Legal Technology News
October 9, 2012
IT Sector Booms during Downturn, Says OECD
Internet firms continue to drive growth and job creation in the IT industry, with fast-rising demand for mobile services helping to boost revenue and investment in research and development, according to a new OECD report.
The OECD Internet Economy Outlook 2012 says that the top 250 ICT firms, ranked by revenue, boosted employment by 4% in 2010 and 6% in 2011. Hiring grew fastest among Internet firms who increased employment by 29% in 2011, largely driven by Amazon.com and Google adding 50% more employees between 2010 and 2011.
ICT sector employment is highest in the United States, accounting for more than 30% of the OECD total, followed by Japan (16%) and Germany (9%).
Electronics and communications equipment firms accounted for the largest share of R&D investment in 2011 by the top 250 firms, with almost 50% (USD 46 billion and USD 28 billion respectively). Semiconductors accounted for 16% (USD 26 billion), followed by software and IT equipment firms with an average of around 13% each (USD 22 billion).
The IT services industry weathered the 2009 downturn better than manufacturing, quickly rebounding to positive growth in early 2010. This is likely due to increasing specialization in ICT services across OECD countries, while manufacturing has shifted to lower-cost production areas, according to the report.
The strength of the services sector is partially the result of the increasing role ICTs play in helping businesses become more efficient. Firms may look to ICTs to cut costs during downturns, creating a continued demand for ICT services as other budgets are cut. The same is true for the telecoms sector which continued to perform strongly during the crisis, as households and individuals today consider them essential services and prefer to cut back on other expenses.
Total worldwide ICT spending is estimated to reach USD 4 406 billion in 2012, of which 58% (USD 2 572 billion) is on communications services and equipment, 21% (USD 910 billion) on computer services, 12% (USD 539 billion) on computer hardware and 9% (USD 385 billion) on software.
Estimates suggest that in 2012, software spending will increase more rapidly (by 7.6% a year) than computer hardware (6.1% a year), as hardware prices continue to fall. Spending on communications, both services and equipment, will also increase rapidly (by 7.6%), reflecting the uptake of more advanced services and the rapid spread of mobile services in developing countries.
The structure of ICT spending is slowly shifting, says the report, with consumer spending now making up one third of the total ICT market. This is mainly driven by increasing demand for mobile devices (smart phones, netbooks, tablets). ICT spending is also growing faster in the natural resources sector, followed by the construction and the energy and utilities sector, possibly owing to the commodities boom and the shift to “smart” infrastructures.
The OECD is also launching a new methodology for measuring the economic benefits of the Internet. Based on official national statistics, the report finds that for 2010, up to 13% of American business value added (business sector contribution to GDP) could be attributed to the Internet. This underlines the importance of the Internet as an important source of growth in a period of economic downturn and a core component of the broader economy.
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