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Technology to help fuel significant revenue and job growth by middle market companies

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Technology to help fuel significant revenue and job growth by middle market companies

New BCG research finds that if more midsized adopted the latest IT tools, they could boost their combined revenues and job creation significantly.

[Editor’s note:  Readers should know that PRESIDENT&CEO abhor the term “SME,” as it lumps together two very different groups of companies, with very different needs and challenges.  However, we do think the findings below are relevant to middle market c-level executives, so we’ve adopted the term in the report.  Just this once.]

Tech-savvy small and midsized enterprises (SMEs) created more new jobs and drove more revenue gains over the past three years than SMEs using little technology, according to a report issued recently by Boston Consulting Group (BCG).

"BCG believes that this association between IT adoption and growth would be consistent in countries across the world."

The report found that there is potential for SME revenue to grow by a combined $770 billion in the five primary countries surveyed – the US, Germany, China, India and Brazil - if more SMEs could achieve the growth rates of those SMEs that use modern IT. These same SMEs could add some 6.2 million new jobs in those countries alone.

BCG believes that this association between IT adoption and growth would be consistent in countries across the world.

"SMEs are a critical growth engine for jobs and economies today, and we wanted to better understand the impact of technology on these small businesses," said Orlando Ayala, corporate vice president and Microsoft chairman of Emerging Markets. (Microsoft commissioned the survey.) "Since the economic crisis, many economies have struggled to return to strong economic growth and to create new jobs, and this research suggests strongly that greater use of advanced IT by SMEs can potentially boost both growth and employment."

BCG's research found that over the past three years, IT-enabled SMEs, which BCG refers to as "technology leaders," grew revenues 15 percentage points faster and created twice as many jobs as SMEs that use less technology.

But at the same time, the research revealed a risk, because SMEs' adoption of IT is decidedly uneven. Across the world, many SMEs, and their customers, don't have access to modern broadband networks, and many lack the skills to get the most out of IT. Many SMEs are also still using large amounts of old and less efficient hardware and software. New devices are also sometimes very expensive due to high import duties, and SMEs are concerned about online security and privacy.

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