E-commerce in Developing Countries

Commerce is the exchange of legals and services for a consideration, comm merely m stary. and so e-commerce is exchange of goods and services facilitated electronically. For the purpose of this paper we allow for read the wide of the mark definition of e-commerce to mean any use of information and communications engine room by a seam that helps it improve its interactions with a customer or a supplier (Payne E. J 2003). E-commerce uses the internet, telephone and fax. This argon all those that discontinue for backing to be conducted in near real sentence conditions.In mod countries, e-commerce has led to a boom in Business Processing trade operations (B.P. Os) and Call Centers. While the maturation humankind is gearing itself to shot up to e-commerce, virtually countries live displayed out al-Qaidaing achievements India is worth mentioning in this context.Indeed Indias advancements in e-commerce even rival those in good countries, and in some cases, surpass them. T oday, maybe as a consequence, India is emerging as a technological superpower. One crucial benefit that step-up countries be picturing to gain from e-commerce is the expanded trade for commodities and services while at the comparable time eradicating the role played by middle men in traditional distribution chains.For example, in batchya the mobile phone has helped the coldmer many a(prenominal) an separate(prenominal) kilometers from major markets access the current prevailing prices thus avoid create by the middlemen. Developing countries are keen to replicate the achievements made by advanced countries together with India in e-commerce. This is with the view of reaping the stinting gains that are transparent to all stake holders to date. However certain difficult decisions have to be made in the journey to establishing a vibrant e-commerce sphere in these countries.Worth noting is that the infrastructure in the developing world is in dire overstep of a major upgra de. For example, the internet and the foundation Wide Web are absolutely vital for the realization of palmy e-commerce. The systems in place in majority of the developing world are both termsly and far to a lower place the expected standards necessary for the implementation of near real time trade. These costly infrastructural improvements lead bring about the following ? Faster connecter speeds to the internet to facilitate information transfer.? Clearer and superior voice and sound clearness to enable fulfillment of intra spheric trade involving conferencing and discussion oer the human race Wide Web. ? Extremely low operating costs together with higher(prenominal) output 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 scotch benefits offered by a successful harnessi ng of the e-commerce sector. briny TextModes of E-commerce thither are different modes of e-commerce Phone, Fax and Internet. Phone e-commerce happens where the provider of the goods or service communicates with the buyer through a phone. Phones keep abreast in several(a) application modes such as satellite phone, mobile phone, telephone and so on Fax e-commerce is where communication between the buyer and seller is done over the fax. Its advantages are in the speed of transactions, the reach available and the lower cost implication compared to face to face conversation or other traditional modes.The Internet and the World Wide Web are the latest major additions to e-commerce and they have brought unique solutions in voice and data communications that were one-time(prenominal) unimagined. For example, the concept of a twenty four hour mobile contribution where goods and services are available to all and sundry on the domain in the comfort of ones residence is still strange i n many business people in the developing world. Arguments against E-commerce in developing countries. There has been much 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 on a lower floor ? Infrastructural cost. ? Change of mindsets to embrace the new forms of technological advancement. The present infrastructure necessarily major adjustments to enable it second e-commerce. Firstly, energy costs in developing countries are among the highest in the world. Per unit charge in consumption of electrical energy in the developing countries occupy to be brought down to levels comparable to those in advanced state of matters. For this to happen, the systems for power generation need to be upgraded to the latest technologies which gas higher efficiency at extremely low operating and upkeep costs.In addition to this, it has become al around general k at one timeledge that much of the universes in th e developing countries do not have access to electricity in the homes. The situation is grave since electricity supply potbelly only be guaranteed in urban centers only, while the majority of the people live in rural areas. Secondly, the engineering that supports internet and World Wide Web connections is subscript to those employed in advanced countries. This inferiority is in terms of its loose surgical operation characteristics whereby it is slow and expensive in terms of data exchange, and cannot support a consistent voice dialog over the internet.This is issues can only be rectified with the introduction of the technology available abroad that includes evocation of fiber oculus cable connection, and inexpensive commercial satellite uplink among other technologies geared towards cutting down the cost of communication while meliorate performance. Other considerations take the nature and form of those that Pare D. J. (2002) brings to light. The cost of doing business lead i nclude, but not confined to network security and regulatory environment.Where as the business in a developed country would comfortably produce goods or services in the standards of the environment it operates in, it is suckd to adopt standards of the buyer (receiver of the goods and services) who happens to be based in a more(prenominal) advanced country. Problems therefore emerge such as how to remit payments in a secure centering, how to confirm that the items selected for purchase are as those displayed over the World Wide Web and other security oriented fears. ARGUMENT FOR E-COMMERCE IN DEVELOPING COUNTRIES.Developing countries are faced with surging unemployment levels that cause discontent and saps phylogeny gains by straining resources and amenities. These economies have prospicient held the notion that by expanding the sectors in there sparing, they get out be able to have more elaborateness of its people in viable income generating activities. E-commerce is touted a s one such sector that, as evidenced by the Indian success, millions of people can be absorbed in this sector which has positive trickle down do and sound complementarities with other existing sectors in the economy.In addition, a positive task diffusion process will arise were by now-skilled laborers from developing countries rifle to advanced countries to get jobs that promise higher wages. It has been found that these nationals are trusty for shipping large heart and souls of foreign currency back home to help there relatives. This foreign income is enables these countries to improve there balance of payments, hence accelerating education. 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 product development, which employs a large number of Indian technocrats. In fact, India produces such a large number of skilled personnel that major multi national firms in IT set up base i n India. The dynamics here are that the large number of skilled labor concentrated in one area pushes down wages as competition for employment thrives. repayable to these dynamics, India has at its disposal an abundance of relatively less expensive and super 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 United States of the States and Great Britain. This export of human labor accounts for a significant heart and soul of foreign currency transfer back home. I agree with (Humphrey J. et. al) when he argues that e-commerce will create a new culture. By embracing 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 quaint solutions that are customized to suit local contexts.This will create anew variant of workers unique to the developing countries. I t 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 development and expansion 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 bigger market for its entrepreneurs, and a break away from the well hunch overn reliance that developing countries economies have in there primary and secondary sectors. THE KENYAN result In Kenya, the pioneer confederation 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 as is the case in India a nd South Africa.? Attempting to change local mindsets with its new concept, for the most part unknown in that part of the world. Where as BPO was already been interpreted 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 ill-tempered problem was not easy to overcome.With the gateway controlled by the government and operating on obsolete technology with a facility for breaking down. It was other eighteen months before Internet gateways were liberalized and the company could now get good speeds courtesy of dedicated satellite uplinks. ? Under performance of the Kenyan economy coupled with a less than friendly kinship atmosphere that existed between Kenya and its developm ent partners. Although this situation was improving, the pace was slow as the government pledged top implement much needed reforms in government.These altogether impacts negatively on investments and industry expansion. ? An unstable political humour in Kenya that was characterized by an over politicized climate. This has the effect of shifting concentration from economic growth and development issues to politics. With the implementation of certain reform pledges that led to restored self-reliance between Kenya and its development partners, there came a drama around 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 needed know how and information on the role of e-commerce in development. These included the directors of Kencall Ltd , in particular Mr. Nick Nesbitt Kencall. com. His contribution to the Kenyan economy has led him to be recognized by the government in through an honorary award 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 laying a fiber optic cable all around Nairobi. By connecting to this the speeds were grandly set upd although the costs still remain high. To reduce cost the government sought to lay an underground fiber optic cable. With partnership of grey African countries they wanted to have the cable running from Cape townsfolk 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 greatness 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 fibre optic cable has already been laid between Nair obi 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 linked into the fray. Smaller firms are doing the same but on a elflike 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. sojourn in the next year to be a growth in this area. Safaricom, the biggest mobile phone operator has thrown a challenge to BPO providers.To say they can handle around 100,000 calls a day while maintaining tincture 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. imputable to the time difference, while other one part of the world dormancy the other is in the middle of a trading day, while another is waking up. There is need for a 24 hr approach shot to e-commerce in order to take advantage of all situations arising. Kencal l 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 also 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 genuine 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 alleviate high turnover by providing training to would be e-commerce players. This way it will eli minate the need for people to seek employment only for them to come in 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 assent that the mere bringing of total strangers together in an online environment will not necessarily reduce overall transactional cost to achieve semipermanent economic gains.This paper has tried to disprove this by clearly wake 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 before long being enjoyed by all not only Kencall Ltd. More in force(p) 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 seven-day in the game on the Kenyan context.Any new entrant will have to start form a point of disadvantage as compared to Kencall at present. With the present business environment where businesses are looking to source 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 persona 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 whole world open to them. The agriculture industry is a good example of successful exploitation of e-commerce in sourcing markets. It has taken only a decade for Kenya to necessitate 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 expan sion 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 wound up by the easy access to market information facilitated by e-commerce. hence a concerted effort involving both the citizens and the government is needed 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 compete more create more jobs and by extension create more wealth. seed Payne, Judith E. 2003. E-Commerce readiness for SMEs in developing Count ries A guide 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 reality 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 Conference on Trade and Development, United Nations, New York and Geneva. (In Forward). Okuttah. M. Outsourcing The latent goldmine http//www. kencall. com/goldmine. htm OTHER SOURCES http//www1. worldbank. org/devoutreach/spring00/article. asp viper? 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