Cloud and the Global Economy – Study by LSE

According to a study by the London School of Economics and Political Science, the development of cloud computing will result in economic growth, increased productivity, and promote change in the types of jobs and skills required by businesses.

The study focuses on two industries – smartphone and aerospace service – and dives into the impact of cloud computing on said industries using the UK, Germany, Italy, and USA and the years 2010 and 2014 as subjects. Microsoft helped underwrite the study.

The study claims that investments in cloud computing are contributing to job creation and growth in both the old and slow-growing aerospace sector and the relatively new, yet fast growing smartphone industry. Added to this, the cloud computing industry is also responsible for job creation via construction, staffing, and supply of the data centers that will host the cloud. Cloud computing also has the benefit of optimizing businesses as it frees up managerial staff and skilled employees, allowing them to focus on the areas of work that are more profitable.

The shift to cloud and virtualization will also open up a wide range of new employment opportunities, as the new set of skills they demand will be in demand among employers. They could also lead to higher than average salaries due to said demand and the rarity of people who have tenure in said fields.

Out of all the countries used as samples in the study, the US is the current leader when it comes to job creation related to the cloud. In the US smartphone sector alone, there are already expectations for cloud related jobs to grow to 54,500 by 2014. This is in comparison to the projected 4,000 equivalent jobs in the UK. According to the study, the discrepancy may be attributed in part or directly to the lower electricity costs and less restrictive labor regulations in the US compared to Europe.

SMEs will also benefit from the shift to cloud. In the smartphone industry alone, cloud computing is already expected to be the basis for rapid expansion and increased rate of start ups among SMEs from the year 2010 all the way to 2014.

However, the researchers discovered that the level of impact cloud computing has on a business’ growth and productivity is still subject to a number of factors related to the type of sector it is involved in and the regulatory environment in which it operates.

It is also seen from the study that the cloud has had a larger impact on the web-centric smartphone services sector than the traditional high tech manufacturing, with an increase in expansion and startup rates expected to happen in 2010 to 2014. For instance, the rate of growth in cloud-related jobs in the smartphone services sector in the UK from 2010 through 2014, is pegged at 349% compared to 52%  in aerospace. German, Italian and US equivalent growth rates will be 280% vs 33%, 268% vs 36% and 168% vs 57% respectively.

The study also shows a shift in jobs from distributed data processing facilities towards consolidated data centers, which will result in a reduction of data processing jobs. This is emphasized by many large firms in the smartphone industry reducing their IT administrators while increasing their IT-related level of employment. The key takeaway is that cloud computing will result in manpower being optimized while also promoting job growth, as the work of existing IT staff will be focused on areas where they will be of greater use – such as general administrative and strategic management – instead of being wasted on short term payroll reduction opportunities.