It would be an understatement to say that the Information Technology (IT) is having an enormous influence on today’s global economy. It would be more appropriate to say that IT is now close to becoming the most important driver of the global economy. The competitiveness of a country’s economy and well being is getting closely aligned to its ability to innovate and participate in the IT industry.
While the industrial revolution was initiated in the labor-intensive manufacturing industry by automotive pioneers like Ford, it is clear that the third revolution is driven by the knowledge-based services sector.
In the last decade we have begun to see a new revolution- the information revolution.
Today, and in the future, it is "brain" and not "brawn" that is the key to sustainable economic growth. Consequently, the level of development of the services sector,
particularly the knowledge-intensive segments, has become a key determinant of national competitiveness for economies around the world.
The use of money enabled the goods made by unknown people in remote places to be bought by others. Money enabled trade to cross immediate geographical boundaries and replaced barter. The information revolution is now enabling the emergence of a new type of barter system on electronic network. People can exchange goods without having to exchange money. This has led to the emergence of virtual markets. Electronic business with replace going to shops. Same is the case with electronic banking system.
The impact of IT on economy has accelerated with the development of satellite communication, increasingly powerful and smaller memory chips and developments in software programming. This has had a fundamental effect impact on organizational structures and human resource management. Intermediate middle management levels have been thinned down and intellectual capital has become a key resource.
The article deals with the IT and its impact on economy in general with special examples of Indian economy. The first section throws light on why IT is useful to us, followed by Business transformation needed to compete with the electronic world. The next two sections illustrate the impact of economy on IT and vice versa with India as reference. Lastly we have the problems regarding implementation of web-enabled business.