REDMOND, Wash. — Oct. 18, 2007 — Global spending on information technology will create 7.1 million new jobs and 100,000 new businesses over the next four years, according to a new study by IDC. The research predicts that in 2007 Microsoft-related activities are responsible for 14.7 million jobs from an IT industry total of 35.2 million people — 42 percent of total IT employment globally in 2007 — and more than $514 billion* in tax revenue worldwide.
“Today technology is a key factor for economic, social and technological progress, and for the sustainability of economies all over the world,” said John Gantz, chief research officer at IDC. “The IDC research underscores what we’ve always known to be true: that software provides a disproportionate contribution to a vibrant IT economy. It also shows the significant contribution made by the Microsoft® ecosystem, especially in the creation of local businesses and local jobs.”
IDC’s independent research, which was sponsored by Microsoft Corp., examined the IT industry’s impact on local job creation, company formation and tax revenues in 82 countries representing 99.5 percent of the total technology spending worldwide. IDC found that the Microsoft ecosystem — defined as people working at IT companies and IT professionals who create, sell or distribute products that run on Microsoft platforms — plays a key role in driving the IT industry’s overall contribution to job growth and economic development.
The study also found that Microsoft serves as an economic catalyst in every country in which it operates. The revenues earned by companies working with Microsoft far exceed the revenues earned by Microsoft itself. The research found that for every $1 that Microsoft earns in 2007, companies working with Microsoft will earn $7.79. In addition, according to the research findings, in 2007 more than 640,000 vendors in the Microsoft ecosystem will make more than $425 billion in revenues, and invest $100 billion in research development, marketing, sales and support in local economies.
“Information technology is the most powerful thing that has happened to mankind right now. It’s a new opportunity to change the world in a very different way,” said 2006 Nobel Prize Winner Dr. Muhammad Yunus, founder and managing director of Grameen Bank, speaking this week at Microsoft headquarters. “This is a chance for us to bring information technology to the poorest people, so the potential energy and creativity that each one of them has can be unleashed. Microsoft can play a tremendous role because they are at the top of the technology pyramid. If Microsoft puts their mind to it something dramatic can happen. This is an opportunity that we cannot ignore.”
“IDC’s research quantifies the enormous power of software to create local jobs and grow economies around the world, in both developed and developing markets,” said Craig Mundie, chief research and strategy officer at Microsoft. “Millions of people are employed globally in Microsoft-related activities, generating more than a half-trillion dollars in taxes in 2007 for governments worldwide. Microsoft’s business model creates average revenues of more than $7 for other companies for every $1 Microsoft takes in. Countries such as China, India and Russia see earnings in excess of $16 to $1.”
In the 82 countries and regions surveyed, the IT industry overall is expected to see continued strong growth over the next four years, generating an additional 7.1 million new jobs from a 2007 base of 35.4 million for a total of 42.5 million jobs by 2011. The No. 1 source of new IT jobs will be China, followed by the United States. In addition, the growth in the global labor force will result in new incremental tax revenues of $592 billion to governments over the next four years.
The study shows that spending on IT will reach $1.2 trillion worldwide in 2007, and is expected to grow 6.1 percent a year for the next four years, a rate twice that of the expected growth of gross domestic product worldwide. The study also found that IT spending on software creates a disproportionate share of the skilled job growth. Software drives activity in the services and distribution sectors, as well as in organizations using IT, so while worldwide spending on packaged software will be only 21 percent of total IT spending in 2007, 50 percent of employment in IT will be software-related.
Illustrating the powerful economic impact of the Microsoft ecosystem, partners all over the world are innovating and experiencing significant business growth.
“Migrating to Microsoft technologies and becoming part of the Microsoft Partner Program has been one of the best business decisions our management team has ever made,” said Tim Wallis, CEO of Content and Code, a company in the United Kingdom. “With Microsoft technologies, we can offer more competitive price points, affordable licensing options and an integrated technology environment that is easier to support for our customers. It’s hard to pinpoint how much all this factors into our 100 percent growth rate of recent years, but I believe that the more we focus on Microsoft, the faster we grow.”
Wicresoft Co. Ltd., a Microsoft partner based in China, grew from 70 to 1,000 employees in a short amount of time and generated a sales volume of $32 million last year alone.
“To date, many of Wicresoft’s milestones and achievements in the last five years have been accredited to Microsoft’s help to achieve international excellence,” said Ingrid Wang, president of Wicresoft. “Through Microsoft’s training programs our sales staff completed a year’s sales volume in only half a year. Our business boomed. We have had a successful transformation from novice member of China’s IT ecosystem to international player. We treasure the strategic alliance with Microsoft here in China.”
“As Microsoft’s ISV Partner of the Year in 2007, Workshare shares Microsoft’s drive to create industry growth,” said Joe Fantuzzi, CEO of Workshare. “Our investment in Microsoft infrastructure, coupled with Microsoft’s product and field team support, enables us to assist our customers in 6,000 organizations across 65 countries.”
Study Highlights
The following trends were observed across the 82 countries and regions:
Global
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Microsoft is a major component of the IT industry. Microsoft and its ecosystem — the companies that create products that run on Microsoft platforms, service Microsoft products, or work with Microsoft products — employ 14.7 million workers globally. This ecosystem helps spur the development of national IT-related economies.
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Global spending on information technology will create 7.1 million new jobs and 100,000 new businesses over the next four years.
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The Microsoft ecosystem employs at least 40 percent of the people working in the IT industry. The same ecosystem is projected to invest nearly $100 billion in local economies in 2007.
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Software accounts for a modest slice of overall IT spending but has a disproportionately positive impact on local economies. Software drives activity in the services and distribution sectors, as well as in organizations using IT, so while worldwide spending on packaged software will be only 21 percent of total IT spending in 2007, 42 percent of employment in IT will be software-related.
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Tax revenues (including value-added or sales taxes, personal income, social taxes, fees and levies, and corporate income taxes) that result from the activity of Microsoft and its ecosystem will amount to $514 billion in 2007.
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In the United States alone, tax revenues from the Microsoft ecosystem will be just $203 billion in 2007.
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In Western Europe alone, tax revenues from the ecosystem will be just under $133 billion in 2007.
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In the Asia-Pacific region, tax revenues from the Microsoft ecosystem will also total nearly $133 billion in 2007.
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In emerging markets, tax revenues generated by the ecosystem will be more than $100 billion in 2007.
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Incremental new taxes accrued over the next four years due to growth in the IT labor force will equal $592 billion worldwide.
North America
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While software spending represents 27 percent of North America’s total IT market, 65.7 percent of IT employees are engaged in creating, distributing, installing or servicing software.
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In 2007 the Microsoft ecosystem is expected to generate more than $166.1 billion.
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For every U.S. dollar of Microsoft revenue in North America, $6.14 is generated by other companies in the Microsoft ecosystem of hardware OEMs, software companies, and channel and service firms.
Central and Eastern Europe
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While software spending represents 13 percent of the region’s total IT market, 39.8 percent of IT employees are engaged in creating, distributing, installing or servicing software.
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In 2007 the Microsoft ecosystem is expected to generate more than $19.5 billion.
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For every U.S. dollar of Microsoft revenue in the region, $14.07 is generated by other companies in the Microsoft ecosystem of hardware OEMs, software companies, and channel and service firms.
Western Europe
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While software spending represents 21 percent of the region’s total IT market, 56.6 percent of IT employees are engaged in creating, distributing, installing, or servicing software.
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In 2007 the Microsoft ecosystem is expected to generate more than $124.1 billion.
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For every U.S. dollar of Microsoft revenue in Western Europe, $7.68 is generated by other companies in the Microsoft ecosystem of hardware OEMs, software companies, and channel and service firms.
Asia Pacific
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While software spending represents 15 percent of the region’s total IT market, 35.9 percent of IT employees are engaged in creating, distributing, installing or servicing software.
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In 2007 the Microsoft ecosystem is expected to generate more than $83 billion.
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For every U.S. dollar of Microsoft revenue in the region, $11.18 is generated by other companies in the Microsoft ecosystem of hardware OEMs, software companies, and channel and service firms.
Mundie reiterates Microsoft’s strong commitment to contribute significantly to local software economies. “Information technology has already helped empower more than a billion people, but there are another 5 billion we have yet to reach,” he said. “As part of Unlimited Potential and as highlighted by IDC’s analysis, Microsoft is committed to transforming education, fostering local innovation, and enabling jobs and opportunities to help create a sustained cycle of social and economic growth for everyone. Our goal is to enable people and communities around the world realize their dreams through relevant, accessible and affordable technologies.”
About IDC Methodology
This study applies IDC’s Economic Impact Model, which assesses the IT industry’s impact on job creation, company formation, local IT spending, and tax revenues in addition to assessing Microsoft’s partner ecosystem. The study’s spending figures accounted for hardware, software, services and data networking expenditures by consumers, businesses, governments and educational institutions within each country. Tax revenue figures were based on potential VAT or sales tax revenues from the sale of hardware, software, or services, as well as business and personal income taxes and social taxes. IT employment included the number of people employed (full-time equivalent) in hardware, software, services or channel firms, and those individuals managing IT resources in an IT-using organization (e.g., programmers, help desk, IT managers). All data was cross-checked against published information and census data available from government sources and validated by local government officials. For information about how to obtain a copy of this report please visit: http://www.microsoft.com/About/CorporateCitizenship/Citizenship/EconomicImpact.
About Microsoft
Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.
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