Technology, Cloud

Cloud Computing will generate jobs, but how many?

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For the last week I’ve seen a number of articles pointing to the fact that cloud computing is creating millions of jobs. Fourteen million worldwide by 2015 according to a recent article from Forbes citing IDC research.  It’s going to be 2M jobs in India, 200K in the UK, 70K in Canada etc. Great news, isn’t it?

But beyond the excitement, what does that really mean? How many of these jobs will be net additions and how many will be replacements of existing jobs going away? That unfortunately is not stated.

Through virtualization, we reduce the number of servers needed. This has a direct impact not just on the manufacturers, but also on the amount of operators required. Through standardization and automation we reduce the amount of operators even more. OK, we will need some people to set-up the automation, but the amount is less than the operators that disappear.  Otherwise the ROI of the investment doesn’t stack up. Self-provisioning reduces the call center team that responds to business user enquiries. And I can go on like that.

For a number of years, IT departments have been reducing their costs, and the cloud, particularly the private cloud, has been a good way for enterprises to do that. Obviously public clouds are being created all over the place and they require people to run and manage them. But the jobs that are done in the public clouds are no longer done in the private ones, so there is a balance transfer between both models.

The question is really how analysts, or anyone,  make these estimates. Cloud will definitely allow us to do new things. The consumerization of IT means there will be more cloud datacenters, but if I remember right a Google datacenter is managed by a couple of people, so we aren’t talking about huge quantities.

Software development is shifting to the cloud so many software developers will be cloud developers in the near future. But are they new jobs?

I would love us to have a technology that reduces costs while increasing the number of jobs. But frankly I cannot really imagine how this would happen. According to the Forbes article, since jobs are being created as a result of increased business revenue from cloud, the jobs will be across the breadth of enterprises, in areas such as marketing, sales, finance and administration, production, and service. Fine, but the marketing efforts going into cloud services will not go into the services they are replacing. Ultimately, the amount of money the world population has to spend is not increasing exponentially, and an increase of 14 million jobs by 2015 is an exponential increase.

So, let’s keep them honest, right?  


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Pearl Zhu 90 Points | Tue, 03/13/2012 - 18:09

Hi, Christian, as usual, enjoy the blog, with in depth of cloud analytics and beyond, the great question is about: Does cloud make the economic pie bigger via value creation, or some more pessimistive perspective?

We may need connect cloud with other pieces of technology progress: such as mobile/social/Big Data., etc, cloud means infrastructure of IT may start shrinking, but emerging technology bring up the new opportunties, espeically from job creation perspective.

For today's knowledge worker, as Drucker predicted long time ago: you need update skill set every four years even shorter with rapidly change today. At the end of day, both management and employees need work together, to make sure the better transformation for both individual and busienss, business need do the best to take care of employees, and employee should have the great attitude, to adapte the the change with working ethics and learning spirit. thanks

Jerry Bishop 100 Points | Tue, 03/13/2012 - 15:04

You are right to be skeptical. My own impression after reading your article falls into four areas:

Post-Transitional Reductions: The build-out of the cloud service providers and transition to cloud by enterprise of existing IT systems creates an overlap, a duplication that ultimately will be a net job reduction as the transitions complete and the economies are realized.

The Application Wall: We have to remember that the cloud equation isn’t just IaaS and cloud adoption will at some point hit the wall when it gets to moving enterprise applications that will not run on a cloud infrastructure or will simply be an unsupported architecture. Conversion of packaged and enterprise apps for cloud architectures will be a long and lengthy process unless someone comes up with a solid hosting model. Either way this is another transitional state resulting in net job creation that could last a very long time.

Constraint Efficiency: One thing about the cloud service model that is easily overlooked is the effect of standardizing the services creating a much more simplified support model and lower cost per user to support it not just because there is no customization but also because of the efficiencies gained from being able to control the release management cycle.

Organic Growth: The democratization of IT made possible by cloud services (accessibility and simplification) combined with the lower cost of entry are producing thousands of start-ups, new products and the development of new applications for the enterprise representing what should be net new jobs.

Labor Arbitrage: As cloud services disperse around the globe the potential for labor arbitrage to factor into the jobs equation gets stronger and more confusing as the opportunity for a net increase in jobs exists by applying the would be savings to resource more hands. Yet, the signs of labor arbitrage benefits declining are beginning to show themselves making this factor a little more uncertain in the long term.

I sure don’t know what the end result of cloud services will be in terms of net job creator or job killer. The answer to that requires more insight than I have on just how much organic growth there will be versus the reductions from efficiencies.


John Dodge 1535 Points | Tue, 03/13/2012 - 18:23

Hopfully the cloud will generate more commercial activity and that will create more jobs. In other words, it will be a net positive for the global economy like, say, low interest rates. Trickle down effect in a way...

Direct cloud jobs versus with all that stuff done in IT would be a net negative on jobs, I suspect.

Jerry Bishop 100 Points | Tue, 03/13/2012 - 18:37

Did you mean to use "trickle down" inconjunction with clouds without going for drizzle, sprinkle, or other metaphor. ;) 

John Dodge 1535 Points | Wed, 03/14/2012 - 11:47

Yeah, pretty much....server admins have about as much future as newspaper reporters.

Christian Verstraete 429 Points | Tue, 03/13/2012 - 17:25

I can only agree with you. You are spot on, this was my analysis also... you write it better though. There might be a growth mainly due to the organic growth you analyze, but it won't be 14M I believe.