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Busting the Myths about Automation in SMEs

automation in SMEs
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Since the new millennium, business landscapes have undergone several changes, thus making automation the need of the hour. While large businesses are making a rapid shift towards automation, Small and Medium Enterprises (SMEs) are still hesitant to adapt to it. The following feature, while mirroring the present scenario of automation in SMEs, touches upon its importance, the reasons for its low adoption and the steps that could encourage the adoption of automation in the sector at large.

Small and Medium Enterprises (SMEs) are vital growth engines in the development of India’s socio-economic environment. They are also likely to be a stepping stone towards realising our Prime Minister’s vision of making India a USD 5-trillion economy and a self-reliant nation.

According to CII (Confederation of Indian Industry), India has over 63.4 million SME units, which account for about 33.4% of total manufacturing output and 45% of exports. SMEs employ an estimated 120 million people directly and have to deal with various entities such as vendors, suppliers, customers and financial firms daily.

Managing increasingly complex operations can be challenging for SMEs and in addition to that, the adoption of automation in SMEs is lower than that of large-scale businesses. This can be attributed to myths like the high cost of automation, complexities of transitions from legacy systems and computers replacing human jobs etc. that float around the adoption of new-age tech in SMEs.

“There is a lack of information and knowledge that surrounds it. There is automation for processes that companies didn’t even know existed. So, they do not consider it in the first place. There is a huge knowledge gap when it comes to automation. Many companies don’t even know that automation doesn’t have to be expensive; that there are simple and inexpensive processes that can help grow their output and their business.”

~ Kalpak Chhajed, Co-founder, Dash 101

While sharing his company’s experiences in the field of automation, he adds, “In our case, it was like unravelling a thread. We started with automation in one process before finding more things we could automate and in different segments of work. Once we’d started, we found there were so many different solutions that we had access to and a lot of them were not even that expensive but applying these simple processes ended up making us more efficient as a company”.

Amid the myths surrounding the adoption of automation, there has also been a reversal in trends with Cloud-based platforms and SaaS offerings gradually attracting SMEs to explore the world of automation and new-age technology.

“This is true to a certain extent and in the past, upfront investment associated with automation was an impediment to SMEs. But with the emergence of cloud-platforms and SaaS offerings, we are seeing a reversal of the trend wherein the resource-limited SMEs are keen on exploring technology innovation to maximise human productivity and efficiency. Further, it offers them the flexibility to scale up or down and pay only for what they need, keeping the set up nimble and agile.”

~ Ankit Rana, Senior Vice President, Polestar Solutions and Services India

It has been noticed that while SaaS offerings and Cloud-based platforms were luring SMEs into exploring the world of automation, the outbreak of the pandemic has turned the tables and to an extent, compelled them to shift to a newer business model for their survival in the competitive market.

According to reports, the outbreak of the pandemic has adversely impacted 80% of SMEs. Frost & Sullivan’s analysis indicated that more than 25% of SMEs may shut down permanently due to the pandemic.

After being struck by the pandemic, a lot of these companies are now looking at automation as a solution to not only quickly getting their business back on its feet but also to keep something like another pandemic shutting them down completely at bay, shares Mr Chhajed.

Further shedding light on the current trend in the adoption of automation in SMEs, Mr Rana says, “In the current COVID-19 scenario, the use of automation and robotics is likely to increase. Many OEMs are already using robotics in a big way and this trend will be accelerated further to manage and maintain their assets.”

“Organisations will also see increased adoption by Tier-1 players who might adopt these technologies and leverage IoT and digital assets more effectively. The coronavirus crisis has further expedited the digitisation and the tasks where human contact can be avoided will be automated to the maximum possible extent”, he adds.


This is an abridged version of an original article that was published in the December issue of the Logistics Insider magazine. To read the complete and unabridged version, please get your copy of the magazine.

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