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Indian SMBs to greatly benefit from digital transformation and cloud

Indian SMBs to greatly benefit from digital transformation and cloud

The beginning of a new decade is always anticipated with new innovations, growth, and development. However, the first year of the new decade seems to have hit a wrong note. The COVID-19 pandemic has shaken the economic and social roots of many countries, including the world’s superpowers.

Businesses, especially the small and medium businesses (SMBs), have been disrupted the most. Many businesses and startups came to a standstill when governments worldwide imposed lockdowns. SMBs were the worst affected.

While it is true that SMBs are the backbone of the Indian economy, they are the most vulnerable too. It is imperative to make SMBs more resilient to disruptions. The only silver lining among this COVID-19 led crisis, is the fast-tracked cloud adoption and digital transformation of businesses.

Digitally mature businesses, the ones that are equipped with the latest digital technologies, are more agile and resilient as compared to their counterparts.

To enhance global competitiveness and build resiliency, SMBs must also become technologically mature.

In the same context, National Association of Software and Services Companies (NASSCOM), released a report titled, “SMB Cloud Adoption in India: Towards a Cloud-First nation”.

The report primarily focuses on how SMBs are at the cusp of digital transformation, driven by cloud adoption.

The following sections talk about the key findings of the report.

Key Findings

In FY2019, SMBs accounted for $952 billion in revenue, translating to 34% share in the Indian GDP. Indian SMBs employ nearly 110 million people, second to agriculture. A strong foundation for SMBs makes India the second largest amongst the BRICS nation in terms of SMB contribution to country’s GDP and employment.

COVID-19 impact on SMBs

According to the report findings, COVID-19 had a deep impact on the SMB sector reducing the GDP share of 34% in 2019 to 28% in 2020. The major verticals impacted include automotive, healthcare, retail, and manufacturing.

Here, the businesses having an online presence in form of eRetail, eHealth, or eLearning have been more resilient.

Government lucrative packages for the SMBs do not seem to have a long-lasting impact. Technological adoption remains the key to improve competitiveness.

Indian SMBs Cloud Maturity and Adoption

  • Most SMBs are at the Initial Stage of the Cloud Journey

Many Indian SMBs are just at the initial phase of their digital transformation journey. To remain competitive, SMBs must focus on Innovation.

The major challenges that limit the growth of Indian SMBs are access to the skilled workforce and capital. Other challenges include:

  • Access to managerial competitiveness
  • Rapidly changing demand landscape
  • Marketplace transition from brick and mortar to online
  • Uncertain demand for innovative products

The key to recovery is to invest in technology like cloud computing, deployment of security, moving existing workloads to the cloud, process automation, etc.

  • >60% of respondents use the cloud in some form

The report highlighted that more than 60% of the respondents use the cloud in some form. Amongst these, 16% of the cloud users are at the mature stage of their cloud journey. The primary factors that drive cloud adoption include – cost savings across infrastructure, staff, and software.

Public Cloud is currently the de-facto preference for most companies.

  • e-Commerce and IT-BPM are the leaders in terms of cloud adoption

Among the emerging growth verticals in terms of cloud adoption – technology and technology-based sectors such as IT-BPM and e-Commerce, BFSI (Banking, financial services and insurance) are leaders. Most of the modern-day startups are born-on the cloud and follow a cloud-only strategy for better cost savings, agility, and business continuity.

According to the report, mature IT-BPM enterprises and tech unicorns are expected to be using more than 15 SaaS-based apps.

  • SMBs Predominantly Rely on Local Channel Partners for Cloud Solutions

According to the report findings, cloud requirements of SMBs are largely catered through local channel partners and IT resellers due to their extensive reach (60%).

  • Pay Per Use Remains Dominant

Pay-per-use is the preferred pricing model among SMBs as it fits their budget requirements. Most are apprehensive in making moderate or large upfront payments.

India’s Public Cloud Market

According to the findings of the report, the Indian Public Cloud market is estimated at ₹ 17,000 crores in the FY2020.

Amongst this, SaaS (Software-as-a-Service) has the dominant share (50%) with a CAGR of more than 27%. Another growth can be seen in the IaaS (Infrastructure-as-a-Service) segment that is growing at a faster rate of 33%. Shift from a CAPEX to OPEX model is one of the main drivers.

The IaaS growth is driven by exponential data generation, use of storage-as-a-service, demand for big data analytics, and DRaaS & backup services.

The report also features 17 case studies that reflect on how companies have used cloud computing to address various problems of their customers. It includes case studies from companies like TATA Advanced Systems, Impetus Technologies, ZNet Technologies, and more.

The opportunities for cloud service providers

The transition of Indian SMBs from legacy IT systems to cloud-based software and tools present an opportunity for the cloud players.

Cloud players must focus on identifying the major challenges faced by SMBs in the form of IT management, data management, security, CRM, etc. and then offer managed services that can smoothen their transition to the cloud.

By adopting a cloud framework, SMBs can improve their operations and productivity, while achieving business continuity and agility. The public cloud opportunity for cloud players stands at ₹ 630 billion by 2025.

Best practices for SMBs in cloud

The report also highlights some best practices for SMBs – a roadmap that can help them build a cloud maturity framework.

As the majority of the SMBs are at the beginner stage of the cloud adoption journey, the report suggests them to break the siloes of cloud investment and look at the larger picture.

A cloud-first approach can help them improve their business performance and gain better ROIs. They must define the cloud-goals of their business and then plan investments to meet cloud objectives.

Where can I get the complete report?

The report is free to download for NASSCOM members. Others can check the link here to get a copy of the report.

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