With smartphone and internet penetration going up, millions of small businesses are moving online. A recent study, by consulting firm Zinnov, estimates that over $80 billion of digital services may be consumed by this new class of small and medium businesses (SMBs) in the country over the next five years.
According to the report, there are 75 million SMBs at present and this number is expected to grow to 105 million by 2024. About over 50 million SMBs are already using digital technologies, over smartphones, computers and the internet in their business workflows.
The study noted that over 600 aggregator businesses, many of whom are new-age startups such as Udaan, Oyo, Meesho, Ola, Swiggy, and Rivigo, have already enabled over 10 million SMBs to adopt digital and will continue to play a vital role in SMB digitisation.
Digitally-empowered SMBs are leveraging a combination of digital services in connectivity and communications, payments, discoverability, productivity-focused technologies, and are starting to expand into the world of artificial intelligence (AI), automation, and Internet of Things (IOT).
“Global tech giants and tech ISVs are committing huge investments to the Indian SMB market. Private equity and venture capital interest in the SMB aggregators and start-ups is at an all-time high and is resulting in the rapid valuation enhancement of such companies,” said Praveen Bhadada, partner and global head - digital transformation, Zinnov
“By 2024, we expect the SMBs’ contribution to India's GDP to grow from the current 40% to about 50%, on the back of pervasive digitalisation. The rising performance of digital SMBs will support adding 4 million new jobs in the next 5 years, anchoring this segment as the linchpin for the Indian economy, especially in light of the purported economic slowdown, in the years to come,” added Bhadada.
The gig economy, which essentially comprises freelancers or independent entrepreneurs growing their business through new-age “platforms, is a major contributor to the digital economy. While traditional industries like retail, manufacturing, logistics, etc. account for a large base of SMBs, it’s the newer categories of SMBs such as housewife resellers, cab drivers, delivery partners, and media content creators that are expanding the SMB base rapidly, and already account for 10% of the total SMBs in India,"said Bhadada.