‘Impact of the New Gen Workforce on MSME Sector – The Changes They Are Driving’ | Suvena Bansal Marar |Business Head – Affordable Business| U GRO Capital

The last few years have witnessed a sharp change in the demographics of the workforce, across industry segments. For obvious reasons, it’s because of the addition of Generation Y and Generation Z to this pool that we are witnessing a change in the physical form and the thought process of enterprises.

While in large business houses, the transition is easily noticeable with the younger generation spearheading new-age businesses like tech, design, automation, entertainment, sports, etc., what’s also interesting to note is the role being played by the new gen in MSMEs. Though the jury is still out if the new generation is smarter than the earlier generation, what’s evident is that they are better informed and are clearly using the information tools much more effectively.

In India, MSMEs generally have a localized footprint influenced a lot by the overall ethos of the cityculture or family values, lack exposure to new-age developments, and don’t have surplus cashflows for full-swing automation. However, what’s pleasantly surprising to note in this segment is the transition that the younger workforce is bringing in. Social media has forayed its way into the MSME businesses, from the good old handmade food industry to art & crafts, fashion, travel, home design, event management, etc. This generation has been able to leverage the strength of not only social media but also new-age information tools reflecting on their ability to adapt, adopt and adjust, thereby scaling up their businesses beyond localized geographies.

The new age workforce has driven a more collaborative and flexible working style, wherein they partner wherever possible and also change the product line to suit the customer requirements, with a much more nimble-footed approach. They have driven the rise in digital transactions and the use of technology to improve efficiency and productivity; this is expected to result in a 15-17% increase in revenue for the MSMEs in the coming year, as per industry reports, as against the historical growth rate of ~10% over the last decade.

The new generation has been instrumental in selling their traditional business as a story rather than a product, which has helped revive dying arts into thriving businesses. They are also modern in their outlook and are more comfortable dealing with credit from banks than dipping into their own savings or borrowing from friends and family. The credit offtake in the MSME space is on a rising trend with almost 30% share in Jan-Nov22. For a segment that accounts for nearly 30% of India’s GDP and employs more than 11 crore people, such developments augur well for broad-based economic growth.

Finally, the exposure of the younger generation to international experiences through travel or the internet has also significantly influenced their outlook on business. For a lot of them, business is a way to earn their living and not their identity. This means that the son of Mr. Gupta would not only want to take over his father’s local kirana shop but also build on it through his experience and exposure, thus furthering his own identity.

While not all MSME sectors exhibit the same level of change, the impact of Generations Y and Z is apparent across various industries. This change is driven by the fact that they themselves represent a significant portion of the consumer market, and their purchasing behavior differs significantly from previous generations.

Therefore, it is safe to say that the new-gen workforce is actively reshaping the MSME sector, driving changes that are gradually transforming the industry landscape. They are more socially conscious and environmentally friendly, yet don’t want to compromise on convenience. They are creating new jobs, investing in new businesses, and helping to grow the economy. The MSME sector is well- positioned for growth in the years to come, thanks to the direction given by the new generation.