Digital Economy and Its Several Impacts on Small Businesses

by Michael Wight March 10, 2016
March 10, 2016

The digital economy has changed how we do business. While big corporations have greatly adapted to the changing scenario, small businesses everywhere are finding it difficult to accept and get used to the digital economy. It will not be entirely wrong to state that things are not exactly how they were supposed to be.


The basic idea of digital economy meant more benefits for workers in the form of less work, that too from home with digitization allowing them to work on their computer (with the help of a network). However, on the contrary, employees seem to be less confident and secure now and often have to put in more hours. Basically, everyone’s working even when they are not at work.


While many tend to blame the Internet and the rapidly changing technology for this, the truth is that technology is not the real culprit. The main problem is that instead of trying to build a true digital economy, we’re only using the technology to fuel the industrial economy we are supposed to leave behind.


The fact is that we are not building technology to aid employees or humanity. But, we are only trying to maximize our profits and to squeeze more out of everyone. As a result, employees are not happy and it has started showing in their work as well.


As per a report from Digital Sector Economics Estimates, digital economy is rapidly growing in the UK. It accounts for about 7.3% of the UK Economy and has contributed over £118.3bn to GDP (2014 reports). And not just the UK, digital economy has helped the American economy as well, but at what cost? As stated earlier, startups are facing the burnt the most, but even big corporations seem to be in trouble. A good example is Twitter, which makes over half a billion dollars in a quarter, yet was reprimanded by Wall Street and got called a failure. On paper, the revenue is pretty big for an online company, but the investors want more from their investment. And in order to meet their unjustified expectations, the company must come up with tricks that make the investors happy. But while doing so it may have to make its users or employees unhappy.


The impact of digital innovation has become more obvious in the last few years with ecommerce sales seeing a major boost. And this is not only seen in the B2B sector but also in the B2B sector. As per a report from EEF, 86% manufacturers agree that businesses should a right to a fast Internet connection. In addition to this, 95% manufacturers believe that it is essential for businesses to be able to access secure online services.


Technology is fast becoming necessary to all kind of businesses. To be able to stay afloat in the industry, even small businesses have to become tech-savvy and hire staff that is well aware of the digital world. Every business from an online clothing store to a software provider to a physical store needs to be tech-savvy. Even reports state that the demand for employees with enhanced digital skills is on a constant rise. With population continuing to age, this could have a huge impact on the employment rate as businesses will begin to do away with older employees and replace them with Generation Z employees, since they are born in the digital era and are believed to have more knowledge on how computers or the digital economy works.


There already seems to be a skill gap in different industries, including retail industry. With new retail tools being introduced at a rapid pace, there is a dire need for businesses to educate their employees to be able to meet the changing requirements.


In this scenario, what a business should do is train its staff. Personal development is very important and benefits all the parties involved.


A growing reliance on digital technology will change the way business is done. But, at the same time we have to change how we use IT. It was built to help employees, but in today’s scenario employees are not very thrilled about its use. Something has to be done so that they can adapt to the changing technology better. Experts suggest building a powerful team that is willing to learn. Also one should make sure that technology is selected not only for the business’s benefit but also for the benefit of people. While technology’s benefits cannot be neglected, something has to be done about its negative aspects.

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