MSMEs Poised to Create Unprecedented Number of Jobs, if Provided a Suitable Environment

The challenges MSMEs face to provide viable job opportunities

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MSMEs are at the heart of the economic development in India. Their disruptive approach has brought the country far but the lack of a conducive ecosystem to create IPs has been halting their steps to mature beyond being a “services provider”.  The stagnation has ultimately drawn a fine line between the skilled labourers and the upskilling population.


With technology taking the front seat in every aspect, hiring numbers won’t do. Hiring right is the hour’s need. While there has been a demonstrable growth in the sector, there is a need for skilled labour to fulfil the evolving requirements. According to a recent Confederation of Indian Industry (CII) survey, the sector has added up to 14.9 million jobs per annum in the last four years.

“Given that the total workforce size according to the labour bureau is estimated at 450 million (projected for 2017-18), the overall job additions work out to 13.5 – 14.9 million per annum,” CII said. Despite the positive result, people are arguing about lesser availability of jobs in the sector. What does that imply?

Lack of Stability

The micro, small and medium enterprises are the key driver for the growth of jobs in India. A report by NRI Consulting & Solutions has projected that the sector is poised to create ~1 crore jobs in the next 4-5 years but the question of stability poses the biggest threat here. “Today, opportunities for MSMEs are the most unstable one,” testified Rama Krishna Kuppa, CEO & Founder, ONGO Framework.  

“If a job means to earn a livelihood, sustain themselves or grow in the sector, the MSME sector doesn’t offer stability.  The demand has gone up, but the industry hasn’t provided security. Addressing the insecurity among MSMEs jobs is essential,” he provided. Indeed. The sector, while, represents a majority of India’s workforce, contribute extensively to India’s exports and manufacturing sector.  

As per the Ministry of MSME’s annual report 2017-18, the MSME sector contributes to ~3.6 crore jobs (~70%) in the manufacturing sector. The manufacturing ecosystem is constantly evolving under the influence of several trends around changing consumer behaviour and technological shifts happening across the globe. The penetration of technology further intensifies the factor of instability.

Skill Gap

Indian organizations have accepted the pros of artificial intelligence integration into their systems and are slowly but surely replacing the labourers fulfilling only measly jobs with high-tech robots. “Since they have just discovered the benefits of tech upgrade, MSMEs have started becoming technologically progressive,” provided L R Sridhar, Founding and Managing Director, Connect India.

While the job creation has been positive, there will always be a temporary divide between the skilled labourers and the upskilling population to fit the job at hand. “There has been a demonstrable growth in the sector, with a wealth of opportunities being created, but with soaring demand for the right skilled labour,” Sridhar added.

With Artificial intelligence, big data and digitalization becoming a key aspect of their operations, the sector is correlating the technical parameters with exact consumer needs and an analysis of competitor products. The growth of the middle class and rising disposable income positions are opening India as an attractive market for consumption. Hence, diversifying the scope for jobs. 

Infrastructural Challenges

MSMEs bear the potential to create an unprecedented number of jobs subject to a conducive environment being created for them. The CMD of JanaJal, Parag Agarwal stated that the firm alone can create 500,000 jobs within 3 years through gainful employment and social entrepreneurship opportunities but the lack of support from the government and authorities deter the opportunity.

“The constant increase in minimum wages and corresponding PF, ESI, etc deter MSMEs from hiring. Due to this, neither is the size of sectors increasing nor demands going up. Job creators must be encouraged through better policy and processes,” he stated. The CII survey had specifically mentioned the need for greater hand-holding of those MSMEs who are currently not using the government initiatives subjected to the sector.

The good thing to note from the recent reports is that there is very healthy growth in employment among the MSME segment of the industry and with the kind of disruptions and innovations that are likely to sweep through the industry in terms of new technologies and practices, our skills development front is also undergoing rapid changes.

Aastha Singal

Written By

Entrepreneur Staff

A business journalist looking to find happiness in the world of startups, investments, MSMEs and more. Officially started her career as a news reporter for News World India, Aastha had short stints with NDTV and NewsX. A true optimist seeking to make a difference, she is a comic junkie who'd rather watch a typical Bollywood masala than a Hollywood blockbuster.