when it came to leisure activities like social media or online entertainment, the report noted that 60% were spending less than 3 hours.
Among the social media apps, Facebook took the top slot with 27%, and YouTube was the most preferred entertainment app with 47% usage. 57% of the respondents said that they did not have gaming apps of any kind installed on their phones.
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The report further stated that of all the tech-savvy MSMEs, a majority of 25% used accounting software, followed by POS software and Customer Relationship Management (CRM) software at 20% and 17%, respectively, to manage their business operations.
When asked about the purpose of the usage of digital devices, 25% used them for account keeping and payment acceptance, while 20% stated that technology was used to process transactions.
On being asked about the positive impact of technology on their businesses, 32% said that it has helped grow their business by improving efficiency in business operations and 28% said that with technology they have seen an increase in their sales and income.
When it comes to the main challenges faced in using technology for business operations, 30% said that they could not afford the high cost of technology, and 29% grappled with poor internet connectivity. Remarkably, 65% chose English as their preferred language to understand technology and conduct business transactions, followed by Hindi at 24%.
