Things are looking bright for the Indian manufacturing segment with recent realignment in global supply chain & India’s continuing reforms. India is now a services giant with a sub-potential manufacturing play. Indian merchandise exports of $420B can easily be $1 Trillion+ in this decade. The Natixis Youthful Asian Economies report identifies India as the #1 country with potential to manufacture labour-intensive products. Similarly on the high-tech manufacturing side, India recently announced a USD10bn package to attract semiconductor manufacturers.
An astounding 38% of global exports are manufactured in Asia. And undoubtedly, China dominates the market with a 20% share. With global supply chain realignment, there has been a push towards a “China+1” strategy by major western nations. India is also set to gain from this realignment. Lifestyle category products like Apparel, Home Decor & furniture segments are set to get a boost from this trend. 70%+ of the exports in this segment is by SME manufacturers.
Digitization is key to India gaining competitive advantage in manufacturing along with logistics & labour law reforms. A staggering 35% of companies (more than one-third) intend to upgrade their enterprise resource planning (ERP) system. Nevertheless, all-inclusive or “monolithic” ERP systems have become redundant for SME manufacturers. The “one size fits all” approach has now been replaced with affordable SaaS solutions. Need of the hour is purposefully built vertical SaaS solutions catering to a specific industry.
Moreover, The Indian Government has been driving the digitization agenda & continuously been enabling the private sector to build solutions. The government-backed e-commerce platform, Open Network for Digital Commerce (ONDC) is set to change the e-commerce scenario in India by giving merchants across the country access to a decentralised e-commerce network. Steps like these are laying the foundation for the democratisation of technology.
China is an example of how the rapid adoption of technology & rise of B2B platforms played a huge part in it becoming the manufacturing hub. In the last couple of decades, it saw across the board adoption of technology in manufacturing workflows. Apart from internal workflows, cross border B2B platforms like Alibaba.com made Chinese exports more competitive by solving product & manufacturer discoverability.
India is already the third largest SaaS ecosystem after the US and China. While the aim of becoming a global manufacturing hub is being driven passionately, the obstacle of low adoption rate of technology in the Indian factories is a challenge that is just beginning to be solved. We believe the solution to it is the vertical SaaS solutions as the implementation of the traditional ERPs is extremely difficult, expensive and time consuming. The lower startup cost, minimalist requirement and easy-to-implement nature of SaaS makes migrating to a SaaS tech stack a perfect solution to the challenges.
Today there are multiple SaaS solutions for different workflows/processes – modular softwares built for pre-sales, marketing, operations, accounting etc. New age SaaS solutions make the onboarding process effortless, streamlines the operations and the manufacturers can start seeing tangible value within months. The RoI is visible & quick – important for SME manufacturers.
Vertical SaaS caters to the distinctive needs of a single industry. One size does not fit all here in manufacturing, therefore the need of the hour is tailor-made vertical SaaS solutions. While traditional ERPs might struggle with adaptability, vertical SaaS solutions workflows are optimised. Let’s talk about SAP adoption with respect to this scenario. SAP adoption for a manufacturer of rugs or carpet would be next to impossible. Even if large scale companies manage to do it, the implementation alone would take more than 18 months and would require constant upskilling and training. To talk about the medium-small businesses (90% manufacturers), this transition is almost impossible owing to the prohibitive cost and the inability to maintain due to high rate of attrition.
In conclusion, modern SaaS solutions are democratising access to technology to SME manufacturers who are the backbone of the segment. SaaS solutions will help digitise business critical workflows of manufacturers without needing heavy resources. The future of Indian manufacturing & exports are linked to vertical SaaS solutions.
(The author is Mr. Divyaanshu Makkar, CEO & Co-Founder, Sourcewiz and the views expressed in this article are his own)
