Can the Cloud Jumpstart the Economy?

cloud computing economyCloud computing isn’t just growing; it’s booming and it’s contagious. The fledgling cloud sector of IT has experienced more than just tremendous job growth in the last two years; new data shows the sector is creating a new economic model for many businesses, generating opportunity and job growth well beyond cloud software companies.

In the next five years, cloud computing has the potential to add 4720,000 new jobs and $100 billion to the global economy, according according to a study, “Job Growth in the Forecast: How Cloud Computing is Generating New Business Opportunities and Fueling Job Growth in the United States,” by the Sand Hill Group and SAP.

“The cloud transformation is like the industrial revolution before it – the cloud transforms traditional business models into models that are delivered through software and the Internet,” said Ben Irvine, vice president of operations for M5 Networks, which specializes in cloud-based phone systems. “Think about TurboTax and the impact on jobs. Fewer accountants are needed for basic tax returns, but new jobs such as software developers, product managers, systems engineers, network engineers, and support representatives have been created.”

Where are the jobs?

As the cloud continues to become a vital part of enterprise operations, the jobs generated by cloud computing will be mainly in programming, engineering, technical customer service, business development, sales and marketing, said Raj Sheth, CEO with Recruiterbox, which develops recruiting software for corporate human resources departments.

“While jobs might be added all over IT spheres, like big companies making servers or enterprise software, there are a large number of cloud companies coming up (that) have a low cost of entry,” Sheth said. “Thus many people can start these companies and write this software. With all the tech platforms available, you don’t need expensive technology, like servers and licenses, to start a software company and you don’t need a sales force to sell any licenses, since it’s just available on a website and folks can sign into these tools just like email.”

It can also open up more employment opportunities at nontechnical companies who adopt cloud platforms. Money saved on technical support can be used to hire in other areas that are unrelated to technology, such as sales or administrative staff. It also widens the geographic area of the employee base. “The cloud enables people who have limited transport or don’t live near jobs to work, and employers to tap talent that they couldn’t before,” Irvine said. “It enables a distributed, ‘work from anywhere’ society.”

Off the ground

The cloud may make it easier for start up companies to get off the ground, as well. That was the experience of Zane Moi, who recently began a business called Tree Crunch, a company that helps organizations leverage social media platforms.

“I was, until this past January, at a large corporation,” Moi said. “In January, I headed out on my own — with two other technical co-founders — to do a new web startup. With the confluence of the cloud and open-source, it’s never been easier to build a start-up.”

“Instead of having to budget to build out infrastructure, we are investing in technical staff — front and back end developers, a graphic artist and a data admin,” he said. “These are four jobs that didn’t exist before — and even say five or six years ago, wouldn’t have been able to exist — because the money we’ve invested in the business would have had to have been invested in equipment, and renting racks in a data center. The cloud has made it easier to start up businesses, but also allowed firms like mine to invest in people from the onset, versus just hardware.”

The biggest factor is that the economy will no longer be dependent on very large companies and their fate, Sheth said.

“As smaller companies develop and do well, the load of employment and economic activity will be more evenly spread,” he said. “The adoption of cloud-based tools by consumers and businesses will further lead to more small companies serving the market as a whole, and not just a couple of large companies.”

About the Authors: Patrick Burke is a writer and editor based in the greater New York area and occasionally blogs for Rackspace Hosting.

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