Introduction
Investment is the act to committing finances or capital goods to buy assets, real estates or money instruments with a view to obtaining returns in terms of income and or interest. Investment is closely associated with differed consumption or savings for future consumption but with plans to have it multiplied for more benefits. The process of investment covers different sectors of the economy; sectors are categorized into public and private sectors and may include business, financial trade, information technology, real estates, and agriculture. One can either invest in area of the sectors or can diversify investments to cover other sectors of the economy (Calhoun, 2002).
Investment in Information Technology
Information Technology is one of the most diversified investment industries and has high growth rates with better profit returns. The IT is an ever growing industry and therefore presents the best opportunity to invest in. IT investments involves several projects that will reduce the cost of IT services in the near future and hence viable for business returns in terms of new profit margins. Due to its high growth rate trend it will also present businesses with competitive advantage and enhanced service-level contract offerings. The process of investment is found in all forms and dimensions and many core investment capital projects within and outside Information Technology normally involves infrastructure. The IT industry is in great need to be rebuilt in order to capture back its legacy worldwide especially after the global economic recession that has substantial effects on the industry. Now is the ideal time to invest in IT in order to cut costs of productions in various sectors especially where human capital can be replaced with the use of computers. This is appropriate at a time when the world has just experienced a widespread global credit crunch which has facilitated demands to reduce cost by retrenching employees and maintaining minimum human capital amongst other factors of production (Haunert, 2010).
Investment in IT has both the local and global trends in terms of micro-level, macro-level, and global-level. IT products are applicable anywhere in the world and every new innovation is quickly spread both locally and globally. This implies that the rate of returns on new innovations in Information Technology is very high. This offers incentives for as many investors as the industry can accommodate to invest in the sector. There are many computer components that are being innovated and their demands are always high as soon as they are positioned in the market. This also implies that trade in IT products, including hardware and software, is very promising in terms of profitability.
Trade in IT products has been on go slow due to few traders relative to the level of demand. This has made the products to be over-priced thereby letting only a small percentage of potential consumers to afford. The overpricing of IT products has driven the many customers away and this has made the industry relatively unprofitable to invest in. Getting into the industry as an investor and offering appropriate prices on the products is highly profitable since most people will be able to afford the low prices. However, this can only be made possible by grand entry into the industry by investors. The need to satisfy and offer high quality IT products to the customers will facilitate high rate of innovation hence driving down prices. In this case, the expected returns will be based on each trader’s enjoyment of competitive advantage over his or her competitors (Marchand, 2007). According to research conducted recently in the United States, Information Technology offers competitive advantage in the current economy. The study focused on all trades in the IT sector. The research found out that the adoption of internet services and software commercial enterprises has played a major role in accelerating the growth of the U.S economy. This is also the trend in other world economies meaning that, at global level, IT services are becoming more important integrated part of drivers of economic growth.
The trend in the IT industry is also clearly shown in sales and marketing of products from other industries. Most companies are going global and therefore require the use of IT to facilitate their international transaction. Most of the international companies have adopted the use of IT products in advertising and selling their merchandise. These include the use of internets to supply products and services, communicate with foreign business associates and to do off-shoring especially where services are sought from overseas countries (Guide for SME Managers, 2004).
The IT is a sector that can be said will never meet its full potential. The rate of innovations and the increasing demand for its services by various corporate organizations always increase its market potential. This implies that there will always be an entry by investors into the IT industry. Businesses without IT integrated into their operations have no place in the 21st century. Every business has taken the global trend and is very much concerned with operating on a large scale in order to enjoy economies of scale. Therefore, as more business entities go global more IT services are required to facilitate this trend. The IT market has not fully realized this trend particularly in the developing economies where IT development still presents high incentives for high returns investments. It is also important to note that the use of internet for research is growing trend that is increasingly demanding more integrated information. This is also an area where the IT market has not fully recognized. The cost of owning computer and internet services are still high. The IT market therefore, has a great opportunity to supply the information technological needs of the rising number of consumers (IBM Global Business Services 2006).
Best Ways to Capitalize on the IT Trend
The demands for IT services are increasing at high speed meaning that there is great potential for investment in the IT sector. To meet the market demands of the global trends of businesses, it is profitable for investors to inject huge amount of capital into the IT industry. The investments should also focus on infrastructures that support the development of Information Technology. In order to allow for more investments, the government, in collaboration with the private sector, should avail cheap credits to potential investors who have interests in the IT sector.
Conclusion
It is important that the IT sector has growing demand due to high rates of new innovations which brings a lot of improvements in the way business is done globally. Several businesses are expanding to operating also in the international market. To facilitate business globalization, the businesses need a lot of services from the IT sector. The importance of this trend of business globalization has not been fully realized by the IT sector and therefore, there is great need to encourage investors through available cheap loans to cash in to satisfy the technological needs of the growing businesses and corporations.
References
- Calhoun, C., 2002, Dictionary of the social sciences: Oxford reference online premium, Oxford University Press US, United States, p. 238.
- Guide for SME Managers 2004, ‘United Nations Conference on Trade and Development’, Prepared by the UNCTAD secretariat, p. 89 [Online].
- Haunert, T., 2010, ‘Investing in IT’, Information technology is more than a line in the budget—it’s an investment in the future, Para 1-2 [Online].
- IBM Global Business Services 2006, ‘2006 GMA Information Technology Investment and Effectiveness Study’, Consumer Products, pp.1-2 [Online].
- Marchand, D., 2007, ‘Keeping an Edge over Competition’, how the information capabilities optimizer effect can work for you, para 1-9 [Online].