Technology means growth: Lessons from SMEs

The following post is from Orlando Ayala, chairman of emerging markets at Microsoft.

It is widely known that small and medium sized enterprises (SMEs) play an important role in the vitality of local economies around the globe. I was recently reminded just how important SMEs are as growth engines of our economies.

Microsoft commissioned The Boston Consulting Group to conduct an independent study, which surveyed more than 4,000 SMEs in five of the world’s largest and most diverse economies: the United States, Germany, China, India and Brazil. The objective was to look at the economic impact of IT on small businesses today.

The study found that tech-savvy SMEs outperformed SMEs using little technology in innovation, job growth and increased revenues over the last three years. SME leaders using technology have grown their businesses and reduced costs, and one important factor seems to be increased worker productivity. According to BCG, if 15 percent of those SMEs that use little technology and 30 percent of SMEs who use moderate amounts of technology adopted the latest IT tools, they could boost their combined revenues by $770 billion and create more than 6 million new jobs in just those five markets combined. Who can afford to leave $770 billion on the table?

What I found particularly interesting is that leaders in emerging markets are even quicker than developed market counterparts to embrace new tools. More than 80 percent of tech leaders in emerging markets use cloud services, communication tools and enterprise resource planning software, compared to only 60 percent of tech leaders in developed markets. And technology leader firms with female founders have achieved average revenues that in most cases match or surpass those of male-founded companies.

Microsoft has a history of working with SMEs by developing products and services that are both cost effective and that help SMEs meet their business goals. The survey revealed that 95 percent of all technology leaders use Microsoft Office, and to me, this means we are the brand that SMEs turn to and trust when choosing IT tools for their business. Why? Because customers can depend on Microsoft. Security, privacy and reliability are the foundation upon which all of our products and services are built.

Microsoft Founder and Chairman Bill Gates has also recognized the vital part SMEs play in the economy, and the role technology can play in empowering them: “This study demonstrates the power of technology to make a big difference in the success of small businesses, which is such an important driver of economic development. I’m proud of Microsoft’s record of engagement with small business in helping them to grow and thrive worldwide.”

We think SMEs are so vital to local economies that, in addition to providing business-enabling technology, we work closely with small businesses to help them close the skills gap that can exist as the rate of technological innovation accelerates. We offer free online classes on basic business skills, as well as online tutorials on Microsoft products, and hands-on training on Microsoft technologies from local partner networks. All of these assets can help SMEs become technology leaders. We also provide no-charge services like Office Web Apps and Skype computer to computer calls to help SMEs get started quickly and experiment with technology solutions and become familiar with the benefits these productivity tools offer.

At Microsoft, we also understand that if we want to have a meaningful impact on local economies, we need to support the technology value chain in its entirety and address opportunities and challenges from the very start: indeed, growth will also depend on our economies’ ability to nurture talent by equipping this and future generations with the right IT and entrepreneurial skills.

Searching for these talents is an ongoing challenge in our sector: our fast-moving business models rely on finding the right people with the right skills, especially since there is a steep learning curve associated with the positions technology businesses can offer. In our view, too few young people are achieving the levels of science, technology, engineering and mathematics (STEM) education required to secure jobs in innovation-based industries. For example, in Brazil, 71 percent of employers identify difficulties sourcing employees with the relevant profile due to low quality education, according to the 2012 Manpower Talent Shortage Survey Research. This is why Microsoft created initiatives such as YouthSpark or BizSpark, to provide opportunities for the next generation.

We are also committed to advancing affordable access to technology and increasing skills in emerging markets and for women-owned SMEs to help them grow. We believe it is important to enable people from all over the world. We are doing that in many ways including introducing Super WiFi technology in underserved areas and by using tools and programs to help bridge the gender gap and provide opportunities for women.

Given the economic importance of the SME sector (there are more 148 million SMEs worldwide), the economic opportunity is colossal, but countries who fail to encourage SME growth today could face stagnant economies tomorrow. BCG’s growth projections of jobs and new revenues from more SMEs harnessing the power of IT are too big to ignore. Small businesses need government to help minimize barriers and consider incentives to supercharge these potential sources of growth. It is our hope that Microsoft’s approach to fostering SMEs and entrepreneurship will help stimulate thought among all stakeholders, from government leaders and public policy makers to SMEs themselves and larger industry players, to reflect on how we can all enrich the environment in which the knowledge economy can flourish.