• Vishakha Waikar

Human Resource Challenges faced by the Indian MSMEs

The Indian MSME today forms a strong foundation comprising of ancillaries and multi - tiered supplier systems which provides a base for the huge multinationals whose brands we recognize world over. An evolution from small cottage industries to MSMEs achieving turnovers of more than 500 Crores, India has come a long way in its journey to be recognized as a global power. This transformation from being the land of snake charmers and poverty to the land of innumerable opportunities has been brought through the various steps of the MSME ministry and the hard work of crores of MSME owners working relentlessly to support the larger corporations whilst at the same time developing the communities they work with.

Schools have taught us the history of industrial development and how he five year plans have shaped policies and regulations nudging the growth of these MSMEs. What needs to be addressed though; is how these MSMEs still struggle to stay afloat and what is the root of their problems. The Chamber of Indian Micro Small & Medium Enterprises enumerates a few of these challenges in an article on its website.

Mentioned in the article are challenges like

1. Absence of adequate and timely banking finance.

2. Limited Capital and Knowledge

3. Non – availability of suitable technology

4. Low production capacity

5. Ineffective marketing strategies

6. Constraints on modernization and expansions

7. Non – availability of skilled labour at affordable costs

8. Follow – up with various government agencies to resolve problems due to lack of manpower and knowledge, etc.

Just like the CIMSME; there are numerous other agencies which address the above mentioned issues. A lot of these challenges are interlinked and thus the MSME owner usually finds himself or herself trying to solve problems or fire – fighting on a normal day. Apart from the above problems, one crucial but often ignored challenge is the lack of sustainable people practices in our MSMEs. Often in our consulting assignments, we come across Entrepreneurs who define their problem statements in line with cash flows, ROIs, Business plan implementation, review mechanisms and sometimes in terms of culture and attitude of people. We often hear entrepreneurs listing down reasons of how people are either not competent or have attitude problems or the attrition rates are high. We hear them telling us how freshers are not ready to stay for long periods and how seniors are neither ready to upgrade nor ready to move out or change their attitudes. Entrepreneurs who are experts ar the technical aspects of their products and excellent negotiators in the market, find themselves clueless and helpless at how to develop culture which brings or attracts good talent and retains it too.


Well, this single question has a lot of answers. Let us look at the first generation of MSME owners. When they started the business, the priorities were clearly defined. It was essential that sales, production, dispatch and collection be given the attention to ensure that the working capital remained in motion and the companies earn enough to gain BEP and eventually move towards profits. Barring some percentage, a lot of MSMEs have been established through financial aids like loans, mortgages etc. The MSMEs set up in the late 70s, 80s and 90s decades were setup in environments which weren’t necessarily conducive to the business. The practices of business were not evolved and in addition not everyone had the family and peer support. Majority entrepreneurs struggled with the availability of all kinds of resources including finance. In this scenario, delivering a good quality product and earning money to develop new products to sustain in the market too priority.

Secondly, it took a long time for the larger companies to train these MSMEs in people practices. The trainings or grooming efforts taken by larger corporations on these MSMEs; who were their suppliers/vendors were all focused on quality of products and processes. All the training efforts be it from the large corporations or the government agencies, were focused on vocational training, increasing the quality of products and processes and improving the productivity. The people practices were completely missed at that point due to priorities at hand.

While the MSME owners realized that people practices are important, by the time they could find time to concentrate on bringing and organized effort to shape the culture, a culture had already set in. The owners were torn between creation of new products and markets & setting people practices. Surrounded by other challenges, naturally revenue generation won.

Now, when the second and third generations are taking over the businesses, major challenges are surfacing and although simple in nature, these people challenges have roots set in the inception of the company and in the people who joined while its inception and thus are difficult to deal with. So, what are we going to do about this? Well, we are going to write about and propose practical solutions to these HR issues in this blog.

The objective of this blog is to provide solutions which are practicable and sustainable. Through this blog we will be providing support to implement practical HR solutions along with help in HR workflows and their implementation.

Any person looking for help for HR implementation can feel free to get in touch with us at the given contact details and we will love to give you formats and workflows completely free of cost. And keep following the blog for discussions on HR related challenges faced by small businesses and MSMEs and ways to arrive at a solution for them.

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