SMB digitalisation could add $3.1 trn to APAC GDP by 2024

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The digitalisation of small and medium businesses (SMBs) in Asia Pacific could add $2.6 trillion to $3.1 trillion to the region’s gross domestic product (GDP) by 2024 and contribute to it economic recovery post COVID-19, according to the 2020 Asia Pacific SMB Digital Maturity Study conducted by International Data Corporation (IDC) and commissioned by Cisco.

Asia Pacific could add between $10.6 trillion to $14.6 trillion to its GDP by 2024, and digitalisation of SMBs could account for as much as 25 per cent of that growth, according to the forecast.

The study shows SMBs that are more digitally mature and enjoy twice as many benefits in terms of revenue and productivity compared to those that have an indifferent approach to digitalisation.

It found that nearly 70 per cent of SMBs in Asia Pacific are accelerating the digitalisation of their businesses as a result of the pandemic. Among the respondents, 86 per cent believe digitalisation will help in developing resilience against such crises, a Cisco press release said.

“SMBs suffered the hardest impact in the current crisis but are expected to bounce back the fastest. This is not just because most of them have had to rely on technology to continue to deliver to their customers but also because of their agility and adaptability to innovate. As the region starts to emerge from the pandemic, this trend will play a pivotal role in the economic recovery. Cisco is committed to work with SMBs to help them emerge stronger with the right digital solutions and strategy,” said Bidhan Roy, managing director, small business, Asia Pacific, Japan and China, Cisco.

The results of the study show that cloud (15 per cent), a foundational pillar for digitalisation, is the top technology investment priority for SMBs in Asia Pacific, followed by security (12 per cent) and purchase or upgrade of information technology infrastructure software (12 per cent).

However, SMBs are also facing challenges on this front. According to the respondents, shortage of digital skills and access to talent is the top hurdle (17 per cent) for SMBs in their digital transformation efforts. This is followed by the lack of necessary technologies to enable digital transformation (14 per cent).

Despite the challenges, the region’s SMBs continue to make progress in their digitalisation journeys. According to the study, 16 per cent of SMBs in the region are now in the advanced digital maturity stages (3 and 4), compared to 11 per cent in 2019.

Slightly more than half of SMBs have embraced digitalisation to become Digital Observers (stage 2). Only 31 per cent of SMBs are still reactive to market changes and have made hardly any efforts to transform digitally (stage 1).

Within the region, SMBs in Singapore, Japan, and New Zealand continue to lead the Digital Observer group, with no changes in their ranking compared to 2019. However, mainland China, Taiwan, and Thailand surpassed Korea, Hong Kong, and Malaysia, respectively. There has been notable progress made by SMBs in Indonesia and Vietnam.