Global IT industry to spearhead economic recovery with 5.8 million new jobs

7 Oct 2009

The IT industry will create 5.8 million new jobs and more than 75,000 new businesses over the next four years, according to Microsoft and IDC – three times the rate of employment in other industries.

The expected growth rate for IT employment of 3pc a year is more than three times the rate of growth of total employment and a strong indicator that investing in IT will contribute to economic recovery and growth.

“In this fundamental economic reset, innovative technologies will play a vital role in driving productivity gains and enabling the creation of new local businesses and highly skilled jobs that fuel economic recovery and support sustainable economic growth,” said Steve Ballmer, CEO of Microsoft.

“Countries that foster innovation and invest in infrastructure, education and skills development for their citizens will have a major competitive advantage in the global marketplace.”

The IDC study, commissioned by Microsoft, investigates the contribution of IT to gross domestic product (GDP), job creation in the IT industry, employment in the software sector, formation of new companies, local IT spending, and tax revenues in 52 countries, representing 98pc of total worldwide IT spending.

The emerging countries on the list of 52 — all countries excluding the United States, Canada, Australia, Japan, New Zealand and Western Europe — will account for only 21pc of IT spending in 2009 and 39pc of IT-related employment. But, over the next four years, they will account for more than 50pc of net new IT spending and 70pc of new IT-related jobs.

The research found that Microsoft and its ecosystem of local partners, vendors and service providers are a major catalyst of local economic growth and opportunity, during both the current economic difficulties and recovery.

As a group, companies in the Microsoft ecosystem in Ireland will generate more than €989 million in revenues for themselves in 2009. For every euro Microsoft will make in Ireland in 2009, companies in the local ecosystem will make €9.22.

To generate those revenues, companies in the local ecosystem will drive nearly €328 million of investment, most of it in Ireland.

Companies in the Microsoft ecosystem in Ireland employ 41,000 people; IT-using organisations employ another 17,000 IT professionals who work with Microsoft software or the products and services based on it.

IT spending is expected to grow at triple the rate of GDP growth in the 52 countries. Although forecasted growth of IT spending is muted since the advent of the global recession, it is pegged at 3.3pc per year between now and the end of 2013.

The Microsoft ecosystem, defined as local companies that develop and/or sell products that run with or on Microsoft software, or that service and distribute Microsoft software, is a critical economic catalyst in every country where Microsoft operates. For every unit of local revenue that Microsoft will earn in 2009, other companies will earn an average of €8.70.

In 2009, the companies in the Microsoft ecosystem will generate more than $535 billion in revenues for themselves. These revenues will remain in local economies.

Global spending on IT will create 5.8 million new jobs between the end of 2009 and the end of 2013.

Spending on software is growing faster than spending on IT overall — 4.8pc a year between 2008 and 2013, compared with 3.3pc for all IT spending. During 2009, total IT employment in the 52 countries dropped a fraction of a percentage point, yet software-related employment grew 4pc.

The IT market will create more than 75,000 new businesses over the next four years. Most of the new companies will be small and locally owned organisations.

“Over the past 20 years, we’ve seen transformative power in how investments in IT innovations foster economic growth,” said Robert Atkinson, PhD, founder and president of the Washington, DC-based Information Technology and Innovation Foundation.

“Continued innovation and investment in information technology will help jump-start recovery from the current recession and will significantly contribute to the growth of employment and new businesses.”

By John Kennedy

Photo: Steve Ballmer, CEO of Microsoft.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years