How can MSMEs unlock the value of GenAI

With over 63 million small and medium enterprises (MSMEs) in India employing more than 15.5 crore people and contributing 30% to the nation’s GDP, MSMEs are an essential part of India’s economy. However, these businesses face unique challenges: they often lack the resources and budgets that larger corporations possess, and they contend with a talent drain as top talent tends to gravitate toward MNCs. This resource gap leads to operational weaknesses across various business functions, limiting growth opportunities. Generative AI (GenAI), a form of artificial intelligence that can produce content, insights, and automated solutions, can transform this dynamic by providing MSMEs with affordable, efficient, and scalable tools. By leveraging GenAI, these businesses can level the playing field and remain competitive in the face of larger, better-resourced competitors.

Opportunities GenAI offers MSMEs

The rise of GenAI presents several opportunities for MSMEs to improve productivity and business outcomes across various domains. One of the most immediate advantages is enhanced productivity and efficiency. By automating repetitive tasks, GenAI enables MSMEs to save time and resources. In marketing, for instance, GenAI-powered tools can generate high-quality content that meets 80-90% of the standards produced by seasoned professionals, allowing businesses to maintain a strong brand voice without needing large teams. Beyond content creation, GenAI can also streamline administrative functions, such as report generation, scheduling, and back-office support, enabling employees to focus on more value-driven tasks. This shift helps businesses maximize productivity even with a lean workforce.

GenAI also helps MSMEs improve customer engagement through AI-driven chatbots and automated messaging systems, allowing for 24/7 customer support. This improves response times, enhances customer satisfaction, and ensures consistent communication. Small businesses, such as those in retail, can deploy chatbots to manage customer inquiries, thereby improving service levels without the need for large customer support teams. Additionally, GenAI empowers businesses to make data-driven decisions by providing valuable insights into consumer behavior and market trends. Smaller players in industries such as retail or food service can now use AI-powered analytics to identify customer preferences, popular products, and peak times, enabling them to make strategic decisions that were previously accessible only to larger companies.

Overcoming challenges in GenAI adoption

While the benefits of GenAI are clear, there are also significant challenges that MSMEs must overcome to successfully adopt this technology. The first and perhaps most pressing concern is the resource constraint many MSMEs face. Operating on tight budgets, these businesses may hesitate to invest in GenAI tools, especially when full-featured licenses for tools like ChatGPT cost around $20 per month. Large-scale AI solutions such as AWS’s Bedrock or Azure

OpenAI models can be prohibitively expensive. Fortunately, as AI technology evolves, the costs of these tools are expected to decrease. In the meantime, MSMEs can adopt a more selective approach, purchasing a single premium license while leveraging free tools to maximize value.

Another challenge is the lack of skilled professionals in AI deployment. According to NASSCOM, about 65% of Indian MSMEs lack the necessary expertise to effectively implement AI tools. Additionally, integrating AI solutions with existing business systems can be a complex process that requires specialized knowledge. However, organizations like CloudThat have successfully bridged this skills gap through targeted workshops and personalized consultations. By addressing skill deficits, MSMEs can ensure seamless integration of GenAI solutions and ensure that employees can utilize these tools effectively.

Finally, many Indian MSMEs operate in regional languages, and many current AI models may not fully support these languages. While there are efforts underway to develop local language models—such as Ola’s Krutrim model that supports around 10 Indian languages—there is still room for improvement in addressing India’s rich linguistic diversity. The development of more sophisticated models that capture cultural nuances and support additional languages will help make AI more accessible for MSMEs, allowing them to better serve their diverse customer base.

A future of growth with GenAI

For MSMEs in India, GenAI represents an unparalleled opportunity to remain competitive and thrive in a rapidly changing, AI-driven world. As many as 94% of business leaders now consider AI essential to their success strategies. By adopting GenAI, MSMEs can automate tasks that occupy 60-70% of their employees' time, freeing up valuable resources to focus on innovation and growth. With the expected decrease in AI tool costs and the availability of targeted training options, GenAI is increasingly accessible for MSMEs. This technology can help businesses unlock new value, enhance operational efficiency, and position themselves for long-term success in the evolving digital landscape.

Bhavesh Goswami

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Founder and CEO, CloudThat