Software Business Driving US Jobs, GDP Growth

The software industry fueled jobs and GDP growth in the United States in 2020, according to a report released Tuesday by an international software research organization.

The report by the BSA Foundation found the software industry supported more than 15.8 million jobs in 2020, a 5.9 percent jump from 2018; and supported $US1.9 billion in total value-added GDP, a 17.1 percent increase over the previous two-year period.

More than 12.5 million of those jobs were outside the tech sector, added the report, which measures software’s impact on the U.S. economy with data and analysis from The Economist Intelligence Unit.

It also noted that the industry directly contributed $933 billion to the U.S. economy in 2020, a 15.1 percent over 2018.

“Software played an instrumental role throughout the pandemic — easing many Americans’ transition to remote work, empowering manufacturers to rapidly shift to producing medical and personal protective equipment, and helping small businesses connect with customers online,” Victoria Espinel, president of the the BSA Foundation, said in a statement.

“The pandemic has made tech more dominant and present than ever before,” added Bob O’Donnell, founder and chief analyst at Technalysis Research, a technology market research and consulting firm in Foster City, Calif.

“As a result, it’s resetting the whole economy,” he told TechNewsWorld. “Tech as a whole is going to take up a bigger percentage of the total job market.”

Expanding Geography

While the largest concentrations of software jobs remain in traditional technology hubs, such as Washington and California, the report noted that other states have experienced greater job growth.

Jobs are surging in New Mexico (direct jobs up 18.7 percent), New York(12.9 percent), Texas (10.9 percent) and Florida (10.1 percent), the report revealed.

Looking ahead, it added, given the trajectory of software’s spread through the overall economy and the pandemic-inspired spread of remote work, software jobs are poised for continued strong growth all across the country.

“We’re excited to see that software is growing most quickly in places you wouldn’t expect,” said the BSA Foundation Executive Director Chris Hopfensperger.

“We expect the new era of remote work to help geographically diversify the tech work force,” he told TechNewsWorld. “As long as you have the right tools and skills, you can do a lot of software jobs from almost anywhere.”

“Geographic diversity is also going to lead to more diversity in the software workforce,” he added.

In addition, as software is applied to local problems, he said, it will create new lines of software business.

Outside Tech Users

Broad use of software outside the tech sector is also contributing to geographic diversity, the report found.

It noted that businesses outside the tech sector are increasingly leveraging the benefits of data and software to grow jobs and business.

The report cited manufacturers as an example. They are coding new solutions to optimize production, speed time-to-market, and deliver innovative products and services.

Farmers, it continued, are using software to maximize outputs and better manage their herds, transforming agriculture.

In healthcare, electronic records and other innovations are improving medical administration and helping deliver a higher level of patient care, it added.

Those sectors — and the software workers who support them — are necessarily spread all across the United States.

In light of the expansion of a wide range of new software jobs, the report called on businesses and policymakers to consider the newly discovered possibilities of remote work.

The ability of traditional coders to take their skillsets out of high-cost tech hubs and work from far-flung home offices will dramatically alter the spread of the software workforce all across the country, a trend that will only increase as the pandemic recedes, it predicted.

Tech Talent in Short Supply

As tech jobs increase, the sad reality is that very few people feel required to work in tech because it requires specialized degrees and certifications. O’Donnell, though, said some businesses are making an effort to address that problem.

“There are quite a few companies now who are creating training programs, even for software developers, for people who have nothing more than a high school degree,” he noted.

“There are aggressive efforts by a number of the biggest players — Amazon, Microsoft, Google, IBM, Cisco — to get people who would have never considered being part of tech into tech,” he observed.

Developer shortages have been a problem in the software industry for years, added Ross Rubin, the principal analyst with Reticle Research, a consumer technology advisory firm in New York City.

“Companies have tried to tap into talent from around the world to help fulfill the demand for software maintenance, upgrades and new products,” he told TechNewsWorld. “It’s been a sore point in the immigration discussions of the last few years.”

He added that the shortage has given rise to the “citizen developer” — someone in an organization, who is not a professional programmer, but can use tools to create simple apps. “There’s a whole category of low-code or no-code development environments that allow people to create point solutions to make their work lives better,” he said.

“Software drives the world so it’s not surprising that we need more software engineers, but the effect they have on the overall economy is massive, observed Jack E. Gold, founder and principal analyst with J.Gold Associates, an IT advisory company in Northborough, Mass.

“The shortage has gotten worse in the U.S. because of the limitations the government has put on importing engineers from other countries,” he told TechNewsWorld. “I don’t see the shortage going away any time soon.”

Unabated Growth

Software industry growth will continue in 2021 and 2022, according to a report by Forrester Research analyst Andrew Bartels.

He predicted software will lead the tech market with 10 to 12 percent growth.

Licensed software sales bore the brunt of the 2020 software slowdown, but most cloud vendors experienced a couple of quarters where quarter-to-quarter revenue slowed to rates of one to two percent as new sales dried up, he wrote.

However, cloud software revenue growth recovered by Q4 2020 and will continue to expand, Bartels continued.

Sales of licensed software will recover as well, he added. As a result, total software spending will grow by around 10 percent in 2021 and even faster in 2022.

As rosy as the future looks for software, manpower issues could create a speed bump for the industry. “The shortage of skilled workers is a big thing,” Hopfensperger acknowledged. “We need more workers getting more skilled sets and staying ahead of technology so we can stay on top of the digital economy.”

John P. Mello Jr.

John P. Mello Jr. has been an ECT News Network reportersince 2003. His areas of focus include cybersecurity, IT issues, privacy, e-commerce, social media, artificial intelligence, big data and consumer electronics. He has written and edited for numerous publications, including the Boston Business Journal, theBoston Phoenix, Megapixel.Net and GovernmentSecurity News. Email John.

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