Today, there will be hardly any field of business or personal life being not impacted upon by Information Technology. It is altering the way we live and work. It will be prudent to know as to what IT involves in its ambit, before we discuss the role of IT in international business.
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It involves use of computers, software, internet, websites, telecommunication, and above all the microprocessors; and enactment and enforcement of IT laws and regulatory mechanism. Businesses adopted computers in three distinct phases – as data processors, as microcomputers, and as networked information systems. The networked connectivity of computerisation through internet is the latest phase of computer use.
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It is the life blood of modern day international business. No one can think of international business without IT. Following facts will witness the growing importance of IT for international business:
i. In globalised world only those businesses/firms will survive who are proficient in the use of IT, because to achieve competitiveness in global and domestic businesses, use of IT is a must. The World Economic Forum, which publishes Global Competitiveness Index, shows the US being dropped from first place in 2005 to sixth position in 2006. One of the reasons is that the US companies are lagging behind in terms of information technology.
ii. It has been one of the factors contributing to growth. According to an estimate IT has been the enabling factor for 50% of the long term economic growth of America since Second World War.
iii. The development has moved away from agrarian to manufacturing to knowledge-based economy. And it has created a robust demand for highly skilled workers in the development and use of IT. One of the largest employment creating industries in India is the IT industry.
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iv. A developed IT industry is a great source of foreign exchange earnings for countries like India. Millions of jobs in the developed world in general and the US in particular have been transferred to India (and other countries) because it offers cost savings, i.e., skilled labour at lower cost. It has become a core business of India. Computer hardware being capital intensive, there is entry barrier. But in case of software, there is no such obstacle.
v. IT is the most enabling technology, “responsible for new products and services, new companies and industries revitalizing, revitalizing existing products, services,
vi. And industries, providing new venues for commerce, enhancing our ability to manage information and to innovate, and improving our productivity, quality of life, and national standard of living.”
vii. In terms of marketing, it is helping to reduce delivery times as it helps to monitor the whole process from production to delivery.
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viii. In terms of operations, IT has been a great facilitator of globalisation and international business. The communication has become faster, cheaper, comfortable and at a click away only. Fax and internet has made it possible even for the small firms to get into international business. But at the same time, if the communication is not working properly with one country, the buying manager will not wait and opt for another country/seller.
ix. IT has affected the whole gambit of organisational working. IT has made it possible to work away from offices and factories. Work relationships have changed – organisations going from hierarchical to flatter ones. Work/social life mix has undergone sea changes – to meet the demands of different time zones, people get less time for rest and social life.