Cloud Computing — a Jobs Forecast Update

A major driver of progress over the past 15 years is the Internet, where 2 billion people are connected and $8 trillion is exchanged each year in e-commerce.  McKinsey estimated that the internet created 1.2 million jobs but destroyed 500,000 jobs.  Many jobs created were in functions such as sales, engineering, and service.   Many jobs lost were in clerical functions that could be automated readily or in functions where economies of scale could be achieved through networked centralization.

Cloud computing is the next plateau for the internet and its employment impact is becoming clear.  In a SAP sponsored study, Sand Hill found that 11 cloud computing companies created 80,000 jobs during 2010, but another 472,000 cloud computing jobs are expected within 5 years.  Furthermore, venture capital investments would create another 213,000 jobs in cloud computing startups over 5 years.  Ultimately, cloud computing efficiencies of $625 billion would flow to U.S. businesses.  Much of that would be reinvested, creating hundreds of thousands of new jobs and adding to the 685,000 jobs total.  The Center for Economics and Business Research says cloud computing will generate more than €763 billion in economic benefits and create 2.3 million jobs in European economies.

The main demands for cloud computing are in mobile applications, social networking, and Big Data.  Mobile services support the business function needs of the 100 million mobile knowledge workers in the U.S.   Social networking now includes business applications for those workers.   In aggregate, mobile application downloads will grow to 98 billion by 2015, requiring massive information flows between mobile-connected workers and cloud databases and processors.

In 2010, McKinsey identified the large scale productivity of “Big Data,” basically intensified data collection and analysis for shaping and supporting business practices in retailing, health care, manufacturing and government.  A large portion of the storage and computing to support big data will come from cloud services because among businesses that embrace cloud services, 49% report that it causes a boosts in corporate agility and 46% report it saves costs.

The tally of jobs expected from cloud computing in the U.S. stands at 685,000 plus a few hundred thousand from “savings reinvestments,” and 2.3 million jobs in Europe – all over the next 5 years.

Alan Daley is a retired businessman living in Colorado.  He follows public policy from the consumer’s perspective.

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