Companies must go digital to stay afloat in business

The pandemic has significantly altered how businesses are being conducted in India and more so now with the Omicrone threat looming large. Although the overall impact of the pandemic is varied, there is no doubt that business organisations in India are becoming more dynamic, and competitive. Sectors like manufacturing of food and kindred products, computer-related services, educational services, etc., have recorded a healthy growth in business registrations. However, there are sectors such as transportation services, repair services, restaurants, bars, etc., that have contracted in business registrations thanks to social distancing measures.

There is no doubt whatsoever that while the pandemic changed the business landscape dramatically, it also presented itself as an opportunity, and many businesses capitalized on the evolving trends, leading to an increase in business registrations. As many as 195,880 new businesses got registered in FY21, a record high. And most of these newly registered businesses are concentrated in sectors that incidentally witnessed a pandemic-induced spike in demand and 96 per cent of the newly registered business had a paid-up capital of up to Re1 million. As newer businesses keep entering the market, survival becomes a key challenge for the existing ones. They have to adapt to the upcoming trends including digital adoption to stay relevant or risk going out of business. In another significant trend, the agriculture sector in the country registered the highest growth in new business registrations at 103 per cent in FY21. The sector recorded 12,368 registrations in FY21. The number was 6,107 in FY20. The manufacturing sector, on its parts, recorded the second highest growth (50 per cent) in new business registrations in FY21.

One has to keep in mind that acceleration in overall growth requires all engines of growth to kick in, predominantly domestic consumption, private and government investment, and exports. Consumption demand is expected to pick up as lockdown restrictions are eased. Deleveraging by corporates has eased their debt burden, but it remains to be seen when the investment cycle will revive. Facing uncertainty has never been easy, but if one goes by history and experiences, it is only during these challenging times, a country or an economy needs to build and prepare for the next phase of growth. There can actually be no better time. An economy has to outmaneuver uncertainty in both the short- and long-term through 'digital disruption', which are not always ready.

And that's exactly what the pandemic has done. Covid-19 has pushed companies over the technology tipping point and transformed business, possibly forever. Companies have paced up the digitization of their customer and supply-chain interactions and of their internal operations by three to four years. And the share of digital or digitally enabled products in their portfolios has accelerated by a shocking seven years. Companies expect most of these changes to be long lasting and are already making the kinds of investments that all but ensure they will stick. Significantly, most of the business organisations recognize technology's strategic importance as a critical component of the business, not just a source of cost efficiencies. It is pertinent to mention here that it is not from the organisations' side only, but during the pandemic, even consumers have switched dramatically towards online channels, and companies and industries have just responded in turn. Across business verticals, the largest leap in digitisation is the share of offerings that are digital in nature.