Business Consulting Firm Stratefix Consulting reveals compensation expectations for India’s MSME segment in FY’ 23
Mr. Mukul Goyal, Co-Founder – Stratefix Consulting., in a discussion with CXOToday shared more insights on the same.
- What are the challenges that MSMEs face?
The MSME industry faces unique challenges that are different from larger organizations:
- Since these companies are largely founder-led or family businesses, it can be challenging for leaders to focus on everything, especially daily operations
- Entrepreneurs need assistance in strategizing beyond a certain level of growth and scale, as streamlining operations and controlling costs while scaling remains a struggle
- Considering the traditional nature of MSMEs, transforming to a more professional, or even digital ways of doing business, is not an easy transition
- MSME companies recognize the need to adopt and integrate technology – but they are reluctant to go the distance
- It is also important for MSMEs to understand the value of investing in the right resources, with the necessary talent and expertise.
It is therefore imperative that MSMEs have a partner who understands their unique needs, strategizes a solution, implements it, and helps ensure it is executed.
- Tell us about Stratefix Consulting.
The MSME industry understands that they must transform to stay relevant. Stratefix was established exclusively to assist MSMEs across India. Since inception, we have helped over 300 MSMEs in India. What makes us unique is that we study the issues, strategize solutions, and even assist in executing the plan. In essence, we work like an extension of the organization in many ways:
- Streamline operations by developing robust systems and processes
- Improve cost efficiency
- Increase sales by assisting in the market penetration of existing products and new product launches
- Set up dedicated teams to handle key functions, such as HR and finance.
- Developing the right expertise and capabilities within the organization to aid growth. This can involve talent, the implementation of the right ERP, etc.
In large enterprises, consulting firms specialize in specific departments. We focus only on MSMEs in metros and non-metro cities because the challenges this segment faces are unique and require a specialized approach.
- What are your growth and expansion plans? Any plans of expanding your portfolio?
Our goal is to transform 10,000 businesses by 2030! We plan to do this by introducing our exclusive franchise model across all tier B towns in India.
As India’s MSME market represents an enormous opportunity, we are focusing on building teams to work with companies across the country. We want to offer MSME all the services they hear about in corporate jargon. We have plans to expand our services to include strategy audit, M&A consulting, family charters and constitutions, and data analysis.
- What is the market opportunity you see in India?
India’s business consulting market is worth $4.5 billion! However, most of the action takes place in metro cities. There is a huge opportunity for business consultants in the MSME industry, which is mainly found in mini-metros and tier 2 and 3 cities. We want to tap into this market.
- Tell us about the survey you recently conducted.
We recently conducted a study to understand/gauge the compensation expectations among MSMEs in FY’23. A survey of 2000 MSME employers and employees in the found that:
- Majority of the business owners intend to give their employees a raise, but the level of the raise differed
- On the contrary, in light of the COVID-19 pandemic, employees felt that they deserved a raise for staying loyal to their employers.
Over the past several decades, the MSME sector has been the engine of economic growth in India. For MSMEs to succeed, they need to attract, retain, and develop talent. However, they face many obstacles when it comes to People management because of a lack of resources and a deficient HR management system.
We conducted a survey to study employee and employer compensation expectations in the MSME segment. The survey produced interesting insights both from employers’ and employees’ viewpoints.
Over the past two years, small businesses have suffered significant losses and struggled to stay afloat. However, understanding the importance of having the right talent on board:
- 68% of companies are willing to give their employees a salary increase of 7-10%
- 26% of businesspeople are willing to give a 10-12% pay raise
- 6% of employers are prepared to offer more than 12% in salary increases.
- Despite the cash flow crisis, MSME companies intend to give raises around Diwali this year – anticipating a complete recovery.
As a result of the dynamic business environment over the last two years, employees expect pay hikes and rewards for remaining loyal to the company during the tough time of past 2 years. According to the survey:
- 72% of employees expect a salary increase of 10-12%; 28% expect a raise of over 12%.
- If not given a pay increase, 58% of employees will consider switching jobs
- Employees also expect their benefits to be reinstated
Recruiting, retaining, and developing talent is the biggest challenge for MSMEs. While they understand the importance of investing in talent and expertise, the non-existence of an HR department or robust HR policies puts them on the backfoot.
FY’23 will present tremendous opportunities for MSMEs to grow and scale. Businesses and employees were both working hard to stay afloat over the last two years. I strongly urge businesses to consider increasing the compensation of their employees, as good talent is hard to find.