Web-enabled India SMBs get 50 percent boost in revenue, profit

Web-enabled India SMBs get around a 50 percent boost in revenue and profit, according to a report by the Federation of Indian Chambers of Commerce and Industry (FICCI) in partnership with Google.

The report, compiled and presented by Nathan Associates, showed that SMBs, who use the Web, fare much better than those that do not. On an average, Web-enabled SMBs boasted revenues 51 percent higher, 49 percent more profit, and customer bases 7 percent broader than their offline-only counterparts.

The report tries to establish the impact of the Internet on SMBs in India. Established in 1927, FICCI is the largest and oldest apex business organization in India and draws its membership from the corporate sector, both private and public, including SMBs and MNCs. Nathan Consulting commissioned Nielsen to survey 951 SMBs from 14 industrial clusters in 19 geographical clusters spread across 11 states of India.

SMBs are critical to the economic growth in India, where 47 million SMBs employ about 100 million people and contribute more than 8 percent of India's GDP.

Rajan Anandan, vice president and managing director of Google India, said: "No developing country with fast growing economy can rely only on its big companies to achieve sustainable growth, and these businesses are leading the way for small Indian business looking to go big online. In the last five years, Internet has had a direct impact on how both consumers and businesses engage with each other." 

"Only 5 percent of SMBs in India have a Web site. I sincerely hope that the government will join with industry to help India realize the value of the Web and put India back on a trajectory of economic growth," he added. 

Despite the advantages, few concerns hinder Internet adoption and prevent SMBs that have adopted it from realizing its full potential. A majority of Internet-using SMBs are concerned about the security of online financial and personal transactions. 

Snapshot: Internet's Role in the performance of India's SMBs

1. Amongst SMBs that use the Internet, 69 percent experienced an increase in customers, and 63 percent an increase in geographic reach and 44 percent saw an increase in firm employment.
2. On an average, an SMB adopting the Internet is able to grow its customer base by 7 percent and employment growth by 4 percent. 
3. Doubling of Internet use in SMBs can generate 43 percent higher profits for SMBs.
4. Only 23 percent of surveyed SMBs engage in e-commerce; on average they have more revenue, employees, and customers than those that do not.

Internet can be a great equalizer for SMBs, providing them with access to new markets, more customers and visibility so as to unleash their potential. However, with 95 percent of businesses yet to even establish a Web site; India is poised for big gains as more small enterprises come online.