MSME Sector in India - Role of ICT(communication technology ) - Part - 25

Role of ICT(communication technology )

MSME Sector in India

Part 25

Importance of ICT in the MSME Sector

Technology is one of the most important aspects in the sustenance of the MSMEs. The personal competence of the entrepreneur can take the company up till a performance and sustenance level, post that when the competition increases and the market expectations mount, the “totality” of the workings of the enterprise becomes crucial. At this stage, use of information and communication technology (ICT) becomes imperative for the growth of SME, if not for survival.


Historically, ICT has been looked at as the enabler of productivity and quality through process automation and quality control. However, its role is much and beyond in allowing MSMEs to build a competitive advantage. According to World Bank Report (2006), firms that use ICT grow faster, invest more, and are more productive and profitable than those that do not.


Exhibit 16: Effect of ICT on Firm Performance in Developing Countries


Dili Ojukwu (2006) demonstrated that the more an organization increases its Investment in both its Business and Information Solutions all other things being equal it would record an appreciable and noticeable increase on the level of Growth. Madaswamy Moni (2009) specified areas of MSME business that can be improved with the innovative use of ICT, which are: (a) user profiling, (b) supply chain, (c) value chain, (d) customer relation management (CRM), (e) SME networks, and (f) supplier cooperation.


The last decade of the twentieth century has witnessed rapid technological advances especially in the areas of ICT albeit at different levels of adoption. Although technology adoption considerably increased during the implementation of the Government of India’s 11th Five Year Plan – with its focus on creating a technology infrastructure and rolling out technology-driven services – the use of technology in MSMEs remains limited.

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