India: digital is booming, but how to make it work for SMBs?

Business gave me the opportunity to return to India after many years and update my assumptions about how the country is responding to the digital revolution we’re seeing across the world. Any thoughts I’d had about limitations imposed by the diversity of the population or high levels of poverty were quickly dispelled. This is a market that has truly embraced the digital age. As such, it represents a huge opportunity for SMB cloud service providers who can both understand and address the factors that make the market unique. In this, the first of two posts on the subject, I look at the ways in which tech is taking off in India.

From taxi to trishaw: transforming transport

It might be easy to think that smartphones have made little impact in India. In fact, this couldn’t be further from the truth. According to eMarketer the country will soon have more than 200 million smartphone users, “topping the US as the world’s second largest smartphone market by 2016.” Usage is entrenched and it’s clear why: smartphone apps are filling the gaps in the country’s systems and infrastructure. Take transportation. From the taxi to the tuktuk, drivers are happily taking directions and getting traffic updates from Google Maps, making up for a road system that’s not well-defined. And that matters for anyone needing to get from A to B, given that there are few other ways to get around. Hailing an auto rickshaw is simpler too, with Ola  and Uber (which has added UberAuto to their traditional UberX and Uber Black). The need exists, the app is designed and the uptake is huge.

Ecommerce hits the target for value hungry consumers

Another growth area is ecommerce, with brands like Flipkart, Amazon and Snapdeal currently estimated by UBS at USD16 billion, rising to USD50 billion by 2020. With ever-present advertising across all mainstream media, and a value-hungry emerging middle class, this estimate is set to be exceeded. There are two key aspects to their success, firstly logistics: notoriously difficult to get right in India, they’ve developed effective software platforms and have started opening them to rivals as a paid service. And secondly payments: there are a range of options available to consumers, including the well-established use of pre-paid mobile minutes as cash. With over 50 million active users, PayTM, MobiKwik, Oxigen and Citrus are also driving the Mobile Wallet trend. Total active users have exceeded credit card users, creating a substantial platform for digital transactions.

This extraordinary boom in mobile use is in stark contrast to the market for laptops, tablets and PCs. Consumers have simply leapfrogged this and instead replace their smartphones every two years.

Government is on board

Both tech minnows and giants are driving this digital transition and doing it in a way that’s innovative and inspiring, creating their own model rather than adapting existing Western concepts. Concepts that, frankly, would not work in this market. And the government is partnering this endeavour, putting significant investment behind this burgeoning market. It’s committed a massive USD16 billion to the ‘Digital India’ initiative, which among other things will look to achieve a fully fiberised India with 600,000 connected villages.

Where’s the support for SMBs?

With a population that’s already adept at using apps and clear how their features can improve day-to-day life, SMBs are currently, surprisingly, under-served by providers. Typically employing 300 employees or less, many small businesses simply don’t have the time or resource to manage IT. Given that the SMB market totalled 48.8 million in 2013, according to Zinnov, and employs around 40% of India’s workforce, this is no small matter. So why hasn’t a cloud service provider stepped forward yet, and made the most of this opportunity? In my next post, I look at the challenges that such a provider faces, and how they might be surmounted.

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