A new report says there's little stopping Europe catching up to the US in cloud computing. The study, carried out by the London School of Economics and Political Science and commissioned by Microsoft, looked at the projected economic impact of cloud computing on the aerospace and smartphone services industries in the UK, USA, Germany and Italy from 2010-2014.

The full report [PDF] is titled ‘Modelling the Cloud’, by Jonathan Liebenau, Patrik Karrberg, Alexander Grous and Daniel Castro.



Investing in cloud computing, says the study, contributes to growth and job creation in both the fast-growing, high-tech smartphone services industry as well as the longstanding and slow-growth aerospace sector. In addition, it is directly creating employment through the construction, staffing and supply of data centers, which will host the cloud. Using cloud computing enables businesses of all sizes to be more productive by freeing managerial staff and skilled employees to concentrate on more profitable areas of work.

The LSE study also shows that there is in fact little risk of unemployment from investing in the cloud, as companies are more likely to move and re-train current staff. This would be alongside the hiring of new staff, likely to be in a higher salary bracket, who have the necessary skills for using virtual data-handling systems.

Commenting on the study, John Vassallo, Vice President EU Affairs at Microsoft said:

"Cloud computing and the explosion in access to technology is impacting the character of work across industries, generating new skills demands, employment and growth opportunities.

“LSE’s study underscores these phenomena using rigorous economic analysis that forecasts growth as a result of the transition to cloud technologies in two major industrial sectors - aerospace and smartphones. The findings highlight that Europe has real opportunity to capture the cloud’s potential, with particular benefit to SME’s as well as new business creation through emerging cloud services."

But researchers found that the level of impact the cloud has on a business or department’s growth and productivity depends on a number of factors, primarily the type of sector in which the business is involved and the regulatory environment in which it operates.

Unsurprisingly, the cloud has a much greater effect on the web-centred smartphone services industry than traditional high tech manufacturing, with expansion and a high-start-up rate among small and medium size businesses in 2010-2014 forecast.

For example:

• In the UK from 2010 through 2014, the rate of growth in cloud-related jobs in the smartphone services sector is set to be 349%, compared to 52% growth in aerospace.
• German, Italian and US equivalent growth rates will be 280% vs 33%, 268% vs 36% and 168% vs 57% respectively.

Of the countries analyzed in the study, the US is leading the way in terms of cloud job creation. US cloud-related jobs in the smartphone sector are set to grow to 54,500 in 2014. This is compared to a projected 4,040 equivalent jobs in the UK. The authors of the study say that this can be attributed, in part, to lower electricity costs and less restrictive labour regulation compared to Europe.

The good news for European businesses, say the report's authors, is that there's little stopping Europe catching up to the US in cloud computing. If European countries can make themselves more attractive for public investment in cloud services, then the skilled jobs created in the US will not be to the detriment of Europe.

To take advantage of cloud computing, the study recommends that European policy makers need to carefully evaluate the following areas:

• Improved education and re-training in ‘eSkills’ will be essential.
• Energy pricing is key to the location of cloud data centres. Providing incentives for companies to adopt green energy practices can attract investment in the cloud.
• Ensuring data transfer policies, such as privacy rights protection, do not impede the development of cloud services.