Blog Post

Will a Shift to Cloud Computing Create or Cut Jobs?

I don’t often look to movies about beer for poignant macroeconomic commentary, but as February ended with an 8.1 percent unemployment rate (and rising), a line from “Strange Brew” struck me as particularly relevant. As they’re introduced to their new jobs as the only two workers on the bottling line, the Mackenzie brothers are told: “Welcome to 1984, the age of automation and unemployment. The rise of the machine and the fall of man. The end of the human era.”

Will cloud computing, as some predict, be to information technology today what automation was to the assembly line in the ’80s? If so, what happens to those jobs? To the people who used to do them?

The Good News

The impact on the bottom line is impossible to deny. Cutting IT costs while maintaining, or even improving, performance levels saves jobs in other departments and might even help keep the company afloat. When done right, the savings realized from server consolidation are well documented, and they only improve when cloud-like levels of virtualization, automation and outsourcing come into play. The cold, hard truth is virtualization and cloud computing let IT departments do a lot more with a lot less.

But where jobs are lost in one area, they sprout up in others. Progressive companies might reinvest their IT savings in jobs that will help the business grow meaningfully, not just in terms of infrastructural complexity. As Werner Vogels says, cloud computing spurs innovation by eliminating the “undifferentiated heavy lifting.”

The increased business also creates jobs with companies providing cloud platforms, both public and private. You have to grow to keep up with demand, right? And let’s not forget the entirely new sectors enabled by cloud computing. There was no need for cloud-monitoring solutions or cloud-service management software before there was cloud computing. We had no idea how much we needed web applications like MySpace, Google Maps or Twitter before cloud computing techniques made them possible.

There is the law of conservation of matter, and there is the law of conservation of jobs.

The Bad News

Today’s laid-off systems administrators, however, are not likely landing these newly formed IT 2.0 jobs. They have been too busy applying duct tape and Band-Aids to existing infrastructures to stay on top of the cutting edge. Nearly a year and a half ago, already, I heard a FedEx Corporate Services IT executive bemoan how ill-equipped his team was to deal with the division’s increasingly fabric-like infrastructure. He was neither the first nor the last to express that sentiment.

Save for the folks who stay on to be trained in the new computing model, most of the application silo crowd seem destined to be seeking employment in new areas. Even as IT hiring ultimately picks up again to grow and evolve these next-generation data centers, it appears any new jobs will be for the young.

Cloud computing leaders have noticed the dearth of talent and have taken action. In late 2007, Google (s GOOG) and IBM (s IBM), followed by Yahoo, undertook initiatives to introduce web-scale computing to leading technology universities. Amazon (s AMZN) has its fingers in the pie, too. On top of simply giving researchers access to massive amounts of computing power and programming tools like MapReduce and Pig, engineers are actually teaching classes on web-scale development.

Across the board, university graduates are increasingly knowledgeable about Internet and cloud computing technologies. For some, it will be all they know. Once the Fortune 500 has cherry-picked the cream of the crop, the rest will be disbursed across the IT landscape.

The End Game

If cloud computing and virtualization really do affect IT departments like automation affected manufacturing plants 20-plus years ago, perhaps all we can do is hope for an economic recovery and for this decade’s version of the service industry (I’m hoping for clean energy) to create more jobs. Oh, and thank the existing IT staff for keeping the house of cards intact this long.

30 Responses to “Will a Shift to Cloud Computing Create or Cut Jobs?”

  1. CloudNinja

    IT Pros are asking “What does my job look like as the tech industry and my company move toward cloud computing?” – I believe David Gristwood nailed this on the head by saying “I think that the Cloud gives IT Pros, admins, etc, the opportunity to get involved with more interesting and higher value activities, such as capacity planning and forecasting, health monitoring, QA, etc, rather than the lower level stuff that is needed just to keep systems up and going”.


  2. Holmes Wilson

    Re: In response to Amazon’s remote deletion of 1984 and Animal Farm

    Hi there,

    Saw you’d written about the Amazon / 1984 flap, and I thought you might be
    interested in the petition we launched yesterday:

    We have over 1400 signatures already, and signers include Lawrence Lessig,
    Clay Shirky, Cory Doctorow and other notable authors, librarians, and

    The petition opens:

    “We believe in a way of life based on the free exchange of ideas, in which
    books have and will continue to play a central role. Devices like Amazon’s
    are trying to determine how people will interact with books, but Amazon’s
    use of DRM to control and monitor users and their books constitutes a clear
    threat to the free exchange of ideas.”

    Please have a look, and if you support the cause or think it would be
    interesting to your readers, a blog post would be great!


    -Holmes Wilson
    Free Software Foundation

  3. This sure seems like much ado about nothing.

    IT jobs by their very nature require constant education and personal “retooling”. An IT worker who expects their skills to be valid 5 or 10 years from now is going to be out of a job no matter what the coming trends are. Sure you can always find a dwindling number of gigs taking care of legacy technology (which never seems to go away as quickly as people predict). But those who refuse to keep up with the educational curve are going to find themselves passed over no matter what.

    The argument that IT jobs are going to disappear due to new technology has been around for as long as there has been such a thing as “IT jobs”. It grabs headlines and causes wringing of hands…. but never comes true.

  4. Here are 2 quotes from a long time ago that are particularly relevant to this discussion:

    “The general theoretical proposition that the worker who loses his job in one industry will necessarily be able to find employment, possibly after appropriate retraining, in some other industry is as invalid as would be the assertion that horses that lost their job in transportation and agriculture can necessarily have
    been put to another economically productive use.” – Wassily Leontief

    “… today’s tech-savvy, well-compensated worker could become an expensive anachronism as tomorrow’s technological advances offer new opportunities for slashing costs and improving economies of scale. A world filled with smart computers, all linked via the Internet, could easily undermine whole sectors of today’s vibrant service and information industries.” – Business Week (1998)

  5. my prediction: overall reduction in number of staff infrastructure jobs, increased hiring at a senior architectural level (turning business plans into architectures that exploit cloud computing)….

  6. John Vasko

    Derrick, what a well-written and well-thought-out post. And great, intelligent comments as well. I don’t work in IT but rather in digital media product development. I really do believe that cloud computing will be good for IT, Web development, and the Internet at large. Your statement about current IT professionals spending so much time putting Band-Aids on problems rather than learning new technology is very true. I do hope that you’re proven wrong on the re-training front. I hope that some of the veterans out there will change with the times and retrain themselves for new functions. In this day and age, all of us have to continually learn new skills to stay ahead of the curve.

  7. The jobs that change deal with cable pulling and rack stuffing and button pushing. Those jobs don’t go away but they do move to places that the big new data centers go – places with cheap energy. Oregon, Washington’s Columbia river valley, the mid west. Additionally the traditional sys admin’s job can now be done from any place so sys admins, like software engineers before them have the entire world as their potential new market.

  8. I think cloud computing actually do not change anything like reducing worker clod computing only make “our project can be run virtually,we can hire the same number of people with less space and less cost of gas to spend and more time to produce “out put at the same rate as we build a great team under the same conclusion is, Cloud computing will not cut a job or add a just make our work management easier and when all productions happen smoothly ,they return could be expected rise and the rise of profit could be expected as “the increase of “demand of New talent”

  9. Chris Walker

    As the CEO of a web-tech start-up, I can tell you that cloud based infrastructure services like Amazon’s AWS will save us potential millions in initial capital expenditure. We we’re working on our deployment model before we were introduced to the option of virtualization in the cloud – initially I was trying to figure out things like how many server will I need, how many server admins will I need to hire, where will I find these people, how much are they going to cost me …. the list went on and on. Now, I plan to hire just 2 admins, zero hardware and I know EXACTLY how much it is going to cost me at a very granular level.
    So, in my case atleast, the cloud has reduced my need to hire a big team of people – which I guess means less jobs for these tech types if there are, as I suspect, many other startups considering the exact same options as me.

  10. Even though the pricing models and the ultimate sustainability of some of the SAAS start ups are ar from perfect, this is the model that the SME has always wanted. Premises IT for delivering apps has been a bastard compromise from the git go, dedicated and virtual hosting (for all common web site and ecom hosting), has been a defualt choice that never worked well for workgroup and business app delivery.

    Now we can see if cloud / grid / SAAS / PAAS can actually get the job done without some pileup of major outages, business failures due to capital illiquidity, and whatever growing pains. It wont take much if a string of serial failures sets up “the fear”.

    But cloud and SAAS ect. are what we SME applications consultants have always needed to get things done. All of that friction is removed with on-demand provisioning and getting past the internal IT ownership egos and fiefdoms.

    I can’t tell you how many really far reaching professional and technical web based productivity plans were kibosh’d due to the demon marriage of self owned IT infrastructure.

  11. CloudRR

    The glass half filled view-
    The Cloud computing shift will result in net creation of more jobs especially if we think of this as in an ecosystem context. For this cloud brew to get Main Street from it’s current bowling pin stage, it will take a crowd. Let’s peel the onion of some of Cloud Services essential blocks-

    Technlogy Stack- Technology Architectures/Tools Providers Virtual Data Centers, Specialized storage fabric, heating,cooling, energy efficiency, commerce, database, Quality of Service, Mobile , network assurance, Data Analysis , Cloud- CLoud Interop and enablement, Security, privacy etc. …lots to be done, need more heads.
    Also, worth reinforcing here that some Enterprises and SMB are not going to abandon their current premise investments; If anything , they may want a hybrid Premise +Cloud offering that could leverage their premise Tech investments ; Some Enterprises may seek a entirel new greenfield hybrid deployment model

    Next, Operational Stack- Admin, Service enablement, Service aggregation, Billing, Monitoring, Troubleshooting, Customer care, new models of support …enough said. Lots of pain here to sift through..will result in more opportunities over time- New skills, more training, more certification requirements..

    Compliance/ Regulatory/Legal requirements- Again, not well understood at all especially if we think of large scale cloud deployments that targets a global audience ; Expect job creation here as well..

    Go to market routes, distribution and Sales – This segment area may see significant job creation because a new generation of VAR/ Service providers will be needed to build distribution routes to get to end customers . SaaS, despite it’s cool aid of selling direct to end customer does not scale up well to direct sales so some degree of distribution assist will be needed depending on target segment; Hence, Expect some of the large IT Consulting services to ramp hiring in this category. Also, expect more partnerships between larger Technology vendors and IT service providers. Last but not the least, you need more sales folks too of several stripes..

    Also, expect some of old box pushing Resellers and also Telecom focused Service Providers to vanish or morph to selling ‘on demand services ” because of the technology shift.

    Marketing and Promotion- Need different ways to market, position and promote cloud services. Will trigger need for newer ways to promote products and promote services. Expect an increased focus on using Twitter, behavioral analysis, Facebook or any other new age medium .

    Last but not the least- the essential cogs such as Training, Language localization, Tech publications, creation of Dummy’s guide to cloud computing,Cloud Certification courses, trade shows, Expect Market research firms to dish out more cloud services Market insights to the tech executive bench.

  12. I have several direct experiences guiding, confronting, and comforting SMEs over the hump and trauma of getting off of local servers and bad dedicated hosting plans, and onto hosted grids / clouds /SAAS / PAAS.

    Yeah, the choice for the soon to be obsolete staff is get it up for managing apps and configuring elastic services, as well as getting API’s right, and get over having “your machines”, “my Machines”, etc.

    I have no sympathy for IT people that say, “these are my machines and I made this etc., ….”, it doesn’t fly with me anymore, and too much damage has been done to SME’s who rode dedicated hosting and in-house machine ponies too long. Curating and spoon feeding licensed apps is over.

    Yet, I do agree that there are limited times when a owned software / server room / machine / mad machine room is required. But not for the SME.

    You all get over it.

  13. I think that the current trend will improve the job situation. It won’t happen overnight but the tools and techniques shaping up as cloud computing are an evolution of computing technology that can, properly applied, spur a revolution in business innovation and creativity. It’s never been so easy or affordable for someone to take an idea and make it real on almost any level. I did write a bunch of other thoughts about this last Friday in a blog post called, “Why Should Business Bother with Cloud Computing?” if you want to check it out.

    Kent Langley

  14. Great post, Derrick. We are indeed going through a phase of automation of what is the “plant” of the 21st century — the data center.

    Another interesting anecdote in this regard is that while IT admin jobs will be eliminated in your typical data center, IT ops and admins are the rock stars at Infrastructure-as-a-Service companies and other cloud providers.