Want to Make in India? Why Not Sell in India!

Want to Make in India? Why Not Sell in India!

Over the last two decades, the Indian information technology industry—including software services companies and the more recent product startups--has spun a successful growth story by mostly gravitating towards Western markets given the lack of early-adopter orientation among Indian enterprises. However, today, there’s another lucrative target market beckoning product companies, and that is the Indian small and medium business segment.

The SMB market has always constituted a significant component of the Indian economy, accounting for 40% of employment and making an almost equivalent contribution to India’s GDP. The challenge has been getting them to spend on technology.

But the last few years have witnessed a sea change in technology adoption. With a rising penetration of smartphones among SMBs and the increased exposure to the possibilities opened up by social media applications, the SMB owner of today is much more tech aware. Indeed, there’s an unmistakable trend of a digital footprint invading small businesses in India. Facebook itself has seen a 70% growth in the number of Indian SMBs in less than a year (June 2014-April 2015). What’s more these companies are also spending money in large numbers for paid listings on online platforms.

History has proven that there is a strong correlation between internet penetration levels in a country and the evolution of SMB-focussed tech businesses. One just has to compare India’s internet growth curve to that of the United States to conclude that the time has come for the new crop of Indian software product startups to ride the ‘Make in India, Sell in India’ wave!

Most argue that the Indian SMB market opportunity is not large enough or will not scale. Not true. There are about 50 million SMBs in India. Across many different segments of SMBs, one has seen price points of $500-$1000 (Rs 31,500-Rs 63,000) for an annual subscription, which translates to a $25-$50 billion market opportunity. Not a paltry figure by any standard.

There are many concerns voiced around this market – particularly that this is a hard market to sell to and retain. Approximately 95% of the Indian SMB market is made up of micro-businesses with headcounts of less than 10 employees. Therein lies the advantage–the owner, user and buyer are typically the same person, and hence the sales process is much faster and more efficient.

Customer acquisition in India will require feet-on-street sales force, face-to-face customer onboarding and follow-on support for sustained engagement–all models that are unfamiliar to western players at Indian price points. Most of the rapidly-scaling SMBfocused startups in India today have a customer acquisition cost that is recovered in less than one year of subscription, many of them in as little as 6-7 months.

Yet, it is important to recognise that we are in the early stages of this evolution. Indian SMBs will not adopt just any technology. The market is ripe today for two kinds of opportunities: Software that helps deliver higher topline for SMBs, and B2B marketplaces that are information brokers or take entire transaction ownership; for example inter-city logistics marketplaces.

Make no mistake about it-India’s time is now. While the government puts in place policy reforms to evangelise the Make in India plan, it’s time for entrepreneurs to Sell in India and fuel the India growth story.