Meaning and Need for Emerging Modes of Business

Why New Modes of Business Emerged

For most of commercial history, doing business meant a physical presence: a shop, a warehouse, a sales counter, paper ledgers, and cash or cheque payments. From the 1990s onward, three developments changed what was possible for a business:

1. Widespread computer and internet access — falling computer prices and the spread of internet connectivity made it possible for even small firms, and eventually individual consumers, to transact online.
2. Globalisation and liberalisation — the opening up of economies (including India's, from 1991 onward) to foreign trade and investment meant firms increasingly needed to reach customers, suppliers, and partners well beyond their own city or country.
3. Rising cost pressure and competition — firms constantly looking to cut costs and focus on what they do best created an incentive to hand off routine or specialised work to other firms rather than doing everything in-house.

Together, these developments gave rise to what this chapter calls the emerging (new/modern) modes of business — ways of conducting business that were not practically possible before information technology matured, principally e-business/e-commerce and outsourcing (including BPO and KPO).

Traditional Modes vs Emerging Modes — the Underlying Shift

Traditional commerce assumes: a physical location where buyer and seller (or employer and worker) meet; transactions limited to local or, at best, national reach; and most activities of a business performed by the business's own staff, on its own premises. The emerging modes relax every one of these assumptions — a website can be visited from anywhere; a payment can be made electronically without either party holding cash; and a specialised task can be performed by a worker or firm located anywhere in the world and delivered back over the internet. …