The Indian SME market is a tough nut. Ask anyone working in this space and you would hear a story of relentless education and grass root level efforts to engage Indian businesses. Some key examples that come to my mind are Naukri.com, JustDial and Indiamart. Each of these are profitable businesses that have succeeded by helping businesses in India. What’s common between all three of these is the crazy sales & support they have created. None of these are known for Silicon Valley level cutting edge technology or an engineering culture to envy.
The reason for this is simple. Business men & women in India are not digital natives. A lot of businesses that I know still have only one email id amongst a 10 people organisation with everyone sharing the same inbox (or two at most) for all client communications. There are hardly any tools used to automate work and organise documents / teams. One exception to this is Whatsapp groups. Given Whatsapp grip over Indian messaging market, they probably are best suited to enter this space. But that’s a conversation for another day.
With Demonetisation hitting India last year, Government has had a aggressive push towards Digital India. Today Digital India is a concept much like Make In India, a much needed branding to a multi-year effort. Demonetisation was a disruptive event and while it can’t change the consumer behaviour overnight, it is a beginning. An event that has set the trajectory of Indians going towards digital payments much faster than before.
One big push which the Government is about to make towards businesses in India is GST. The Goods & Service TAX wold come into affect from 1st July 2017 and it would directly impact over 9 million businesses in India. These are the same businesses which I described above. Hard to digitise, ones that mostly outsource their compliance and very much in their comfort zone with the traditional setup.
GST requires any serious business in India to upload all their B2B invoices in digital format to the government portal on a monthly basis. Imagine that. Businesses that may have been billing on paper today, may not have a great invoicing or accounting system are not only required to get super disciplined with their billing, they also need to upload all their invoices to the government. Monthly. These invoices are required to be in a sequence, invoice once made cannot vanish and would be matched online with what the purchasers file with the government. This would not be a easy change.
ERPs like Tally have a stronghold amongst businesses in India. Whereas cloud solutions like Quickbooks are doing their best to make inroads into the Indian market. Given that Government is making such a large push towards making Tax Filing digital, they have a private body GSTN making the technology for it and APIs are given for startups to make high quality interfaces for GST filing. This opens up the doors to newer players like ClearTax, SahiGST etc to offer online GST filing softwares. Thus challenging the fragmented compliance market where several desktop based softwares have ruled the roost.
Will this GST push make businesses in India tend towards technology & lead to rise in digital adoption? Or would our finance professionals community rise up to the occasion and expand their offerings? I believe both would happen and years later when we look back at this day of GST launch, as much as fear & chaos it may seem today, then we would see it as a beginning of Digital Transformation in Indian SMEs.