REDMOND, Wash. — Oct. 4, 2009 — Global IT research firm International Data Corporation (IDC) and Microsoft Corp. today released the results of global research, finding that the information technology (IT) industry will create 5.8 million new jobs and more than 75,000 new businesses over the next four years.
The expected growth rate for IT employment of 3 percent 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 98 percent of total worldwide IT spending. 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.
Summary of Key Findings About the IT Industry
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 3.3 percent 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. The expected growth rate of 3 percent a year is more than three times as fast as the growth of total employment.
Software drives IT growth. Spending on software is growing faster than spending on IT overall — 4.8 percent a year between 2008 and 2013, compared with 3.3 percent 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 4 percent.
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 organizations.
“Over the past 20 years, we’ve seen transformative power in how investments in IT innovations foster economic growth,” said Robert D. Atkinson, Ph.D., founder and president of the Washington, D.C.-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.”
Because of its extensive partner network, the Microsoft ecosystem creates economic opportunities for companies selling products that run with or on Microsoft software, or that service and distribute Microsoft software.
“Being part of the Microsoft ecosystem is creating opportunities not only for our company, but also for other companies and individuals that we partner with to provide our service,” said Dan Merritts, vice president of marketing for Eduify. “It’s ignited a ripple effect that extends value and growth to local communities around the world.”
Additional Findings About the Software Industry
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 21 percent of IT spending in 2009 and 39 percent of IT-related employment. But, over the next four years, they will account for more than 50 percent of net new IT spending and 70 percent of new IT-related jobs.
IDC estimates that cloud services could add $800 billion in net new business revenues between the end of 2009 and the end of 2013.
Companies in the Microsoft ecosystem employ 6.1 million people. IT-using organizations employ another 8.8 million IT professionals who work with Microsoft software or the products and services based on it. Together, those 14.9 million people account for 42 percent of the people working in the IT industry or as IT professionals in the 52 countries.
IT spending provides revenues for more than 1.2 million companies selling or distributing hardware, software and services. Those companies, in turn, employ more than 13 million people. Another 22-plus million IT professionals work in IT-using organizations.
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 although worldwide spending on packaged software will be only 21 percent of total IT spending in 2009, 51 percent of employment in IT will be software-related.
The employees and companies in these 52 countries will pay nearly $1.2 trillion in taxes in 2009. In the next four years, there will be nearly $366 billion in net new tax revenues.
Full results of the study can be found at http://microsoft.com/economicgrowth.
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. A report on IDC’s methodology is available at http://microsoft.com/economicgrowth.