Small and medium business(SMB) owners in the Asia Pacific (APAC) remain optimistic amid the challenges brought by the COVID-19 pandemic, according to the study by information technology company HP conducted last year. The confidence to bounce back is anchored on the ongoing digital transformation among companies.

However, growth projections suffered significantly, from 46% before the pandemic to 16% at the height of the global health crisis.

“SMBs are the lifeblood of every economy in Asia but the pandemic has hit SMBs hard,” said Christian Edmond Reyes, managing director in the Philippines, HP Inc. “As the engines of growth for Asia and the Philippines, they must move past survival to revive their businesses.”

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The study titled “Survival to Revival” surveyed 1,600 SMBs across eight countries in Asia at the height of the COVID-19 crisis middle of last year.

SMBs with employees between 50 and 199 showed more optimism in terms of growth, according to Reyes. But micro-businesses with less than 10 employees are less likely to be confident about growth. One of the common factors is productivity disruption when businesses opted for the work-from-home arrangement.

Governments imposed lockdowns to help curb the spread of the virus halting business operations and seriously crippling the economy.

Decline in productivity

“During the pandemic, only 6% of respondents have shared increased productivity,” Reyes said. “But a big 43% have actually shown that they have seen less productivity among their workforce. For now, the primary strategy of SMBs is survival.”

The study found only 6% of SMBs recorded higher levels of workplace productivity compared to the pre-COVID period.

Still, businesses are banking on digital adoption, with 60% of those surveyed believe that digital transformation is an essential component to survive and thrive in the face of a crisis. Indonesian SMBs (74%) believe technology is key to overcoming the damage the crisis has done to their businesses.

Even with this confidence, HP found some SMBs are clueless on where to look for assistance to jumpstart their digital adoption. Financial institutions rank high (31%); 60% of SMBs consider government support to be insufficient and/or are unclear on what support is available; only 19% of respondents turn to IT companies for help.

Fintech

“In terms of bridging the gap from the knowledge that they need a lot of SMBs that we interviewed do not know where they can seek guidance and advice,” Reyes said. “Fintech is a perfect example. One of the key points of the survey that by default, a lot of SMBs go to traditional financial institutions for advice, and only a small number have gone to technology companies. I think there probably is a need for more awareness that technology companies, especially like HP, can help them with their digital transformation.

Skills were also identified as an issue. The pandemic amplified the lack of digital-first mindsets and skills within existing SMBs that hamper growth, affecting nearly half (44%) of respondents. Underpinning all of this is a need to identify digital talents who can help SMBs to transform the business. The majority of SMBs do not dedicate resources and/or invest in innovation as a discipline; it is more common to ask customers what they want, or simply mirror what the competition is offering. Only one in five SMBs have customized offerings, looked for new sales & supply-chain channels, or introduced new lines of business.