ICT adoption by MSMEs

Abstract

ICT adoption by MSMEs is of considerable significance in the present scenario. At a time when the world is amidst a major health and economic crisis due to the Covid-19 pandemic, adoption of ICT especially by Micro, Small, and medium enterprises is keeping the wheel of the economy moving. Every year 14.9 million people are being employed in the Micro, Small and Medium Enterprises sector (survey by CII). MSMEs contribute to 40% of India’s exports and 45% of total output. Over 6000 value added products are produced by MSMEs. This suggests how critical MSMEs are to the success of a nation. However, there are a number of obstacles that act as a hindrance to their growth including, ineffective marketing strategies, constraints to modernization and expansion, lack of skilled personnel, and limited knowledge. This paper focuses on the use of information and communication technology (ICT) to overcome these constraints. ICT based solutions including Six Sigma, Total Quality Management (TQM), Total Productive Maintenance (TPM), Enterprise Resource Planning (ERP) softwares, etc. have transformed the working of MSMEs in recent times. MSMEs using ICT have witnessed a rise of 20% in their revenues compared to those not adopting ICT. However, there are certain limitations to the use of ICT including high cost, technical failures, lack of technological expertise and infrastructure. The Ministry of MSMEs has made huge efforts to overcome these with the help of schemes like Digital MSMEs, ASPIRE and National Manufacturing Competitiveness Programme (NMCP). INR 7,572 Cr have been allotted to Ministry of MSME in 2020-21. As part of the research, a telephonic interview of owners of 10 MSMEs of India was conducted on the use of ICT and their perception with respect to adoption of ICT in MSMEs. Thereafter, statistical inferences were drawn. Almost all enterprises (in the sample space) use Tally for accounting and few of them use ERP softwares or open source softwares for automating processes like HRM, SCM, production planning and production scheduling.