Impact of Covid-19 on MSMEs and its employees

Abstract

The focus of the study is on the impact of Covid-19 on MSME’s operating in different sectors across the country. In-depth interviews of proprietors from several MSMEs is conducted to understand the magnitude of the impact of lockdown and the measures that can be taken to be better prepared for such situations in the future. Detailed analysis is done on three broad areas, i.e., external stakeholders, internal stakeholders (employees), and organizational processes. The major problems faced by companies under study are financial constraints, employee unavailability due to migration and fear, delays in payments, increase in transportation costs, shut down of plants during peak season, among others. Companies adopted different and unique strategies to tackle these problems. Few companies collaborated with their competitors to increase their bargaining power over suppliers; other companies installed sanitation chambers, social distancing guidelines, and regular check-ups to reduce the fear among its employees. Few other companies leveraged the increase in export opportunities due to the China ban to increase their customer base. The majority of the SMEs we interviewed have realized that the dynamism in the industry has increased. It is essential to adopt new strategies like digital marketing, increasing focus on automation, consolidating plant locations, diversifying product portfolio, and increasing dependence on perennial products to be better prepared for such a crisis in the future. A common highlight from the primary and secondary analysis is that it is imperative to invest in the employees. Its important to make them feel safe and take care of them during a crisis as they are affected even more than the company. In the long run, taking care of employees pays handsomely.