The effect of a net economy

In order to arrive at a better understanding of what a net-economy is and how it stresses the relevance of software, it is first important to discuss the concept of a net-economy.   Net-economy is basically defined as a digital network that allows for the transfer of information from one source to another.This transfer has a value that then creates its own economy that takes advantage of the different electronic platforms that exist between parties.   It is also an economy that takes advantage of the development of information technology.   This brief discourse shall attempt to highlight the relevance of software in this growing economy and how it has changed the way by which business is conducted by shifting from people based focus to software dependent methods.The effect of a net economy can be seen clearly through the impact that the Business Process Outsourcing (BPO) industry has had on certain economies.The reason for this is that BPOs have opened up the world markets and has shown that, according to Friedman, there really is a flat world that allows the factors of production, in this instance information, to flow from one part of the world to another.   In his book entitled The Flat World, Friedman has cited the information exchange and the net-economy as one of the major forces that is currently changing the way businesses are run on a global level.This recognition of the net-economy has now stressed the importance of software to its success.   As Friedman elaborates, the impact of this is that software or the means through which information is transferred becomes more important than the people.The success of the net-economy is now dependent on the speed and velocity by which information can be processed from the source to the market.   Presently, most of the companies that are based in 1st World Countries that are engaged in IT require specialized talent, which can be found in other developing countries, in order to function.The depletion of talented individuals and workers is now forcing these companies to search for the required technical assistance in other talent rich countries located outside of the developed countries such the United States, such as India and China.   Without software, there is no way by which this information or talent can be accessed, it becomes increasingly important, therefore, to ensure that there is enough software to support the net-economy.The main contribution or impact that software has had with regard to the economic aspect is that the net-economy has greatly increased the relative wages that individuals now receive with those engaged in the IT sector earning relatively more in the present than ever.The salary range for programmers in other countries is significantly lower than that of most developed countries with a higher standard of living and therefore even by relocating the entire business process to other countries and factoring in the movement costs and expenses, the companies that resort to outsourcing still save more than they would if they chose to continue all business operations in the developed countries.This means that people as a cost of doing business is a factor that can be changed and is now variable.   This also signifies that software development is quite integral to this process because it allows businesses to relocate the variable factors without a decrease in productivity.In a very serious, competitive environment, companies have to concentrate on their core competency and they want to outsource everything and reduce cost and therefore the world is seeing the trend toward offshore outsourcing increasing.As technology continues to improve and the business world becomes more and more competitive, the growing role of a net-economy becomes crucial.   Yet in order for the net-economy to take full advantage of the situation it needs to lay the infrastructure for such which lies in the information technology development and software.The prom ise of increased velocity for information transfer between business units and lower costs can only be achieved with the establishment and creation of this technology backbone.   Therefore, while people, as a business resource, are important, in a net-economy the key to survival and to remaining competitive lies in the software.