Importance of Small Business According to Economic Condition of Pakistan

In today’s modern world Information Technology and Globalization have changed the way of business in the 21st century. As the developing nations and developed nations compete for greater market share in the global market Pakistan too must act up so as not to fall behind nations such as China, India and Brazil. Being an agricultural country, Small and Medium size (SME) firms play a vital role for earning foreign exchange, employment, social uplifting and achieving welfare status for Pakistanis.

According to Small and Medium Enterprise Development Authority (SMEDA) of Pakistan, SMEs constitute nearly 90% of all the enterprises in Pakistan; employ 80% of the non-agricultural labour force; and their share in the annual GDP is 40%. Firstly, they can help these firms gain access to a larger market by means of the Internet and lower rates of advertising as compared to television. SMEs are not only beneficial to themselves but also to a growing IT industry in Pakistan.

As the number of IT firms that initially open are also small in size then with contracts obtained from SMEs, these firms can also grow in size and stature. Local IT firms also have the distinct advantage of attaining contracts for MIS and ERP systems at lower rates as compared to international firms. Pakistan has one of the highest SME starting rates in the world around 8. 5% but it also has one of the sharpest decline rates with around 50% of SMEs that started in their initial year begin to loose customers and hardly survive for 5 years.

MIS and ERP systems can allow SMEs to have better knowledge about their respective industries on an international level by communicating with SMEs in other countries. Recently, SMEDA and JICA (Japan International Cooperation Agency) have initiated an Industry Support Program in Pakistan. MIS and ERP systems will also SMEs to interact with their staff much better thus allowing greater communication between management and labour. This is important for the survival of any firm because if relations and communication among the people involved in the firm are constrained then, the firm cannot hope to survive in the long run.

MIS and ERP systems can also allow SMEs to interact with consumers much quicker and faster by conducting online surveys and attaining their results much faster as to previous experiences by doing such exercises manually. Programs such as those initiated by SMEDA and JICA allow great benefits to those involved with SMEs in any manner or form and with the involvement of the local IT sector, these firms can go a long way into not only ensuring their own survival but also the huge benefits that will be added to the Pakistani economy in more ways than once.