When you move to the cloud you no longer need people on your payroll to manage whatever it is that you’ve moved over. That might be your servers, it could be the management of your computer desktops, or it might be your platforms. Even Software-as-a-Service entails less on-premise admin work than traditional purchases.

You may need in-house personnel to architect what the cloud landscape needs to look like and to manage the relationship with the cloud supplier – roles you won’t have had on your wage bill unless you already outsource your IT. But, on balance, for medium sized organisations and upwards at least, you’re likely to have more man power on your hands following a switch to the cloud than you did before.

So are organisations taking the rise of the cloud as an opportunity to use the spare resource for more value-add tasks? Or do they see it as an opportunity to save on headcount – something the majority of businesses, especially those with shareholders, are under pressure to do in this enduring poor economic climate?

The initial headlines might suggest the latter is more commonly the case. Over the last year or so the likes of HSBC, Royal Bank of Scotland, UBS, Virgin Media, TalkTalk and Nokia have all confirmed IT redundancies – sometimes running into the thousands.

There’s a school of thought that gets discussed regularly at The Cloud Circle’s events that suggests more jobs should become available within IT suppliers if they do indeed begin to ebb away from other enterprises as a result of cloud. Within the profession, this has come to be labelled “going over to the dark side”.

To what scale it has become a viable mass scale option remains to be seen but it is certainly oft-repeated. For instance, Ian Takats, head of IT at Visit Britain and Visit England, the organisations entrusted with promoting British leisure pursuits to holiday makers both here and abroad, told us in an interview earlier this year that he would advise anyone working in the IT department of a private sector company to start looking out for cloud providers that are hiring and to consider joining them at the earliest opportunity.

But some within the IT industry itself have announced large scale job cuts themselves. HP’s axe has been difficult to track but it was certainly swung at 934 UK employees in July and a further 1,300 in October. On the other side of the pond, chip maker AMD recently announced that it is going to make 1,400 employees redundant in order to invest part of the resultant savings into cloud. Interestingly here, the company says that the claims

Looking to history for parallels does little for confidence either. Between 2001 and the end of 2009 the number of people employed by IT and telecoms companies fell some 12 per cent from 974,000 to 860,000. This coincided with a large rise in outsourcing – which is essentially what cloud computing is – to such companies.

The state of things

Where the public sector is concerned, the proposition is clear. When Whitehall was recast from red to blue last year (albeit with an ever so slightly yellow tinge in the paint work thanks to the opportunist Liberal Democrats) the first Conservative government for 13 years entered the fray with the same basic ideologies that the last one had left behind. Namely, that is that the markets will right themselves, government intervention should be minimal, and the private sector should create wealth and jobs while the public sector is trimmed.

And so it was to be. Public sector job cuts have probably been the key discerning venture of the new government so far and IT has seen its fair share of this.

Certainly here, it is clear to see how the cloud can help to fulfil this ambition. It seemingly goes hand-in-hand with the minimalist government philosophy. You push out work that was formerly done in-house to a private sector employer. And then the personnel that used to handle those tasks are prime candidates for removal from the public expense burden.

There has been an 11 per cent increase in cloud adoption by public bodies over the last nine months, according to research by the Cloud Industry Forum, and plans for the creation of government’s shared cloud infrastructure, the ‘G-Cloud’, are now progressing apace with an ambitious target of 50 per cent of government’s IT to be hosted in the cloud by the end of 2015.

It is difficult to see many being re-housed in innovative roles when such a thirst for wage bill reduction endures.

However...

There are some figures arsing that suggest the cloud is indeed creating jobs.
jobsadwatch.co.uk, which monitors job vacancies across the leading recruitment websites, says there were one per cent more IT jobs advertised in quarter three of 2011 compared with the three months previous.

Furthermore, Resource on Demand, a recruitment company which specialises in finding workers with cloud specific skills, says that ‘cloud recruitment’ has increased by 52.9 per cent over the last year, with both suppliers and non-IT focussed companies seeking the new talent.

The company’s operations director, Theresa Durrant, says the figures “are proof that cloud firms are continuing to grow and invest in their work forces.” 

She adds: “If there is one sector that can have immunity from a double-dip recession it is cloud computing.  We are confident of this and are looking forward to another busy 12 months and reporting further growth in 2012.”

Both of these are indeed positive findings on face value, of course. But they don’t necessarily answer the point in hand here. Are these vacancies additional jobs or are they replacements for forced redundancies in other areas of IT?

To get an accurate idea we’d need up-to-date figures on the total number of people employed in the IT industry and as IT professionals in other sectors. The most recent come from e-Skills, the Sector Skills Council for Business and Information Technology. The organisation did a study at the end of last year and found there were then 1.5 million people currently employed in IT across the UK, accounting for roughly one in twenty of the UK’s active workforce, broken up into 860,000 in the IT & Telecoms industry and 674,000 elsewhere. It says its research suggests these numbers are set to swell by 2.19% year-on-year – a growth rate five times the national average – which will mean the creation of up to half a million jobs in five years. Presumably, though, that’s provided the cloud doesn’t spoil things.

Cloud as creator

Cloud is certainly creating some opportunities for new jobs. Notably, London’s start-up haven Tech City is now positively flourishing and the cloud has to take a large part of the kudos.

As the UK’s answer to San Francisco’s Silicon Valley, there are now over 600 startups in Tech City, mostly around the Old Street and Shoreditch area. On a Sunday in late October, they all gathered together in an old brewery down east London’s trendy Brick Lane where, between them, they had 500 jobs to offer out.

Most of the companies present, which included some phenomenally popular web-based applications like LastFM, Just-Eat and Shazam, said they were using some kind of public cloud for power storage and Software-as-a-Service was a staple of their product delivery. Many intonated that they would not have been able to start their businesses without the elasticity this type of infrastructure offers.

It looks as though there are a lot of factors that are going to have to mature before we can accurately analyse what the true effect of cloud on the IT jobs landscape is. Government is expecting big things from Tech City, and is putting its weight behind it accordingly, but no official targets or expectations for its growth have been revealed.

Within the enterprise sphere, we don’t know how far reaching the cloud will be yet, and it’ll be some time after businesses have settled into their new environment before we’ll see what the stabilised staffing situation will look like.

And the back drop to all of this is the economy. While the customer is always right, the shareholder is king. Any efforts to improve the business are welcome in all corners, as long as they can be translated into profits – quickly. If a dividend can’t be returned by means of growth there will be high pressure on publicly listed businesses to provide one through cost efficiencies. It’s not sustainable but it’s the way of the way of the world.

Unfortunately, one of the biggest costs a business faces is its staff. When there is a need to reduce the expenditure, the opportunity presented by cloud seems difficult to ignore. For SMEs during this ongoing economic downturn, reducing costs could be critical to survival, let alone growth or investor windfalls.

The cloud is changing the face of the IT industry. As more companies find the prospect of outsourcing their needs, and reducing costs in doing so, there is a subsequent impact on the job market. While on the one hand the cloud may offer organisations the opportunity to trim their IT workforce, at the same time, the need for personnel working with and for the cloud providers grows.

It’s clear that cloud can offer the opportunity for innovative, value-add work instead of menial process-based chores. But it’s just as clear that it also offers up a chance to swing the proverbial axe at staff considered surplus. Which one will win out?