It’s a small world after all – Global Software Development I

When I was a young boy my parents told me to eat all of my food because there are people in China and India who are starving.  I tell my kids and those college students I speak to study hard and to work hard because there are people in India and China that want your job.  They are smarter than you, and they are willing to work harder than you too.

Everyone who has had an economics course knows that success attracts competition and software development is no exception.   Many countries are predicting large growth in employment in software development.   Country after country expects to utilize software development as a key industry in hopes of accelerating job growth and positively impacting the entire economy.

It is not just a few countries making software anymore. The idea of software development begins simultaneously in several countries.   In the middle of the 1990’s most software was created in only seven countries Canada, France, Germany, Italy, Japan, United Kingdom and the United States.  These seven countries are known as the G7.  Based upon published government reports I estimate employment in software development in the G7 was about 2 million in 1990.  The current number employed in software development in G7 countries is around 5 million.

No one knows the exact number of those employed in software development worldwide. The current employment levels in software development in India are around 1.5 million, and in China, they are around1.3 million. The remaining world (Eastern Europe and South America) about 2.2 million employed in software development. In 2008, there were about 5 million employed in software development outside of the original G7 countries and about 5 million in the G7 countries.  Based upon all these official, government reports I estimate it to be around 10 million.

The G7 countries went from 100 percent of the software development industry in 1990 to 50% by 2006.   Right now it is a tie game, but most of the G7 countries are predicting steady 5 to 7 percent growth rates while India, China, and Eastern Europe are predicting 20 percent growth rates.  In less than twenty years 70 percent of software will be developed outside G7 countries.  Only about 15 percent of software will be developed in the USA.

We have seen these same patterns before.  A few countries dominated the auto industry, the wine industry, and steel industry.  There was rapid growth, a period of no growth, then decline.
Software does not have to be put onto a ship and transported across an ocean.  Countries have established import fees (duties) on many goods and services.  This will not be possible with software.   Software can be moved from one side of the world to the other in a blink of an eye.   Software does not have to stop at shore’s edge and be counted.    Even if it did stop at shore’s edge what would inspectors count?  How would they size the amount of software crossing a border?  It is easy to count the number of cars, tons of steel, or bottles of wine.
Tomorrow I will shed some light on software development country by country.

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  1. […] Part I [i] IDC, Table 1, IT Market Growth and Local and International Contributions.  “The Contribution of Software and IT Services Industries to the Chinese Economy, John F. Gantz, IDC – Chinese-Economy.pdf. […]

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