Software.org: the BSA Foundation, has commissioned the experts at The Economist Intelligence Unit (EIU) to examine the economic role of the software industry.
Software changes lives. The way we work, play, and move is being transformed by new software — not just on your computer, but by apps, big data, and access to the cloud.
From optimising plane routes to improving life for people with Parkinson’s disease, innovation is happening at every level.
To understand the impact of this, Software.org: the BSA Foundation called upon The Economist Intelligence Unit (EIU) to examine the software industry’s economic role.
They studied the European Union (EU) and seven member states: France, Germany, Italy, the Netherlands, Poland, Sweden, and the United Kingdom. The research shows which countries are seeing the biggest benefits from software’s growth — and how others can share in that success.
The stakes are high: All in, software was responsible for €1 trillion of total EU value-added GDP (Gross Domestic Product) in 2016. That’s an increase of 9.9% from 2014, compared to overall GDP growth of 6% over the same period. And software supports other sectors, too — think of it as double-clicking on growth.
It’s not just about coders. The software industry provides jobs in every field, from disaster recovery services to data processing and accounting. As Europe closes the digital skills gap, companies are hiring for jobs that simply didn’t exist a decade ago — roles like strategic cloud data engineer, big data product specialist, and futurist.
Across the EU, work supported by the software industry through direct, indirect, and induced contributions represents 12.7 million jobs, up from 11.6 million in 2014.
The total direct wages paid by the software industry for all 28 EU member states grew to €162.1 billion, up from €139.2 billion in 2014, an increase of 16.4%.
Wage growth in smaller countries is particularly impressive: total salaries paid by the sector in Sweden grew 31.4% over the two years to 2016, and by 30.4% over the same period in Poland.
Diverse rates of growth
The UK, Germany, and France contribute 63% of total EU direct software industry value-added GDP. But things are changing: during 2014–2016, the UK was the only one of these three countries that increased market share in the EU software industry. That’s because smaller countries such as Sweden and Poland are grabbing a bigger piece of the software pie.
The direct value-added GDP contribution from Sweden’s software industry grew 43.9% between 2014 and 2016. But the sector is also driving growth in countries where the economic situation has been tougher in recent years: Italy saw an increase in the direct value-added GDP impact of 12.7% during this period.
What does Brexit mean for the EU’s software industry?
The UK is home to the Europe’s biggest software industry, with a direct value-added GDP contribution of €85.8 billion in 2016 — up 31.5% over two years. It employs almost 700,000 people directly and distributed €37.1 billion in wages.
Thousands of start-ups took their first steps at London’s Silicon Roundabout; Microsoft set up its first research lab outside the US in 1997 in Cambridge, in an area that has become known as Silicon Fen.
But the UK vote to leave the EU has led to a time of uncertainty, with the vision for the UK’s future relationship with the EU still being debated at the highest political level.
The UK’s positioning as an open economy has helped firms set up and grow there. At the same time, EU membership has made it very attractive to European tech talent, with no visa required to work in the UK.
Although the UK may be leaving, the effect on the software industry remains unclear. Stephen Kelly, CEO of Sage, a British company that supplies cloud-based accounting software to SMEs, told The Times recently that British companies have “just kept calm and carried on and grown their business, they haven’t been distracted by Brexit.”
Mark Adams, regional VP, UK & Ireland at Veeam comments, “Digital transformation might be a topic that feels like it’s exhausted the minds of executives, but the economic impact made by the software industry in the last four years speaks volumes as to why it should remain at the forefront of Britain’s post Brexit economic strategy."
"A contribution of €221 billion to EU GDP and an additional 2.6 million jobs is not to be sneered at. These are staggering figures and providing current investment levels are maintained we could see these numbers at the very least double in the next four years."
"Whilst the current European political climate is clearly far from certain, we would hope that investment of this calibre remains steadfast. The future impact it can have for the UK as businesses seek to make more intelligent data-based business decisions and flourish during the fourth industrial revolution is impossible to ignore.”
Whatever the outcome of Brexit talks, the EIU figures show solid growth for the software industry across the EU and the individual countries surveyed.
In a world where the power of apps, big data, and AI are changing lives, the industry looks set to continue creating jobs and inventing products regardless of political headwinds.