E-commerce businesses has the potential to add 12 million new jobs in India over the next decade, according to a new study by HSBC Global Research.
The country needs as many as 80 million new jobs in the next decade, said the report titled “India: More jobs per click - The employment potential of e-commerce”.
Nearly three-fourths of these new jobs in the e-commerce sector are expected to be in broad supply chain activities -- logistics, warehousing and courier -- and the around 30% would be in customer care, information technology and management, the report said.
The study warns that the country may fall short by 24 million, or 30%, out of the 80-million jobs target. However, if enabling factors work to the advantage of the e-commerce ecosystem in the country, half-of-the-expected shortfall can be mitigated by the new tech-based businesses, the report added.
The e-commerce business in India is already showing potential to support the projected growth for new job opportunities. At present, India, according to this report, has 330 million internet subscribers, almost all of which, or around 94%, are wireless. This means mobile phone-driven e-commerce activities will be a major force for growth in the future.
At present, there are one billion mobile phone subscribers covering 75% of the current population, one billion biometric identities (Aadhaar cards), and 220 million new bank accounts, created since the present governments launched the financial inclusion programmes in 2014.
The report counts on the countries’ demographics, particularly the fact that the generation born after 1990, or the start of the internet age, accounts for 25% of the population now and is expected to swell to 45% by 2025. There is also immense potential in the retail sector in India, which could be brought under the organised retail framework, creating sufficient headroom for growth in e-commerce. At present, organised retail accounts for only 8% of the overall retail pie in India against China’s 25% and 85% in the United States.
E-commerce as an element of overall consumption in India is still less than 2% of the total number, against 14% in China, indicating a magnitude of catching up India needs to do to realise its job potential.
The report recommends setting up of digital market places in rural India, which could further strengthen the job opportunities in the e-commerce business.
There are working benchmarks for India to adopt, such as Taobao villages in China created by Chinese internet giant Alibaba. From 20 such villages in 2013, they have grown to 780 by 2015. These digital villages are spread over 17 provinces of China and cover more than 200,000 active online shops, the report said.
“In India, the potential for e-commerce in rural areas is promising given similar infrastructure inadequacies as in China. The market potential is sizeable as well. For example, more than 800 million people live in 640 villages (in India),” it said.
The biggest challenge for this rural transformation is the internet penetration in the country’s villages.