London School of Economics study

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

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 then as the longstanding and slow-growth aerospace sector, the study claims. Just in case, 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 so then. 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.”

The countries analyzed in the study

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, partly, to lower electricity costs and less restrictive labor regulation compared to Europe.

Small to medium-size businesses will benefit as then. 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.

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 instance, 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

The study’s authors, Jonathan Liebenau, Patrik Karrberg, Alexander Grous and Daniel Castro, as well talk about the direct and indirect employment and business opportunities that will stem from cloud, which may not be apparent with the naked eye. “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 compared to their level of employment if not 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.” Nearly 25% of new jobs accrue from direct employment in public cloud services firms, they add.

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I am an author and independent researcher, covering technology, information research trends and markets. I as well can be found speaking at business IT, cloud and SOA industry events and Webcasts. In recent years, I had the possibility to keynote the International SOA and Cloud Symposium in Amsterdam, and SOA Congress in Germany. I am as well one of 17 co-authors of the SOA Manifesto, which outlines the values and guiding principles of service orientation in business and IT. Much of my innovation work is in conjunction with Unisphere Research/ Information Today, Inc. for user groups including SHARE, Oracle Applications Users Group, Independent Oracle Users Group and International DB2 Users Group. I am as well contributor editor to CBS interactive, authoring the ZDNet "Service Oriented" site, and CBS interactive's SmartPlanet "Business Brains" site. In a previous life, I served as communications and research director of the Administrative Management Society, an international professional association dedicated to advancing knowledge within the IT and business management fields. I am a graduate of Temple University.