E-commerce in Developing Countries

Commerce is the exchange of goods and services for a consideration, comm notwithstanding money. Thus e-commerce is exchange of goods and services facilitated electronic whollyy. For the purpose of this paper we lead contract the broad definition of e-commerce to mean any use of information and communication theory technology by a telephone circuit that helps it improve its interactions with a client or a supplier (Payne E. J 2003). E-commerce uses the internet, band and fax. This atomic number 18 all those that allow for business to be conducted in near current duration conditions.In advanced countries, e-commerce has direct to a boom in Business bear upon Operations (B.P. Os) and Call Centers. While the growing orb is appurtenance itself to catch up to e-commerce, some countries thrust dis vie outstanding come upon lend indexts India is worth mentioning in this context.Indeed Indias advancements in e-commerce even rival those in advanced countries, and in some cases , surpass them. Today, maybe as a consequence, India is emerging as a proficient superpower. One crucial benefit that maturation countries be en stacking to gain from e-commerce is the expanded market for commodities and services time at the same time eradicating the role p resideed by middle men in traditional distribution chains.For slip, in Kenya the nimble phone has helped the sodbuster many kilometers from major markets overture the current prevailing prices on that pointfore subjugate exploitation by the middlemen. Developing countries be keen to replicate the achievements do by advanced countries unneurotic with India in e-commerce. This is with the office of reaping the economical gains that ar obvious to all stake holders to date. However certain difficult decisions deport to be made in the journey to establishing a vibrant e-commerce orbit in these countries.Worth noting is that the al-Qaida in the offset world is in critical need of a major upgrade . For guinea pig, the internet and the World Wide meshwork are absolutely vital for the realization of successful e-commerce. The systems in drive in majority of the evolution world are both tall-priced and far below the expected standards necessary for the implementation of near real time trade. These damagely infrastructural improvements leave bring about the following ? high-velocity connection speeds to the internet to facilitate entropy channelise.? Clearer and superior voice and near clarity to enable fulfillment of intra global trade involving conferencing and discussion oer the World Wide meshing. ? Extremely low operating(a) follows together with higher out set capacities which facilitate business profitability and sustainability. This paper is of the view that though e-commerce has high set up costs, major organizational adjustments and infrastructural considerations, developing countries stand to gain massive economic benefits offered by a successful harnes sing of the e-commerce heavens. Main TextModes of E-commerce Thither are different modes of e-commerce Phone, Fax and Internet. Phone e-commerce happens where the supplier of the goods or service communicates with the buyer through a phone. Phones come in various application modes such(prenominal) as air phone, mobile phone, telephone etc. Fax e-commerce is where communication between the buyer and seller is do everyplace the fax. Its advantages are in the speed of transactions, the reach available and the glare cost implication compared to face to face conversation or other(a) traditional modes.The Internet and the World Wide Web are the modish major additions to e-commerce and they shake off brought remarkable solutions in voice and data communication theory that were erst plot of land unimagined. For example, the concept of a twenty four hour mobile office where goods and services are available to all and sundry on the globe in the comfort of ones residence is still rummy in many business peck in the developing world. Arguments against E-commerce in developing countries. in that location has been a good deal of the debate on e-commerce especially regarding the role played by the internet and the World Wide Web.The major issues raised are listed below ? Infrastructural cost. ? Change of mindsets to embrace the late forms of technological advancement. The present infrastructure needs major adjustments to enable it support e-commerce. Firstly, energy costs in developing countries are among the highest in the world. Per unit charge in function of electricity in the developing countries need to be brought buck to levels like to those in advanced nations. For this to happen, the systems for power generation need to be upgraded to the latest technologies which tout higher efficiency at extremely low operating and maintenance costs.In addition to this, it has become almost general knowledge that much of the populations in the developing coun tries do not have access to electricity in the mansions. The situation is grave since electricity supply bottom of the inning solely be guaranteed in urban centers only, small-arm the majority of the people represent in rural areas. Secondly, the technology that supports internet and World Wide Web connections is inferior to those employed in advanced countries. This inferiority is in name of its weak performance characteristics whereby it is slowly and valuable in experimental conditions of data exchange, and scum bagnot support a consistent voice dialog over the internet.This is issues fecal matter only be rectified with the introduction of the technology available overseas that includes installation of fiber optic cable connection, and inexpensive commercial satellite up tie in among other technologies geared towards skimting down the cost of communication while improve performance. Other considerations take the nature and form of those that Pare D. J. (2002) brings to light. The cost of doing business allow for include, but not confined to network auspices and regulatory environs.Where as the business in a developed state of matter would comfortably produce goods or services in the standards of the environment it operates in, it is compel to adopt standards of the buyer (receiver of the goods and services) who happens to be based in a more than(prenominal) advanced country. Problems therefore emerge such as how to remit payments in a secure sort, how to confirm that the items selected for purchase are as those displayed over the World Wide Web and other security oriented fears. ancestry FOR E-COMMERCE IN DEVELOPING COUNTRIES.Developing countries are faced with surging un troth levels that cause discontent and saps development gains by straining resources and amenities. These economies have long held the notion that by expanding the sectors in there economy, they will be able to have more participation of its people in viable income g enerating activities. E-commerce is touted as one such sector that, as evidenced by the Indian success, millions of people net be absorbed in this sector which has controlling trickle down effects and sound complementarities with other existing sectors in the economy.In addition, a positive labour diffusion process will arise were by now-skilled laborers from developing countries migrate to advanced countries to get jobs that promise higher wages. It has been found that these themes are responsible for shipping large amounts of foreign currency keister home to assist there relatives. This foreign income is enables these countries to improve there balance of payments, thus accelerating development. A case in point is the dynamic tertiary sector in India that is spurred by the computer technology industry.India has remarkable strength in software development, which employs a large number of Indian technocrats. In fact, India produces such a large number of skilled personnel that m ajor multi national firms in IT set up base in India. The dynamics here are that the large number of skilled labor concentrated in one area pushes down wages as competition for employment thrives. Due to these dynamics, India has at its disposal an abundance of relatively less expensive and highly learned work force.There is, as a consequence, a high population of Asians of Indian origin fulfilling duties in the IT sectors of major world powers, including the get together States of America and Great Britain. This export of human labor accounts for a world-shaking amount of foreign currency transfer back home. I bear with (Humphrey J. et. al) when he argues that e-commerce will create a pertly culture. By cover the way the world wants things done, developed countries will by extension be taking the initiative in creating home grown solutions to global problems, thus providing unique solutions that are customized to suit local contexts.This will create a unused breed of workers u nique to the developing countries. It is thus clear that where as e-commerce will be pretty expensive to embrace in the short term. In the long run however, the benefits accruing easily outweigh the costs. By embracing e-commerce the developing countries will be killing two birds with the same stone generating economic increment and intricacy by providing the necessary infrastructure and creating a new economy and culture for the learned in the country.Added to this is the bonus of providing a larger market for its entrepreneurs, and a break away from the well known credit that developing countries economies have in there primary and secondary sectors. THE Kenyan CASE In Kenya, the pioneer confederacy in e-commerce is Kencall Ltd. Its basic vision is to lead the way in outsourcing business Kencall. com. Being the first major outsourcing company in Kenya, it was faced with a myriad of problems. Some of these problems are listed below ? Lack of a pool of experienced labor force a s is the case in India and South Africa.? Attempting to change local mindsets with its new concept, largely unknown in that part of the world. Where as BPO was already been taken to developing countries namely India and South Africa this was still a very strange idea in Kenya. ? Expensive telecommunication infrastructures, coupled with slow reforms in the Kenyan communications sector to enable it adjust to global developments. There was need for fast internet uplink to allow for real time transfer of data and voice to the clients. This particular problem was not easy to cover.With the portal controlled by the government and operating on obsolete technology with a knack for breaking down. It was another eighteen months before Internet gateways were liberalized and the company could now get good speeds courtesy of dedicated satellite uplinks. ? under(a) performance of the Kenyan economy coupled with a less than hospitable relationship atmosphere that existed between Kenya and its development partners. Although this situation was improving, the pace was slow as the government pledged top implement much call for reforms in government.These altogether impacts negatively on investments and industry expansion. ? An unstable policy-making climate in Kenya that was characterized by an over politicized climate. This has the effect of shifting assimilation from economic growth and development issues to politics. With the implementation of certain reform pledges that led to balance wheelored confidence between Kenya and its development partners, there came a turn nigh in the Kenyan economy. It started to grow. The industry specific results were a marked expansion in investment, higher employment and an increase in per capita incomes.In addition there was a wider pool of returning graduates from developed countries who knew what BPO was all about. They came with much take know how and information on the role of e-commerce in development. These included the direc tors of Kencall Ltd, in particular Mr. Nick Nesbitt Kencall. com. His contribution to the Kenyan economy has led him to be recognise by the government in through an honorary trophy bestowed to him by the president of the republic. With the realization by the government that in e-commerce lay a goldmine kencall.com, they sought to exploit it by first lay a fiber optic cable all around Nairobi. By connecting to this the speeds were greatly enhanced although the costs still remain high. To reduce cost the government sought to lay an underground fiber optic cable. With partnership of Southern African countries they wanted to have the cable running from cape Town to Somali. Politics has put this noble idea in the back burner. The Kenyan government on its part has chosen to go it alone, as it recognizes the importance of e-commerce. Plans are already at an advance stage to have a cable between Mombasa and Fujaira in Oman.In anticipation of this, a case optic cable has already been la id between Nairobi and Mombasa with the rest of the nation in the pipeline. All this has lead to a proliferation of BPO providers. Skyweb and Pacis have already joined into the fray. Smaller firms are doing the same but on a small scale. On Wed 11th July, Skyweb launched into the market a solution that allows a firm offer BPO on the strength of only 5 computers. Expect in the next year to be a growth in this area. Safaricom, the biggest mobile phone operator has thrown a contend to BPO providers.To show they can handle around 100,000 calls a day while maintaining quality and they will be given the account. This is a challenge to be taken seriously if e-commerce is to grow to match if not pass the pioneers like India and China. Due to the time difference, while other one part of the world sleeping the other is in the middle of a trading day, while another is waking up. There is need for a 24 hr approach to e-commerce in order to take advantage of all situations arising. Kencall has overcome this by operating on 8hr shifts for 24 hrs. This has been made possible by the good security provided by the government.Kencall Ltd Daily Nation (2007) has grown from an initial work force of 20 members to the present over 300 staff. The have too had to move location to a more spacious building where growth is possible. The amount of work handled ahs also grown six fold. This has led to Kenya been recognized as an upcoming force in e-commerce. By extension businesses in Developed countries feel comfortable when dealing with Kencall since they have the capacity to deliver. With the technological strides, Kencall can with a degree of certainty claim to be in a position to guarantee the integrity of its business partners information.In addition, Ken call has with itself the unique opportunity of spinning itself into and e-hub provider. With its wealth of experience, it can mitigate high turnover by providing training to would be e-commerce players. This way it will eliminate the need for people to seek employment only for them to quit after six to twelve months once they are instruct and have an understanding of e-commerce and by extension BPO. CONCLUSION Pare D. J 2003 is of the opinion that the mere bringing of total strangers together in an online environment will not necessarily reduce overall transactional cost to achieve long-term economic gains.This paper has tried to disprove this by clear showing that the opposite is true. By improvement of the working environment, the long term economic gain is clear for any to see. The fibre optic link currently being enjoyed by all not only Kencall Ltd. more(prenominal) effective security is but one of the major achievements being enjoyed by Kenyans. On their part Kencall Ltd is reaping the fruits of persistence. They are defining the parameters in e-commerce simply because they have been longer in the game on the Kenyan context.Any new fresher will have to start form a point of injury as compared to Ke ncall at present. With the present business environment where businesses are flavour to outsource labour intensive operations, Kencall stands at an advantage. In addition, with all the people trained by Kencall, Kenya is at an advantageous position to exploit new business in e-commerce. The completion of the fibre optic link will greatly enhance this. Not only will the cost of doing business come down, it will also enable Kenya position itself as the regional hub of e-commerce.The reference point to all who desire to enter into this business this will be all who know what is geed for them. The local producers now have the social unit world open to them. The floriculture industry is a good example of successful exploitation of e-commerce in sourcing markets. It has taken only a decennary for Kenya to command a healthy 30% of cut flowers sold in the world. This growth and success can be replicated in other areas. For example the floriculture industry is faced with rapid expansion problems and it is investing in technology from Israel and other countries leading in floriculture to fulfill this needs.Kenya can turn the big swaths of land on the northern part of Kenya to be great producers of horticulture as the global demand in Kenyan cut flowers increases, albeit stimulated by the easy access to market information facilitated by e-commerce. Hence a concerted effort involving both the citizens and the government is infallible to enhance awareness and accelerate infrastructure provision to enhance the benefits of e-commerce in providing remarkable industry specific economic solutions. As Annan K. rightly put it, e-commerce is the most visible example to how ICT can contribute to economic growth.By improving trading efficiency and helping developing countries integrate into the world economy. Allowing entrepreneurs to grapple more create more jobs and by extension create more wealth. REFERENCE Payne, Judith E. 2003. E-Commerce readiness for SMEs in developing Countries A leave for development professionals. Pare, Daniel J. 2003. Does this site deliver? B2B E-Commerce services for developing countries Humphrey, J. Mansell, R. Pare, and D Schmitz, H. 2003 . The candor of E-Commerce in developing countries Does e-commerce provide developing country businesses with easy access to global markets?Annan, K 2003. UNCTAD Secretariat, E -Commerce and Development Report 2003, United Nations league on Trade and Development, United Nations, New York and Geneva. (In Forward). Okuttah. M. Outsourcing The latent goldmine http//www. kencall. com/goldmine. htm new(prenominal) SOURCES http//www1. worldbank. org/devoutreach/spring00/article. asp? id=79 E-commerce for Developing Countries Expectations and Reality, Volume 35, Number 1, 1 January 2004 , pp. 31-39(9) http//learnlink. aed. org/Publications/Concept_Papers/ecommerce_readiness. pdf