Cloud Computing Might Be the Next Big Jobs Generator

Written By Ned Smith, senior writer at BusinessNewsDaily

Published March 15, 2012

FOXBusiness

Cloud computing has the potential to become a greater generator of jobs in the U.S. than the Internet was in its early years, a new study says. In addition to creating very large business opportunities and hundreds of thousands of new jobs, cloud services could also save U.S. businesses billions of dollars. The driving forces are the proliferation of mobile devices, swelling social media usage and the emergence of "Big Data," the study found.

The study, sponsored by enterprise software giant SAP, looked at the trends and indicators supporting the growth of cloud services and the ways cloud computing may create jobs. It found that 11 cloud computing companies added 80,000 jobs in the U.S. in 2010, and the employment growth rate at these organizations was almost five times that of the high-tech sector overall.

Companies selling those cloud services are projected to grow revenues by an average of $20 billion per year for the next five years, which has the potential to generate as many as 472,000 jobs in the U.S. and abroad in the next five years.

[5 Ways to Harness the Power of the Cloud]

Venture capital investments in cloud opportunities, projected to be $30 billion over the next five years, could add another 213,000 jobs in the U.S., the study found.

The economic impact for companies buying cloud services can be even more significant. Cloud computing could save U.S. businesses as much as $625 billion over five years, much of which could be reinvested to create new business opportunities and additional jobs.

The study says three industry megatrends are propelling the growth of cloud services and employment: the boom in mobile computing devices such as smartphones and tablets; the "social" trend in online services; and the growth of Big Data flows that require more data management services. Government policies and purchasing decisions at all levels will also have a major influence on cloud adoption and job growth.

"The study confirms that cloud computing can have a significant impact at every key growth stage of the business life cycle — from launching a startup to expanding a business to managing a multinational enterprise," said Jacqueline Vanacek, SAP VP vice president and cloud computing evangelist. "Business growth leads to jobs, and cloud computing will accelerate this in certain industries."

Reach BusinessNewsDaily senior writer Ned Smith at nsmith@techmedianetwork.com. Follow him on Twitter @nedbsmith.

Copyright 2012 BusinessNewsDaily, a TechMediaNetwork company. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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Cloud computing fueling global economic growth: London School of Economics study - Forbes

The development of cloud computing will promote economic growth, increase productivity and shift the type of jobs and skills required by businesses, according to a new study by the London School of Economics and Political Science.

The LSE study selected two industries, aerospace and smartphone services, and examined the impact of cloud computing on these  industries across the UK, USA, Germany and Italy between the years 2010 and 2014. The LSE study was underwritten by Microsoft.

Investing in cloud computing is contributing to growth and job creation in both the fast-growing, high-tech smartphone services industry as well as the longstanding and slow-growth aerospace sector, the study claims. In addition, cloud is directly creating employment through the construction, staffing and supply of data centers, which will host the cloud. Using cloud computing enables businesses of all sizes to be more productive by freeing managerial staff and skilled employees to concentrate on more profitable areas of work.

There will be a new range of employment opportunities opening up as a result of the shift to cloud as well. As the study points out, “as firms shift from proprietary application servers towards virtualization and cloud computing, related skills will be in demand among employers. New direct hires and upskilling for public cloud enablement result in higher-than-average salaries.”

Of the countries analyzed in the study, the US is leading the way in terms of cloud job creation. US cloud-related jobs in the smartphone sector are set to grow to 54,500 in 2014. This is compared to a projected 4,040 equivalent jobs in the UK. The authors of the study say that this can be attributed, in part, to lower electricity costs and less restrictive labor regulation compared to Europe.

Small to medium-size businesses will benefit as well. In the smartphone sector alone, “cloud computing will form the basis for a rapid expansion and high-start-up rate among SMEs 2010-2014 in all four markets in services,” the study says.

The study also shows that there is in fact little risk of unemployment from investing in the cloud, as companies are more likely to move and re-train current staff. This would be alongside the hiring of new staff, likely to be in a higher salary bracket, who have the necessary skills for using virtual data-handling systems.

But researchers found that the level of impact the cloud has on a business or department’s growth and productivity depends on a number of factors, primarily the type of sector in which the business is involved and the regulatory environment in which it operates.

Unsurprisingly, the cloud has a much greater effect on the web-centred smartphone services industry than traditional high tech manufacturing, with expansion and a high-start-up rate among small and medium size businesses in 2010-2014 forecast.  For example, in the UK from 2010 through 2014, the rate of growth in cloud-related jobs in the smartphone services sector is set to be 349%, compared to 52% growth in aerospace. German, Italian and US equivalent growth rates will be 280% vs 33%, 268% vs 36% and 168% vs 57% respectively.

The study’s authors, Jonathan Liebenau, Patrik Karrberg, Alexander Grous and Daniel Castro, also talk about the direct and indirect employment and business opportunities that will stem from cloud, which may not be apparent at first. “Our analysis shows jobs shifting from distributed data processing facilities to consolidated data centers, resulting in a drop in data processing jobs overall as efficiency gains occur especially through public cloud services,” they write. “We see a reduction in IT administrators within large firms in smartphone businesses (and most likely in many other similar sectors) compared to their level of employment otherwise expected by taking into account overall IT spending.”

They add that direct and indirect employment gains will be seen in the construction of new data centers needed to accommodate the public cloud businesses, and an “unanticipated effect is in job creation of site maintenance, janitorial staff and security guards in newly built data centers. Overall, more than 30% of short-term new employment in cloud services originates from the construction of data centers and outfitting them accounts for around another third.” Almost 25% of new jobs accrue from direct employment in public cloud services firms, they add.

Then there’s the “cloud dividend” that enterprises will see as the cloud infrastructure develops. These gains will be “in the form of shifting
the work of existing IT staff towards general administrative responsibilities and strategic management rather than exploiting short-term payroll reduction opportunities. Herein lies one of the main new skills challenges to the existing labor force.”

(Full PDF of the study, Modelling the Cloud: Employment Effects in Two Exemplary Sectors in the United States, the United Kingdom, Germany and Italy, available from the LSE Website.)

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