Blog Post

Another take on the cloud-jobs debate

Whether you think cloud computing creates or kills jobs depends on what jobs you’re talking about and how companies will use any IT savings they reap.

I had my doubts about the findings of a Microsoft-funded(s msft) IDC report showing that as companies move to cloud computing, millions of jobs (8.8 million worldwide, 1.1 million in the U.S.) will be created by 2015. I still do.

The issue is that companies that save money don’t necessarily put that money back into their businesses. They dole out executive bonuses, they pay dividends, they sit on their cash and look pretty. And that is largely true when it comes to big companies. How many of the too-big-to-fail banks that took government money to get back on their feet, succeeded in doing so and then used their new profits to create jobs? I rest my case.

SMBs, as usual, will power job growth

But David Linthicum, CTO and co-founder of Blue Mountain Labs, a cloud computing consultancy, has a different take.

He gives IDC credit for parsing the market closely and for its finding that small and medium businesses (SMBs) moving to the cloud will generate jobs because those companies are far more likely than their bigger brethren to funnel money back into their businesses.

And that will mean jobs. It’s just that those jobs will not necessarily be in IT. “They’ll hire more people to sell and to manufacture stuff, and that’s a much healthier way to look at this,” Linthicum said.

In his view, fewer people will be needed to manage compute infrastructure, and that’s a good thing overall.

IDC estimated that 75 percent of IT spending worldwide is sucked up into maintaining legacy systems and handling routine upgrades — a trend it calls “legacy drag.”  Cloud-computing moves can shift that legacy work to the cloud, freeing up the company to focus more on non-IT business projects: real work that can earn money.

For example, “cloud-generated jobs” in banking will grow from 735,126 this year to 1.4 million in 2015 (a compound annual growth rate of 27.4 percent), according to IDC.  Government jobs will nearly double, from 271,039 this year to  513,202 in 2015 (a 26.3 percent CAGR.)

“We tend to look at the question of how many people will be hired to support this new technology. That’s not the question. The real question is how many people will be hired — period.”

More jobs — just not tech jobs

Most C-level executives view the data center as evil, or at the very least a cost center, he said, and they should. (That mindset is one reason legacy IT vendors that are hedging their bets between on-premises and cloud-computing worlds push the notion of IT-as-a-service, whether it’s delivered from an on-site data center or a cloud.)

The problem is that the people who work in data centers and see their work relegated to commodity status are obviously not thrilled with the trend.

Linthicum agreed that big businesses sit on their money.  “But if a smaller company gets back 75 percent of its IT budget when it moves to the cloud, that’s a significant impact, and they will put that back into the company and jobs,” he said.

Photo courtesy of Flicker user andjohan.