08 December 2019

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Business Incubation and Indian SMEs – A Vital Link

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Business incubation is nothing but an environment created that is conducive to nurturing an enterprise’s sustainable growth potential and development. It is a public and/or private, entrepreneurial, economic and social development process designed to nurture business ideas and start-up companies. The process comprises wide-ranging business support programmes, to assist the beneficiaries establish and hasten their growth and development.

 The aim of such a business cum innovation incubation centre is to promote the economic development of its community, by supporting newbie companies and their business development. These centers provide basic services such as start-up consultancy and business planning, consultancy in business development (legal, marketing etc.), consultancy for and/or access to financing, sharing of office services, office space, and/or workshop / lab facilities for lease on flexible terms, training etc.  To give an example there is the Brigade Tech Park, a spacious technology park at Bangalore which has a range of features and facilities for software development companies, BPOs, biotech enterprises and corporate offices. Several reputed organisations are already operating from here such as Qualcomm India Pvt. Ltd; LG CNS India; IBS Software Services; Spice Communications.

Incubation facilities for SMEs (Small & Medium Enterprises):

Globally the incubator model has emerged as an essential constituent of the infrastructure required for the growth of high technology businesses such as Information Technology and Software development. These incubators provide the much needed input to nurture and transform technology ideas into commercial successes. Conventionally these incubators acted as Institutes for the creation of cutting-edge technology through technology transfers from universities. These centers are once again in the news, this time in developing economies like ours. However, it is necessary to keep in mind the distinction between the traditional IT/ Science Parks and the Incubator Facilities. The main differencing factor is the availability of intellectual and financial support through a select consortium, which provides strategic advice pertaining to all business related matters.

It’s crucial for the SMEs sector to concentrate on its technology performance. The SMEs sector play a major role in the developed countries and one of the reasons for its success is a reasonable equity benefits in terms of distribution income. A strong SME's sector is critical to terms of the services that it can provide to the larger enterprises and to the Medium enterprises. In the developed countries the SME's have been performing well and the similar pattern is observed in advanced developing counties. It is also a known fact that in the developed countries, the large-scale enterprises are increasingly cost cutting and depending on the network of SME's. Hence, the technology strong SME's system is developing countries will be vital to develop, attract and work with larger enterprises. It would also encourage the newbie’s to own the Intellectual property rights within India. Till now majority of the Intellectual property that has developed in India has been owned by the American companies.

Advantages of Incubation facility:

An incubation facility is always a blessing for SMEs due to its various advantages. For starters it helps to promote newbie ventures of young entrepreneurs, provides a wide range of entrepreneurship development initiatives such as training, nursery incubator space during the initial gestation period, central common machining facilities, systems and networking support, catalogue library, funding schemes etc. As a result of these facilities there is considerable reduction in the initial investment commitments of the entrepreneurs thereby reducing his risk quotient to a large extent. Other usual but useful facilities such as workshops, computer networks with internet facilities etc., have proven to be a boon for upcoming enterprises.  The instant availability of common facilities for new ventures motivate the entrepreneurs to confidently set-up their own ventures and relieves them of start up tensions thereby enabling them to focus their full attention on core competency development.

Moreover, most entrepreneurial incubation centers have ready availability of on-line consultancy in the form of a team of management professionals, to analyze various business propositions. This team helps to develop suitable business strategies and providing newbie entrepreneurs greater impetus.

Limitations to promoting incubators:

Although it supports the SMEs, there are very few incubation centers and innovation centers in the country specifically for SME’s. There is also a lack of proper national coordinated incubation program. Some of the constraints in the way of promoting incubation facilities may be summarised as follows; To begin with, newbie SME’s often think they will be requiring more financial services rather than non financial services. There is dependency on NGO’s and public sectors to provide such services. However, NGO and public sector support deregulates the Business Development Services (BDS). BDS is generally defined as any non-financial service purchased or provided businesses on a formal or informal basis. The reality is that supply of Business Development Services (BDS), is very critical to micro, small and medium enterprises. Another drawback is that the level of business education is low too. There are no business incubation institutes giving training in India, in-fact most of the incubation are campuses. There is also lack of knowledge about other incubation programs. Further more there is a paucity of incentives and coordinated strategy in promoting the development of local technology. Banks too are often reluctant to provide loans and support research and technology innovation and modernisation. Private sector by and large also shies away from donning the role of mentor. Even amongst the SME support groups’ proper co-ordination is lacking.

Suggestions for promoting incubation programmes:

However there are many ways to promote incubation programmes. The first step should be sensitisation and education in the form of dissemination of information with regard to business incubation. Next is to ensure greater private sector involvement by organizing workshops for the Private Sector Associations, the Chamber of Commerce, and Trade bodies etc. Also setting-up of more business incubation institutes or starting of higher education institutes. A National Association of Business Incubation, to oversee all that, would be ideal. Effort should also be made to link business incubation to all universities and research centers. Moreover support and encouragement should be given to applied research. In this context the State has already started regional applied research center – CRE, but which requires more push. It is also incumbent to share the best practices of the incubations. As stated earlier banks are reluctant to invest in this, hence through State incentives Banks too can be encouraged to fund applied research. Also wide spread effort should be made to enhance the business environ so that young budding graduates are inspired to start their own business.

STPI - Incubation Facility in Mangalore:

A state-of-the-art incubation facility called the Software Technology Parks of India (STPI) has been recently setup at Blueberry Hill, Derebail in Mangalore. It was started to encourage Small and Medium Enterprises (SMEs) as also to promote and motivate entrepreneurs in the field of IT/ITES in Dakshina Kannada region. It is promoted by the Society under the Ministry of Communication and Information Technology, Government of India. The STPI is one of the 34 in the whole country set-up by the Centre and one of the five in Karnataka, the others being located in Bangalore, Mysore, Manipal and Hubli. On its list of clients are several IT Companies including Infoysis. STPI provides international data communications as well as internet services as a Category ‘A’ service provider.

The STPI - Mangalore Incubation Center is a full fledged incubation institute well equipped with all the modern facilities available. The infrastructure consists of a reception, NOC working area, spacious conference hall, library and a cafeteria on the ground floor.  It has fully networked and plush six incubators each of 220 sq feet to facilitate SMEs. Also there are five workstations in each office with high powered PCs. The Switched Local Area Network has connectivity to high speed internet gateway. The conference hall here has a 24 seat capacity. Moreover there are discussion rooms for various brain storming sessions. Also there is 24/7t echnical support from Network Operations Center.

The services provided at STPI’s Data Communication facility include high speed data communication services, quality internet services, bandwidths multiples of 64 kbps, 2 mbps to 45 mbps or higher, end to end network management, 24/7 customer support, EXIM services and last but not the least incubation services. STPI Mangalore operates with Multiple International Optic Fibre Bandwidths which is ideal for all kinds of real-time applications and also resides International Satellite Gateway Earth station facilitating high-speed Datacom services, thereby availing quality internet services

Last Updated ( Wednesday, 28 July 2010 17:33 )  

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