Oliver Bell’s Weblog

When I originally joined Microsoft in 1995 my plan was to stay with the company for about two years, learn what I could and then move back to the financial services industry and work out how to capitalize on what I had discovered.

Two years later, after significant changes brought by products like Windows 95 and the way in which the company embraced the Internet at that point in time it felt like I was working for a very different company, so I stuck around to see what would happen next.

The speed at which the company changes internally and externally is not the only reason that I have continued to work for the same company way beyond the simple goal that I set myself.

As I have mentioned before, some of the early projects that I got involved with were focused on the implementation of electronic government in the United Kingdom, and it was exciting to think about the positive social impact that some of those projects were designed to deliver.

Over the years I’ve been involved with many projects of a similar nature, some of them were customer projects, and some of them more product related in fields such as language support, accessibility and helping bridge the digital divide.

About eight years ago we started to look at other aspects of Microsoft’s role in society, one of those activities involved working with International Data Corp (IDC) and looking at the economic impact of the company in a number of countries around the world.

These studies looked not only at Microsoft as a stand alone company, but also examined other elements such as the number people employed by partners, revenue generated by those companies, tax paid to national treasuries and so on. Basically looking at the entire ecosystem around Microsoft and the positive role of the company in economies where it trades. The interesting headline number that I remember coming out of the original study was the data explaining that $8 of revenue that was generated within the ecosystem around Microsoft for every $1 of direct revenue earned.

On October 18th IDC released the set of reports for 2007 and I have spent the last couple of hours looking through some of the data for Asia, it is pretty exciting to see. Starting with that same headline number for Asia alone now being $11 of revenue for every $1 of revenue directly earned by Microsoft. The data shows that Microsoft’s business model creates a great deal of local wealth along with millions of jobs in countries across Asia.

Let me share some of the headlines with you from the information in my inbox;

Growth in IT investment has generated 3.5 million new jobs in the period 2002 to 2006 and it is projected to add an additional 2.8 million jobs in the Asia-Pacific region alone by 2011. This represents a growth in IT-related employment of 5.5% (CAGR) during the period.

Total IT employment in the Asia-Pacific region is 11.9 million, of which 40% are Microsoft-related jobs.

The market with the highest percentage of Microsoft-related jobs is Korea, where 49% of IT industry jobs stem from selling products that run with or on Microsoft software, or that service and distribute Microsoft software. The greatest numbers of Microsoft- related employees are in China and Japan (1.6 million and 1.2 million, respectively).

The percentages of Microsoft-related employees are significant in all countries, although the lowest are Indonesia with 29% and Vietnam with 19%.

Microsoft itself employs 78,565 people globally, or 0.2% of the world’s total IT workforce, underscoring the importance of the Microsoft ecosystem to job generation.

It is projected that 35,211 new IT companies will be created in the Asia-Pacific region between 2006 and 2011, representing a 2.4% (CAGR) increase over the period. This predicted growth will remain broadly consistent with the 2002 to 2006 period.

In the Asia-Pacific region, for each dollar Microsoft earns, the ecosystem earns $11.18 – including $7.80 in hardware, $1.42 in software and $1.96 in services. The ratio is greater for the BRIC+M (Brazil, Russia, India, China, and Mexico) countries at $15.91 – including $12.52 in hardware, $1.43 in software and $1.96 in services.

The highest ratio in Asia-Pacific is in Vietnam at $20.76 and the lowest in Japan at $8.42.

In Asia-Pacific, the Microsoft ecosystem will invest $15.4 billion in 2007 in their local economies on infrastructure, people, marketing, and business development.

Tax revenues to governments from the Microsoft ecosystem will be approximately $132 billion in 2007. Tax revenue includes value-added or sales taxes, personal income taxes, social taxes, fees and levies, and corporate income taxes.

Total IT tax revenues across Asia-Pacific in 2007 will be $172 billion, or 1.45% of regional GDP.

When I joined the company in 1995 the technology industry was only just beginning to morph into the form that we know today, at that point in time a small number of very large companies dominated every part of the sector and the concept of local partners just did not exist for most of these companies.

Today the success of the information technology industry is really in the hands of local technology providers who take software that is available globally and work out what the local solutions need to be built, which services need to be offered and in turn how best to serve those local markets. As a result of that, as the IDC data shows, these companies play an extremely significant role in any national economy.

There is a lot more to read in the study, if you’re interested follow this link to have a look for yourself.