A new research study suggests that IT innovation produced by the cloud could create $1.1 trillion a year in new business revenues and lead to 14 million new jobs by 2015. Guy Daniels reports
A study published this month by analyst firm IDC, commissioned by Microsoft, suggests that spending on public and private IT cloud services could generate nearly 14 million jobs worldwide from now until 2015, and IT innovation created by cloud computing could produce $1.1 trillion a year in new business revenues.
IDC estimates that spending on public cloud IT services in 2011 was $28 billion, compared with more than $1.7 trillion in spending on total IT products and services. It also calculates that IT cloud services helped organisations of all sizes and all vertical sectors around the world generate more than $400 billion in revenue and 1.5 million new jobs during the year.
IDC’s theory is that IT innovation allows for business innovation, which leads to business revenue, which leads to job creation. It believes that more than 50 per cent of the 14 million new jobs will accrue to SMBs, and more than 1 million jobs each will accrue to the banking, communications, and manufacturing industries. A majority of these jobs will be found in emerging markets because of their huge workforces (for example, 1.2 billion workers in China and India).
The biggest sector spending on cloud will be professional services, because it contains many information-dependent midsize companies that will adopt SaaS components of cloud computing, as well as large services companies adopting IaaS. In a 2010 survey, IDC found that professional services firms spent five times as much on public IT cloud services as a percentage of IT spending as government, and two-and-a-half times as much as utility companies.
In terms of performance by region, the US accounted for 62 per cent of worldwide spending for public IT cloud services last year. But despite the North America region as a whole having a high share of spending on IT cloud services, it will have the lowest total number of cloud-generated jobs in 2015, due mainly to its relatively small workforce. EMEA has four-times the workforce of North America, and so more cloud-created jobs.
Last year, IDC calculated that EMEA's spending in public IT cloud services was 40 per cent of North America's, but its investment in private cloud was just over that of North America.
Asia Pacific is dominated by two countries in terms of job creation; China and India, with their vast workforces. The region accounts for 12 per cent of public IT cloud services worldwide. It also has infrastructure challenges will encourage investment in private IT cloud services. John Gantz, SVP at IDC and co-author of the research, said:
“We tend to think of China and India as emerging markets, but they’re actually early adopters of the cloud. They’re not bound to existing systems. They’ve skipped that step, so there’s less holding them back.”
Gantz and fellow co-authors Stephen Minton and Anna Toncheva concluded that:
“The study results seem to indicate one of the beauties of cloud computing – it frees enterprises from the constraints of the client/server model, where up-front investments in infrastructure are required to pursue technological solutions to business problems. Emerging markets, small cities, and small businesses have as much access to the benefits of cloud computing as large enterprises or developed nations.”
Gantz explained that they developed their results by analysing cloud spending trends in more than 40 countries and then using this information to forecast the number of jobs this spending will create:
“Enterprises that embrace cloud computing reduce the amount of IT time and budget devoted to legacy systems and routine upgrades, which then increases the time and budget they have for more innovative projects. When IT innovation happens, business innovation is reached, which then supports job creation.”
The ambitious predictions have already generated a healthy amount of scepticism, with some observers questioning whether or not the net gains will be so high. Even if cloud adoption will save companies money, will this be reinvested in the business in the form of new jobs, or be taken out as profit and bonuses? Could it, in fact, have an adverse affect on the jobs market?
Commenting on the findings of the study, Susan Hauser, corporate VP of the Worldwide Enterprise and Partner Group at Microsoft, argued that cloud is indeed going to have a huge impact on job creation:
“It’s a transformative technology that will drive down costs, spur innovation, and open up new jobs and skill sets across the globe. Again and again, we’re seeing how the cloud is helping our customers save costs and improve the customer experience. The cloud is the number one topic among CIOs from around the world. They want to know how they can use it to fuel growth. And they want to be sure they have the right people and skills in place to make it happen.”
please sign in to rate this article