Impacts of Information Technology on Society in the New Century

 Impacts of Information Technology on Society in the New Century


In recent decades there has been a revolution in information technology and communications, and everything indicates that technological progress and the use of information technology will continue at an accelerated rate. 

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 Impacts of Information Technology on Society in the New Century


Accompanying and supporting the dramatic increases in the power and use of new information technologies has been the falling cost of communications as a result of both technological improvements and increased competition. According to Moore's Law, the processing power of microchips doubles every 18 months.

These advances present many important opportunities, but they also pose great challenges. Today, innovations in information technology are having far-reaching effects in many domains of society, and policymakers are taking action on issues related to economic productivity, intellectual property rights, protection of privacy and affordability and access to information. Decisions made now will have lasting consequences and attention must be paid to their social and economic impacts.

One of the most significant results of the progress of information technology is probably electronic commerce through the Internet, a new way of doing business. Although it is only a few years old, it can radically alter economic activities and the social environment. 

It already affects sectors as large as communications, finance and retail and could expand to areas such as education and health services. It involves the seamless application of information and communication technology throughout the value chain of a business that is conducted electronically.

The impacts of information technology and electronic commerce on business models, trade, market structure, the workplace, the labor market, education, private life and society as a whole.


1. Business models, trade and market structure

One important way that information technology is affecting work is by reducing the importance of distance. In many industries, the geographic distribution of work is changing significantly. 

For example, some software companies have found that they can beat the tight local market for software engineers by sending projects to India or other nations where salaries are much lower. In addition, these arrangements can take advantage of time differences to be able to work on critical projects almost 24 hours a day. 

Companies can outsource their manufacturing to other nations and rely on telecommunications to keep marketing, R&D and distribution teams in close contact with manufacturing groups. 

Thus, technology may allow a finer division of labor across countries, which in turn affects the relative demand for various skills in each nation. Technology makes it possible to unlink various types of work and employment. Firms have greater freedom to locate their economic activities, which creates greater competition between regions in markets for infrastructure, labor, capital, and other resources. It also opens the door to regulatory arbitrage: companies can increasingly choose which tax authority and other regulations apply.


Computers and communication technologies also promote more market-like forms of production and distribution. An information and communication technology infrastructure, which provides low-cost, 24-hour access to almost any type of price and product information desired by buyers, will reduce information barriers to efficient market operation. 

This infrastructure could also provide the means for real-time transactions and make intermediaries, such as sales clerks, stockbrokers, and travel agents, whose role it is to provide an essential information link between buyers and sellers, redundant. The elimination of intermediaries would reduce costs in the value chain of production and distribution.

 Information technologies have facilitated the evolution of enhanced mail-order retailing, in which products can be ordered quickly over telephones or computer networks and then shipped by suppliers via integrated carriers that rely on rely heavily on computers and communication technologies to control their operations. 

Non-physical goods, such as software, can be shipped electronically, eliminating the entire transportation channel. Payments can be made in new ways. The result is disintermediation throughout the distribution channel, with a reduction in costs, prices.


The impact of information technology on the cost structure of companies can best be illustrated by the example of electronic commerce. The key cost-cutting areas when selling through e-commerce versus a brick-and-mortar store involve brick-and-mortar, order placement and fulfillment, customer service, robustness, inventory management, and distribution. 

Although setting up and maintaining an e-commerce website can be expensive, it is certainly less expensive to maintain such a store than a physical one because it is always open, accessible by millions of people around the world, and has few variable costs. so you can scale to meet demand. 

By maintaining one 'store' instead of several, duplicate inventory costs are eliminated. In addition, e-commerce is very effective in reducing the costs of attracting new customers, because advertising is often cheaper than other media and is more targeted. In addition, the electronic interface allows e-commerce merchants to check that an order is internally consistent and that the order, receipt and invoice match. 

Through e-commerce, companies can move much of their customer support online so customers can access databases or manuals directly. This significantly reduces costs and generally improves the quality of service. E-commerce stores require far fewer but highly skilled employees. E-commerce also saves on inventory handling costs. 

The faster the ticket can be ordered and delivered, the less the need for a large inventory. The cost impact associated with declining inventories is most pronounced in industries where the product has a limited shelf life (eg, bananas), is subject to rapid technological obsolescence, or falls in price (eg, bananas). , computers), or where there is a rapid flow of new products (for example, books, music). 

While shipping costs can increase the cost of many products purchased through e-commerce and substantially increase the final price, distribution costs are significantly reduced for digital products such as financial services, software, and travel, which are important segments of commerce. electronic.

Although electronic commerce causes the disintermediation of some intermediaries, it creates a greater dependency on others and also some completely new intermediary functions. Intermediary services that could add costs to e-commerce transactions include advertising, secure online payment, and delivery. 

The relative ease of becoming an eCommerce merchant and setting up stores results in such a large number of offerings that consumers can easily become overwhelmed. This increases the importance of using advertising to establish a brand and thus build consumer trust and familiarity. 

For new e-commerce businesses, this process can be expensive and represents a significant transaction cost. The openness, global reach, and lack of physical tracks that are inherent characteristics of e-commerce also make it vulnerable to fraud and thus increase certain costs for e-commerce merchants compared to brick-and-mortar stores. 

New techniques are being developed to protect the use of credit cards in e-commerce transactions, but the need for greater security and user verification leads to increased costs. A key feature of electronic commerce is the convenience of receiving purchases directly. For tangible goods such as books, this incurs shipping costs, causing prices to rise in most cases, thus negating many of the savings associated with e-commerce and substantially increasing shipping costs. transaction.

With the Internet, electronic commerce is expanding rapidly into a fast-moving, open global marketplace with an ever-increasing number of participants. The open and global nature of e-commerce is likely to increase the size of the market and change the structure of the market, both in terms of the number and size of players and how players compete in international markets. 

Digitized products can cross borders in real time, consumers can shop 24/7, and businesses are increasingly facing international competition online. The Internet is helping to expand existing markets by eliminating many.


2. Workplace and labor market

Computers and communication technologies allow people to communicate with each other in ways that are complementary to traditional face-to-face, telephone, and written modes. They enable collaborative work involving distributed communities of actors who rarely, if ever, physically meet. 

These technologies use communication infrastructures that are global and always on, enabling 24-hour activity and asynchronous and synchronous interactions between individuals, groups, and organizations. Social interaction in organizations will be affected by the use of computers and communication technologies. 

Peer relationships across departmental lines will be enhanced through information sharing and coordination of activities. The interaction between superiors and subordinates will become more tense due to the social control problems posed by the use of computerized monitoring systems, but on the other hand, the use of email will reduce the barriers to communications between different levels of status, which will result in more disinhibited behavior. communication between supervisor and subordinates.

That the importance of distance is reduced by computers and communication technology also favors telework and, therefore, has implications for the residence patterns of citizens. As workers find that they can do most of their work at home instead of a centralized workplace, demand for housing in climatically and physically attractive regions will increase. 

The consequences of such a shift in employment from the suburbs to more remote areas would be profound. Property values ​​would rise in favored destinations and fall in the suburbs. Rural, historic, or charming aspects of life and the environment in newly attractive areas would be threatened. 

Since most telecommuters would be among the best educated and best paid, demand in these areas for high-end, high-income services like gourmet restaurants and clothing boutiques would increase. There would also be an expansion of services of all kinds, creating and expanding job opportunities for the local population.

By lowering the fixed cost of employment, widespread telecommuting should make it easier for people to work flexible hours, work part-time, share jobs, or hold two or more jobs simultaneously. 

Since changing employers would not necessarily require changing place of residence, telecommuting should increase job mobility and accelerate career advancement. This increased flexibility could also reduce job stress and increase job satisfaction. Since job stress is a major factor governing health, there may be additional benefits in the form of reduced health costs and mortality rates. 

On the other hand, it could also be argued that technologies, by expanding the number of different tasks expected of workers and the variety of skills needed to perform these tasks, could speed up work and increase the level of stress and job pressure. time on workers.

A question that is more difficult to answer is about the impacts that computers and communications can have on employment. The ability of computers and communications to perform routine tasks, such as accounting, faster than humans does raises concerns that computers and communications will replace people. 

The answer to this argument is that even if computers and communications lead to the elimination of some workers, other jobs will be created, particularly for computer professionals, and that the growth of production will increase overall employment. Computers and communications are more likely to lead to changes in the types of workers needed for different occupations than to changes in total employment.

A number of industries are affected by electronic commerce. The distribution sector is directly affected, since electronic commerce is a way of supplying and delivering goods and services. Other industries indirectly affected are those related to information and communication technology (the infrastructure that enables electronic commerce), industries related to content (entertainment, software), industries related to transactions (financial sector, advertising, travel, transportation). 

E-commerce could also create new markets or extend market reach beyond traditional borders. enlargement.

As shown in the previous section, high level skills are vital in a technology-based and knowledge intensive economy. Changes associated with rapid technological advances in industry have made continual upgrading of professional skills an economic necessity. 

The goal of lifelong learning can only be accomplished by reinforcing and adapting existing systems of learning, both in public and private sectors. The demand for education and training concerns the full range of modern technology. 

Information technologies are uniquely capable of providing ways to meet this demand. Online training via the Internet ranges from accessing self-study courses to complete electronic classrooms. These computer-based training programs provide flexibility in skills acquisition and are more affordable and relevant than more traditional seminars and courses.


4. Private life and society

The increased representation of a wide variety of content in digital form results in easier and cheaper duplication and distribution of information. This has a mixed effect on content provision. For one thing, content can be distributed at a lower unit cost. 

On the other hand, distributing content outside of IPR-compliant channels can reduce the incentives for creators and distributors to produce and make content available in the first place. Information technology raises a number of questions about the protection of intellectual property and new tools and regulations must be developed to solve this problem.

Many issues also surround freedom of expression and content regulation on the Internet, and there continue to be calls for mechanisms to control objectionable content. However, it is very difficult to find a sensible solution. 

Dealing with indecent material involves understanding not only opinions on such topics, but also their evolution over time. Furthermore, the same technology that allows content to be altered with respect to decency can be used to filter political speech and restrict access to political material. Thus, if censorship does not seem to be an option, labeling could be a possible solution. The idea is that consumers are better informed in their decisions to avoid objectionable content.

The rapid increase in computing and communications power has raised serious privacy concerns in both the public and private sectors. Decreases in the cost of data storage and information processing make it feasible for both government and private data mining companies to compile detailed files on all citizens. 

No one knows who currently collects data about people, how this data is used and shared, or how this data can be misused. These concerns reduce consumer confidence in online institutions and communication, and thus inhibit the development of electronic commerce.

One technological approach to protecting privacy could be cryptography, although it could be argued that cryptography presents a serious barrier to criminal investigations.

It is conventional wisdom that people today suffer from information overload. Much of the information available on the Internet is incomplete and even incorrect. People are spending more and more time absorbing irrelevant information simply because it's available and they think they should know about it. 

Therefore, how people assign credibility to the information they collect needs to be studied in order to invent and develop new credibility systems that help consumers manage information overload.


Technological progress inevitably creates dependence on technology. In fact, creating vital infrastructure ensures dependency on that infrastructure. Just as the world now depends on its transportation, telephone, and other infrastructure, it will also depend on the emerging information infrastructure. 

Dependence on technology can bring risks. Failures in technological infrastructure can cause the collapse of economic and social functionality. Blackouts of long-distance telephone service, credit data systems and electronic funds transfer systems, and other vital communications and information processing services would undoubtedly cause widespread economic disruption. However, it is probably impossible to avoid technological dependency.

Therefore, what must be considered is the exposure arising from reliance on technologies with a recognizable probability of failure, with no viable substitute available, and with high costs as a result of failure.


The ongoing information and communications revolution has numerous economic and social impacts on modern society and requires serious social science research to manage its risks and dangers. Such work would be valuable for both social policy and technological design.

Decisions must be made carefully. Many of the decisions made now will be costly or difficult to change in the future.

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