Will Cloud Computing Create Jobs or Shift Them? Analysts Debate

Of all the reasons to consider cloud computing — lowered capital expenses from not purchasing new computers, predictable cost of maintenance through the pay-by-the-drink model, the ability to quickly scale up processing capacity, ease of setting new employees up with computers — you rarely hear anyone say it will create new jobs. If anything, logic would suggest that fewer corporate IT staff are needed when IT resources are delivered through a highly automated cloud utility.

Two analyst firms — IDC and Gartner — have come out with differing views on this issue. This morning, IDC came out with a Microsoft-commissioned report that projects that spending on public and private IT cloud services will generate nearly 14 million jobs worldwide from 2011 to 2015 and that IT innovation created by cloud computing could produce $1.1 trillion a year in new business revenues. Nearly 1.2 million of those new cloud-related jobs will be created in the U.S. and Canada, according to the IDC study.

Gartner's take is quite different. In a report the firm issued in October, it opined that the rise of IT utilities and digital workforce engineering will eliminate more skilled jobs in the U.S. than they create. "What we focus on more is the displacement of jobs," says Peter Redshaw, managing vice president, Gartner Industry Advisory Services, Banking & Investment Services Research. "As the back office and the data center become more automated and outsourced, a lot of old jobs will disappear and new ones will appear elsewhere. That shift might be as big as 14 million, though we don't put a number on it. But the number of net new jobs is highly debatable."

Redshaw notes that technology that increases the efficiency with which something is produced, usually increases consumption. "So the paradox is that you end up using more computing resources as a result of needing less of them per unit produced," Redshaw says. "That would tend to support the argument that cloud computing will not destroy jobs but create them. Not necessarily in the same place, though, and maybe not 14 million of them."

IDC's rationale is that "IT innovation allows for business innovation, which leads to business revenue, which leads to job creation," according to the report. It developed its results by analyzing cloud spending trends in more than 40 countries and then using this information to forecast the number of jobs this spending will create.

The example given of cloud computing leading to job growth is cloud provider Vorsite, which plans to double the size of its workforce this year.

According to IDC, banks spent 3% of their IT budgets on public IT cloud services last year. It projects that 735,125 jobs will be created in the banking industry by cloud initiatives this year, 1.4 million in 2015.