Article: The rise of SMEs: Challenges HR can’t ignore

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The rise of SMEs: Challenges HR can’t ignore

The ecosystem of business and work is undergoing a major upheaval, creating challenges for small and midsize enterprises. But are SMEs prepared to rise above?
The rise of SMEs: Challenges HR can’t ignore

Despite the challenges brought about by the pandemic, small and midsize enterprises in India stand strong. Now, in the post-pandemic milieu, many are preparing to bounce back and move closer to even bigger and more ambitious goals. 

Initial public offerings from SMEs in the financial year 2021-22 increased, from 28 companies raising Rs 244 crore, to 67 raising Rs 932 crore, data from Prime Database Group revealed.

But the ecosystem of business and work is undergoing a major upheaval, creating challenges for SMEs

Regulatory environment

The ease of doing business and other initiatives introduced by the government in the past few years have bolstered the growth of startups and SMEs in India. But the country’s regulatory environment remains complex. 

SMEs demand an ecosystem that allows them to be more competitive; enables technology innovation; ensures cluster and infrastructure development; and makes procurement of SME products easier. 

Access to funds

“Even with rising unicorns, one of the biggest challenges that we see today is that the startup ecosystem as a whole lacks a compelling revenue base,” said Nirav Choksi, co-founder and CEO, CredAble. 

To tackle this challenge, Nirav believes there is an urgent need to infuse cash flow into the startup ecosystem. Tax exemptions for foreign direct investments would also be a welcome move that could further aid in the globalisation of startups and emerging companies. 

In the 2022 Budget, the finance minister extended by another year the existing tax benefits of startups, which were earlier offered the redemption of taxes for three consecutive years. How far this will benefit SMEs and startups remains unknown. SMEs seek greater credit support. 

Skills shortages

The great reshuffle is far from over. The war for talent continues. SMEs have limited access to skills that are fundamental to their business growth. 

This is true for India’s budding gaming industry. “The industry will benefit from a fund that can provide capital to talented developers and designers, putting India on the path to becoming the hub for game development globally,” Sai Srinivas, co-founder and CEO, Mobile Premier League told People Matters, in an exclusive interaction. 

Investing in human capital is emerging as a key priority for large companies and SMEs.

Digital disruption

The SME digital uptake in recent years has increased. Realising the operational and functional benefits of digitising business and work processes, many SMEs have now walked down the path of digital transformation. Further nudged by the pandemic, SMEs are looking at digital and omni-channel models to deliver their services. 

But the SMEs lack readiness when it comes to digital transformation. The other challenges like access to funds or skills shortages further slow down their digital journey. 

The demand for digital can’t be ignored, if SMEs want to thrive in the new business ecosystem. Both talent and consumers are demanding a robust digital experience and SMEs must respond. HR leaders in these small businesses have to play a key role in driving the change agenda. 

How far are SMEs prepared for these challenges?

To benchmark the current state of work in SMEs and to chart its roadmap towards the future, People Matters and Keka present to you the much-needed research on the state of Indian MSME Sector 2022. The research will especially focus on the big business disruption and challenges and the implications of them on talent management. 

Click here to participate in the survey and get the exclusive report and a chance to win Amazon vouchers. 

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Topics: Strategic HR, #SMEcorner

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