From hiring to marketing: How AI adoption is driving MSMEs efficiency, reshaping small business landscape - An insight

Micro, Small and Medium Enterprises (MSMEs) are the backbone of the India’s economy, contributing significantly to employment generation, industrial output and exports. At a time when technology is rewriting the business landscape, MSMEs are turning to AI to stay competitive, improve efficiency and unlock new growth opportunities.

Over the last few years, AI adoption in MSMEs is rising consistently as small businesses use technology to reduce costs and boost productivity. Right from digital marketing to data analysis, AI is helping streamline operations and enhance customer experience. According to a recent report by Boston Consulting Group (BCGX) and Federation of Indian Chambers of Commerce & Industry (FICCI), adoption of AI in India's 64 million MSMEs alone could unlock over USD 500 billion in economic value.

Why AI IS Necessary For MSMEs?

Highlighting the focus on digital infrastructure, Krishna Khandelwal, founder & CEO of Hunar.AI, a leading AI platform for frontline workforce management, said that technology plays a critical role in the advancement of small businesses in today's time.

With affordable tools and government support, MSMEs are gradually embracing AI for growth. He said that MSMEs with AI capabilities can respond more quickly, work more efficiently and have much lower marginal costs. Over time, this will translate into pricing advantages, faster growth cycles and higher operational resilience.

"While AI may not yet be an absolute necessity for every MSME today, it is rapidly becoming foundational for long-term competitiveness. MSMEs need people who can think in terms of systems, logic, and optimization, but they don't necessarily need big AI teams. It will be crucial to have people who can convert business goals into AI workflows that can be executed. Organisations that develop this internal capability will be able to continuously improve their operations," Krishna said.

He said that the government’s focus on AI talent development was timely. For MSMEs, one of the first tasks that AI is radically changing is hiring.

"Hiring has traditionally been limited by bandwidth because it takes human intervention. AI directly alters the workforce management economics for MSMEs. Technology allows MSMEs to operate with organisational maturity that was previously only accessible to large enterprises. It also allows founders and leadership teams to focus on workforce strategy and capability building, rather than operational coordination," he said.

"Technology is not just helping MSMEs work faster and smarter, but small businesses using it for marketing, customer service and managing data to grow and save costs," Krishna added.