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ENHANCING THE COMPETITIVENESS OF SMEs WITH ICT
As global competitiveness becomes a reality, Small and Medium Enterprises (SMEs), specially in
the manufacturing sector, face a huge challenge.
In the earlier protected economy scenario, even inefficient SMEs in the manufacturing sector managed to be
profitable. But with the global competition arriving, Indian SMEs need to continuously reinvent themselves
to stay competitive, efficient and profitable.
In this new age, Information and Communication Technology (ICT) can play a crucial role in enhancing the
productivity and efficiency of Indians SMEs. In fact, ICT can help SMEs enhance the efficiency of their
people, connect better with customers, vendors and other stake holders, streamline processes and save costs.
To bring the benefits of ICT to the SME sector 2004, the Prime Minister of India established the
National Manufacturing Competitiveness Council 9NMCC), which in association with Microsoft India
is dedicated to providing the SME sector with the necessary resources-both financial and technical,
which will ensure that Indian SMEs retain their edge even in the face of global competition.
DRIVING GROWTH THROUGH ICT
Many studies conducted worldwide on the SME sector have revealed a direct co-relation between
competitiveness and ICT penetration. The more an SME harnesses the power of ICT, the more it has been
found to be competitive.
In India, while the large manufacturing units have taken to ICT in a big way, the SMEs are yet to reap the
benefits of ICT on a large scale. This has led to a ‘competitiveness gap’ and the SMEs now need to
concentrate on adopting ICT to bridge the distance between them and the world. This is imperative, if India
is to grow as an economy.
In order to help SMEs realize the potential of IT, Microsoft is working intently with the Government,
industry, academia and local IT developer communities to spread the benefits of ICT at the grassroots and
take India forward.
DRIVING GROWTH THROUGH ICT
° ICT capital contributes positively and significantly to output and productivity of SMEs
° Contact or exchange of information between producers, exporters and consumers helps to
improve trade performance by creating mutual awareness of products, quality and market
conditions.
° Flexibility is considered to be a major source of competitiveness for SMEs compared to larger
enterprises. The use of ICT increases the competitiveness of SMEs as they enable the creation of
more flexible links with trading partners because of faster and more reliable communication
channels.
° External transaction costs are associated with the initiation, negotiation and enforcement of
Contract. The Internet helps enterprises get relevant information faster and cheaper, and reach
out to sellers and customers that were previously out of reach
° Economies of scale in exports help SMEs to expand regionally and globally
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