The government is emphasising on Digital India at every possible opportunity of industry interaction. While big companies are rapidly adapting to the e-commerce, digital technology culture, small and medium enterprises (SME) are a laggard.

Here are pointers that explain the potential impact of digital technology on SMEs:

  • What is digitalization:

Digitalization is defined as the use of digital technologies to change a business model and provide new revenue and value-creating opportunities. In other words, it is the process of moving to a digital business.  

  • Impact on revenue:

Over the past few years, smartphones have taken the country by a storm. People from all demographics have become extremely dependent on this technology. These days, people order everything from food to furniture online. And if a customer wants to find something like say, a store that sells old vinyl records, she simply does a Google search. The search immediately throws out results for music stores near her. And if your store does not have an online presence; then Boom! You just lost a customer. For an SME, having only a physical presence can limit the company’s market reach. Having an online presence can provide good opportunities to increase the customer base as well as profits. There is enough empirical data to show that SMEs with an online presence can be more profitable than those without it.

  • Access to wider customer base:

The internet creates a level playing field to compete. An SME has as much opportunity to attract customers as big multinationals. The emergence of e-commerce has provided SMEs with low-cost effective solutions to trade with customers all over the world. In addition, customers can buy their products 24X7. There is no concept of a “Closed” sign in the online sphere. It may be night in India but that shouldn’t stop a customer in Belgium to buy your company’s product. So by investing in digital technologies and improving customer experience, SMEs can increase their customer base in a big way. And all this is possible with a limited increase in operational costs.

  • Increase in operational efficiencies:

It is great to hear the cash register ring all day long. But a company cannot really enjoy its profits if the operational costs are too high. SMEs can decrease their overall expenditure by optimizing their operational costs through small business software such as cloud based platforms and ERP systems. These solutions will help the company perform better by providing meaningful information for better decision making. For example, a study by online shopping giant Snapdeal reveals that SMEs can optimize their marketing expenditure by as much as 60-80% of the total cost through access to e-commerce platforms.

  • Better customer engagement:

In today’s environment of instant feedback and 5-star reviews, the customer has become the emperor. An enriched customer engagement is more important than ever. Luckily, tools like data analytics and business intelligence are transforming the way companies interact with customers. These solutions try and predict customer needs by combining technology with increased customer engagement. Until recently, this technology has been cost-prohibitive for SMEs. But with the emergence of new cloud based solutions and free software, SMEs are back in the game.


Growth in the online space has increased by leaps and bounds. And in order to survive in the global market today, an online presence is a basic requirement. Recognizing missed opportunities, lots of offline SMEs are now jumping onto the bandwagon to become digital SMEs.

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