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January 30, 2012

Cloud Computing Bolsters Economy

Tiffany Trader

A new study from the London School of Economics and Political Science shows that cloud computing has a clear role in stimulating the economy and creating jobs. The Microsoft-sponsored study looks at the impact of cloud computing on the aerospace and mobile services sectors in the United States, the United Kingdom, Germany and Italy from 2010-2014.

The LSE study finds that cloud computing contributes to job creation in all markets, to varying degrees. Primary jobs are created in the process of building and staffing datacenters to host the cloud platforms and services. While a secondary positive economic impact is experienced by the companies that adopt cloud services. According to the report, cloud adoption carries little risk of unemployment; worker productivity gains are usually redirected into more profitable business activities.

The authors state: “This study shows how the microeconomic characteristics of cloud computing create a dynamic effect that will bring about changes that, when effectively implemented, will improve firm productivity, enhance new business development, and, while initially creating employment primarily in cloud services businesses and data centres, shift the character of work in many firms in the coming years.”

Out of the four countries that were analyzed, the US was the strongest with regard to job creation with cloud-related smartphone services jobs expected to grow from 19,500 in 2010 to 54,500 in 2014. In the UK, equivalent jobs are set to grow from 900 to 4,040 during the same time period. The study’s authors cited lower electricity costs and less restrictive labor regulation in the US as possible factors for the discrepancy. In fact, the report found energy cost was second only to geopolitical stability when it comes to selecting where to build a datacenter.

The full 64-page report “Modelling the Cloud,” was authored by Jonathan Liebenau, Patrik Karrberg, Alexander Grous and Daniel Castro.