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Barriers of ict usage among smes in india

I . t

The effective operation of companies for most industries is starting to become increasingly influenced by their ability to adopt and utilize ICT and the acknowledgement of this sort of technologies by simply large companies, the same level of adoption is not evident among SMEs. ICT adoption has been thought to be a complex trouble by SMEs. Although Government of India is taking initiative in promoting ICT adoption in SMEs. Still a lot of issues ought to address for successful ownership of ICT in SMEs.

This study attempts to identify the interior and external barriers existing in usage of ICT by SMEs with the help of overview of literature and secondary info study.


In growing countries, SMEs are the key source of income, a breeding

Ground intended for entrepreneurs and a supplier of career.

YUXTAPUESTO, WSIS Report, February the year 2003

Globalization, increased level of competition, high level of uncertainty, inability to anticipate the future characterizes the present day world of business. The traditional elements of production land, labor and capital can no longer assure sustainable competitive advantage. To be able to adapt to improvements and to grow in this competition requires the firms to adopt to technology which assist in faster, dependable, cheaper and safer communication. Proliferation info and Communications Technology (ICT) nurtures the business world largely.

Small , medium companies (SMEs) constitute almost ninety five percent of enterprises inside the region and directly serve as both the central source and drivers of national economies. Since the global overall economy becomes progressively reliant upon information and communications technology (ICT), the small businesses within the growing economies will be yet to reap the benefits of ICT adoption.

The purpose of this paper is usually to investigate the extent of adoption info and conversation technologies by small and channel enterprises (SMEs) in the developing sector.



The federal government of India has enacted the Mini, Small and Medium Enterprises Creation (MSMED) Take action, 2006 in terms of which the meaning of micro, small , medium corporations is as beneath:

  • A micro enterprise can be an business where purchase in plant and machinery does not go over Rs. twenty-five lakh
  • A little enterprise is definitely an business where the expense in flower and equipment is more than Rs. twenty-five lakh although does not go beyond Rs. 5 crore, and
  • A medium venture is a great enterprise in which the investment in plant and machinery is more than Rs. 5 crore but does not exceed Rs. 10 crore. (http://www. rbi. org. in, )
  • Inspite of its good contribution to the Nations overall economy, in progressively more competitive inside the National and International Marketplaces, SME Sector faces several problems a shortage of adequate and timely financial finance, limited capital and knowledge, nonavailability of suitable technology, low production capacity, ineffective online strategy, identification of recent markets, limitations on modernization expansions, nonavailability of highly trained labor by affordable price, follow up with various government agencies to solve problems and so forth. With reducing of economy in India and overseas, particularly USA and Eu and increased competition supply by china manufacturer and a few inexpensive centers of production coming from abroad a large number of units have been completely facing a difficult time. In order to make it through SMEs ought to resolve to competitive tactics like solid technological basic, innovation, intercontinental business view and develop capacity to restructure.


    The creation of information and communication systems across the globe requires not only the business world but as well every discipline to accept these tools. Mobile phone telephones present market backlinks for farmers and business people. The Internet provides vital know-how to universities and clinics. Computers increase public and private services, and increase production and contribution. By attaching people and places, ICT has played out a vital role in national, regional, and global development, and holds substantial promise for the future. (world traditional bank report, 2006). ICT re-homing is linked to the bottom line of company harmony sheets. Companies using email-based for buyer communication, for example, can increase 3. 4% faster in terms of sales than those which do not (Qiang, Clarke, Halewood, 2006). Production and reinvestment were identified to be likewise higher for more intensive users of ICT. In another study of manufacturing SMEs in Canada, the development of e-business methods was identified to explain 4% of revenue growth and 5% of export performance (Raymond, Bergeron, Blili, 1-6-2005). ICT makes it possible for product innovation in SMEs (MARIANO CORSO, 2001), internationalization (Sharon Loane, 2006).

    ICT and SMEs

    Today the use of ICT in businesses is very important, especially in SMEs, which might be the majority of companies operating in the world. The usage and utilization of ICT brings benefits with regards to efficiency, effectiveness, innovation, development and competitive advantages. ( Domenico Consoli, 2012). The determinants factors are because given in figure 1 .

    Similarly, the blockers are around 4 factors viz

    • financial: excessive initial expense and difficulty in the usage of credit
    • infrastructural: power, bandwidth and trustworthy Internet connection
    • organisational: lack of qualified staff and coherent strategy
    • technological: development of technology without adequate training

    (Dr Charles Akomea-Bonsu(2012), Domenico Consoli(2012))

    Other major factors that affect the ICT adoption by SMEs are relative advantage, compatibility, observability, security and cost. Other significant reasons that hinder the ICT adoption are complexity and trainability (availability of trial softwares) ( Khong Sin Tan, 2012).

    As the global economy becomes increasingly reliant on information and communications technology (ICT) to receive, process, and send out information, the small businesses should strive the benefits of adopting ICT. But the ability of SMEs to engage and reap benefits of globalization depend on the extent of use of ICT. Otherwise, these SMEs are set to lose out on opportunities to integrate into the global supply chain, bid for outsourcing businesses, and increase their internal productivity and efficiency. ( Vadim Kotelnikov,2007).

    Khong Sin Tan (2010) conducted study on “Internet based ICT adoption” in Malaysian SMEs and reported that all but 4. 7% of the enterprises have garnered the internet usage. With the support of the Government in terms of incentives, grants etc. , those SMEs which have adopted internet based ICT, experienced the closer relationship with their trading partners. Service sector seems to have adopted ICT more compared to the manufacturing sector.

    The major source of competitiveness for SMEs is their flexibility and ICT enables flexibility by creating more flexible links with trading partners because of faster and more reliable communication channels. AT the same time, we should not deny the fact that SMEs are characterized by informal information systems and the decision maker is mostly the entrepreneur himself, whose personal resources are restricted.

    With the use of ICT transaction costs could be lowered and facilitate the SMEs to expand regionally and internationally. Müller-Falke (2001) finds for Indian manufacturing SMEs that enterprises that use more advanced forms of ICT have on average a higher labour productivity and a higher growth rate(Susanna Wolf,2000).

    Challenges of ICT adoption

    Supporting challenges. SMEs do not take advantage of ICT vary widely across sectors and nations. In developing countries, particularly in India, SMEs often lack the human technological resources needed for ICT implementation. Lack of awareness, uncertainty of ICT benefits, set-up costs and pricing issues and security concerns are the most visible barriers to ICT adoption. SMEs facing economic and political uncertainty and cultural factors are also barriers for ICT adoption in India.

    Technical challenges. From technological perspective, a firm should have at least someone within it who has a reasonable amount of knowledge for technology in general. Therefore, without internal technological capabilities, utilisation of ICT applications might be difficult and sometimes dangerous in terms of system maintenance and failures. The opposite is to seek advice and support from IT professionals, but most SMEs do not simply afford to do that because of the relatively high cost.

    Managerial challenges. From managerial perspective, SMEs may also lack the managerial understanding and skills. A small and medium-sized enterprise needs to entirely reshape its current systems because ICT adoption projects are complex in nature. For example, the successful implementation of e-business requires restructuring business process and redefining core competence of the firm. Undertaking such changes cannot be successfully implemented without relevant skills and a visionary mindset. Further, lack of longterm corporate strategy is another factor. SMEs’ strategies are often confined on survival and on shortterm activities.

    Administrative challenges. More precisely, very often, managers of SMEs set their decisions on current needs and situation. The decision-making process of the managers is rather intuitive, based on instinctive decisions and is less dependent on formal models of decision- making. They tend not to pass on information and do not delegate decision-making powers to their inferiors. They are often the only people in the company who have the authority, responsibility and access to the information necessary for identifying business opportunities including utilisation of information technologies for strategic and competitive purposes.

    Principle reason for non-adoption of ICT. SMEs are largely dependent on the environmental surroundings of the companies. SMEs are negatively affected by the following factors:


  • Low economic power compared to large companies.
  • Difficultly gaining access to capital with a consequently limited ability to finance development activities.
  • Worse access to specialized training and education compared to larger companies.
  • Lower access to necessary information and consultancy services.
  • Unfair competition from large companies and dumping prices of imported products.
  • Limited sale of finished products in the domestic market and increased cost of export.
  • Competition of retail organisations managed by financially strong companies.
  • Weak position in public tenders.
  • Failure to and delay in receiving payments resulting in secondary financial insolvency.
  • High administrative demands from government bodies and agencies.
  • >

    SMEs inside the ICT industry play an important role inside the new economic climate of India. Most SMEs operate within a fiercely competitive environment, as such, it is important to optimize organization practices. This effort has to be significantly maintained ICT. But the implementation of ICT could cause a number of issues for SMEs, such as not enough financial options, lack of experience of ICT and insufficient understanding and skills in the area of laptop literacy of employees. This is why the most regular purpose of execution of ICT in SMEs is in survival in the organization in its competitive environment. Apart from that, general policy strategies and usage of ICT in the organisations are highly influenced by the management.

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    Published: 12.17.19

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