Study: Software and Information Sectors Shine

As the United States economy continues to show signs of strain, one bright light is the software and information sectors, where the rate of growth has significantly outpaced that of the economy as a whole, a new study has found.

This has helped sustain the expansion of the overall American economy over the past few years, said the study, titled “Software and Information: Driving the Global Knowledge Economy,” which will be released Jan. 24.

It was prepared by Content First, a public policy research company in Washington, in conjunction with the Software & Information Industry Association, a trade association representing the software and digital content industries.

“The software and information industries have a bright future, because competition in the global knowledge economy requires accurate and timely information and because technological changes lead to new and better products and methods for distributing them,” the study reports.

Revenues generated by United States software and information industries have risen more than 10 percent since 2000, reaching $564 billion by 2005, and the industries employed more than 2.7 million Americans in 2006. More than 400,000 jobs were added between 1997 and 2006, pushing net employment up 17 percent over the same time period, the report said.

“The strong gains in employment by the software and information industries also contrast sharply with the decline in jobs in many of the nation’s major industries between 1997 and 2006, including transportation equipment manufacturing, down 13 percent; computer and electronic product manufacturing, 27 percent lower; an 8 percent fall for telecommunications; and a 13 percent decline in the chemical manufacturing sectors,” the study reported.

The outlook for the industry remained good, with the Bureau of Labor Statistics predicting that there will be more than 2 million job openings in software and information by 2016, the study noted. The study also said that the number of computer software engineering positions was expected to grow to almost 1.2 million by 2016, a rise of 450,000.

The software and information industries also paid among the highest wages in the country, with the average salary rising 18 percent, after being adjusted for inflation, since 1997, to stand at $75,400 in 2006. That was 78 percent higher than the $42,400 annual average wage for all private-sector workers that year, which was a 10 percent hike in real terms since 1997, the study reported.

However, Jim Foley, a professor at the College of Computing at Georgia Institute of Technology and former chairman of the Computing Research Association, told eWEEK last August that the numbers for college students heading into IT was not looking good.

CRA research had found that entering freshmen who indicated they would major in computer science fell by half, from the high of 16,000 in 2000, which was just before the dot-com crash; to some 8,000 by fall 2006.

"But the good news is that the decline seems to be leveling off; at Georgia Tech we have a slight uptick," Foley said at that time.

The number of United States students graduating with Bachelor of Science degrees peaked at 14,000 in the 2003-04 academic year, dropping to 10,000 for 2005-06, he said, noting that interest in computer science and computer engineering as a major had also dropped from about 3.7 percent of entering students in 1999 and 2000 to about 1.1 percent in 2006.

The new SIIA study also found that global market for ICT (Information and Communications Technology), which covers computers, software, telecommunications and systems design, is growing strongly and creates the infrastructure that fuels the digital information market.

Global ICT spending approached $3 trillion in 2005 and is expected to grow to about $4 trillion in 2008, with a third of this spent on computer software and services, the study found.

After citing all the positive effects of the industry on the economy, the report turned to the challenges that are top of mind for SIIA members.

“There is little room for complacency. Sustaining—and growing—the significant economic and job impact delivered by the software and information industries will require a supportive public policy environment,” the SIIA said in the report.

For that environment to flourish, a highly educated and skilled work force is required which, in turn, needs investment in science, technology, engineering and math education, as well as reformed immigration policies to attract and retain skilled workers from around the world.

In addition, government regulations need to continue to be based on the “least-restrictive approach, refrain from choosing one business model to the exclusion of others, and, wherever possible, rely on meaningful self-regulatory compliance efforts that build confidence in the marketplace,” the study said.

It also called for the further dissolution of barriers to cross-border trade, an “enforcement regime that deters infringement, piracy and counterfeiting,” and called on the United States to continue to maintain strong broadband penetration and unrestricted access to rich Internet content.

In disclosing its methodology, the SIIA said that it had examined all the United States industry classification codes to identify those that best defined the software and information industries, while most of the statistics presented were based on the most current available data from government data sources when the report was prepared in the fall of 2007.