For the first time, the Small and medium enterprises (SMEs) of the world, especially those in emerging markets, are being empowered by technology. As technology becomes affordable, it will downstream to the bottom of the enterprise pyramid creating a world of business very different from the one we see today, one in which the smaller companies can also make a difference, especially if they can form online clusters.
Look at some of the numbers. There are, according to Dun and Bradstreet, 3.2 million small-scale industries (SSIs) in India. The computer base in India is about 6.5 million, of which 3.5 million computers have been sold in the past 3 years. Of this, about 1 million would have gone into homes and at least 1 million would have been bought by the bigger companies. The SMEs have thus bought less than 1.5 million computers in the past 3 years. The SMEs put together, by my estimate, must be employing well in excess of 50 million people.
The problem of course is the cost of technology, which is dollar-denominated. In the US, it is easy to spend USD 3,000 on computing (hardware, software, maintenance) for a person. It amounts to less than 10% of the salary of the person using it. In India, that figure remains the same (assuming people have to buy legal software). But the same money in India becomes a multiple of a person’s salary, rendering it unaffordable for the mass corporate market.
What if this were to change? What if the real cost of computing were to be brought down to 10% of the salary of the person in India? This means a 70-90% reduction in the cost of technology. This would dramatically change adoption levels – my bet is that sales of computers would go up by a factor of 3-5. The amplification power of the penetration of technology within enterprises would be huge across the economy as people start interacting electronically and technology makes possible the “near-real-time economy” in India. Productivity would go up, inefficiencies across the supply chain would come down, and a computer-literate workforce by the millions would open up global opportunities for their enterprises.
Small businesses have typically lagged big businesses in technology adoption by 3-5 years. SMEs are only just starting to adopt technology. As they do so, there is an opportunity for entrepreneurs worldwide to empower SMEs using a mix of existing technology components and innovative thinking. This new enterprise mass market thinks of technology as a utility, as a way to bridge the digital divide across companies and across markets.
As employees and enterprises go online with a PC on every desktop, online clusters of enterprises and people will give greater voice and power to the group hitherto which has mostly been only partially connected to global networks. This may be as unimaginable as the prospect of a million bloggers was a year ago. But it is a future which is rapidly emerging at light speed.