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IT spending could reach US$1 trillion worldwide

Spending on computer technology is forecast to top US$1 trillion this year as the industry grows increasingly vital to national economies worldwide, a study by market researcher International Data Corp (IDC) showed yesterday.

An analysis of 82 countries and regions found that information technology (IT) businesses -- computer hardware, software and services -- are major generators of jobs, companies and tax revenues.

"Growth of the IT sector is critical to the world economy and each of the countries we study," the IDC report said.

Global IT spending this year is forecast to equal 2.5 percent of the world's GDP and that figure will rise to 2.75 percent by 2011, said the IDC study, which was commissioned by US software giant Microsoft.

IT spending provides revenues for more than 1 million companies, employing 35.2 million people. Those employees and the firms they work for will pay more than US$1 trillion in taxes this year, it said.

Japan, Canada, Britain, France, Germany, Italy and the US account for two-thirds of IT spending worldwide and three-quarters of spending on packaged software.

Spending on computer hardware, software and services ranged from 3.6 percent of GDP in Singapore, Sweden and Denmark to less than half a percent in Pakistan and Nigeria.

The number of computer industry related jobs will climb by 7.1 million in the coming four years, the IDC study said.

China is expected to add the most new jobs, with the second highest growth being in the US.

Overall, job growth in IT will be triple that of the average worldwide increase in employment, the study concluded.

More than a quarter of the new jobs created by the computer industry will be in developing countries, it said.

"These jobs will be driven by an evolving highly skilled labor force, an opportunity which is extremely important in developing a competitive economy," IDC said.

Of the 4.6 million new software-related jobs expected to be created by 2011, 1.2 million will be in Brazil, Russia, India, China and Mexico and another million in emerging economies elsewhere, it said.

Azerbaijan is expected to see the fastest growth in jobs related to software, followed by Russia and Vietnam.

"This is the first time we've had a global snapshot of what the IT world looks like and how that is likely to evolve in the next few years," Microsoft chief research and strategy officer Craig Mundie said.

"For all these countries so focused on employment and economic productivity, it is clear the IT sector is a big player both in terms of its own economy and leverage in other sectors," he said.

Technology giant Microsoft, its partners and firms relying on its software employ 42 percent of the world's IT workforce, the study said.

Companies in "the Microsoft ecosystem" will earn more than US$400 billion in revenues this year and invest nearly US$100 billion in local economies next year, the report said.

IDC estimates that there are at least half a million companies in an ecosystem that includes computer makers, software designers, retail outlets, service firms and application training groups.

For every US dollar, euro, peso, or other unit of currency Microsoft earns this year, businesses linked to it will earn 7.79, the study said.

Mundie said the findings validate years of efforts by Microsoft to convince countries to implement policies promoting higher education, high-speed Internet networks, patent protections and access to markets and venture capital.

"I spent the last decade or so going into these emerging countries," Mundie said.

"To look back 10 years later and see the patterns in places as remote as Azerbaijan and as big as China you realize it is a big phenomenon and we are making progress," he said.
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