Europe Closing the Gap Separating it from U.S. as Top Internet Economy; Business Leaders See The Lack Of Suitably Skilled Workers as the Single Greatest Constraint on Future Economic Growth
NEW YORK, August 28, 2000 - The United States continues to have the world’s most advanced digital economy, but Europe is starting to close the gap as the Internet continues to create new jobs both directly and across other industries, according to a new study released by Accenture*.
The study projects that by 2002, the Internet economy will employ more than 10 million people across a variety of industries in the United States, the five largest European economies and Ireland.
The report examines the impact of the Internet on the economies of the United States, France, Germany, Ireland, Italy, Spain and the UK. Brazil, which has the largest Internet economy in Latin America and attracts significant U.S. and European investment, was also included in the research.
Viewed as a line of business itself, the Internet will have directly created 5.8 million jobs in the United States and 3 million jobs in the six European countries surveyed by 2002. These are defined as jobs created by Internet pure play companies, portals, software consultants, web designers, and telecommunications and Internet Service Providers offering Internet access.
However when Internet-related jobs in other industries are factored into the forecasts, the total number of jobs created in the U.S. and European countries jumps from 8.8 million to more than 10 million, according to the report.
The report is based on analysis of publicly available economic data, surveys of companies, government agencies and opinion makers as well as results of interviews with 160 CEOs, senior executives, government officials and industry experts.
"The good news is that the Internet is creating more jobs than it is destroying, even when you look at traditional business models,"said Steve Freeman, partner, Accenture, who advises communications companies on e-commerce and Internet strategies. "And this peripheral job creation is likely to be significant in the short term as established businesses invest in building up new Internet operations alongside their existing businesses."
The report also indicates that growth of the Internet economy is accelerating in Europe, which has begun to narrow the gap that keeps it behind the United States as home to the top Internet economy.
In 1998, the Internet economy employed four times as many people in the U.S. as in the six European countries studied (2.1 million Internet economy employees in the U.S compared to 517,000 in Germany, France, Ireland Italy, Spain and UK). By 2002, this ratio will be lower than two-to-one, the report projects. (5.8 million Internet economy employees in the U.S. compared to 3 million in the European countries surveyed.)
The same trend is reflected in revenues generated by the Internet economy, according to the report. In 1999, the Internet economies in the European countries studied generated $132 billion in revenues – or roughly one quarter the $507 billion in Internet economy revenues generated in the U.S., the study says. But by 2002, the Internet sector will be worth $597 billion in the European countries – or roughly one half the $1.23 trillion forecast for the U.S., according to the study.
The study examines the impact of the digital age on traditional business models, concluding that the number of new jobs created by the Internet in traditional businesses more than offsets current job displacement, as certain functions are replaced by automation and individuals become empowered to perform more tasks.
Areas of job creation result from greater geographic reach, the development of new marketing channels, broader product and services lines, expanded customer service capabilities through call centers and customer service agents, and increased marketing and advertising.
The Internet is expanding markets geographically, particularly for banks and retailers whose products can be delivered online or by mail.
Business leaders on both sides of the Atlantic continue to see the lack of suitably skilled workers as the single greatest constraint on future economic growth, the report says.
"The overwhelming majority of those interviewed felt that demand for employees with Internet skills and experience easily outstrips supply,"the report said. Many pointed to the lack of computers in schools and the lack of government-financed or government-led initiatives to change the situation.
"The U.S. certainly leads the way in terms both of relevant courses offered at university level and the numbers of students enrolled in them,"the report said. But it said that educational institutions at every level are still not doing enough to arm the next generation of workers with the appropriate skills.
While the growth of the Internet has played a major role in creating the current skills shortage, it is also becoming part of the solution at many companies, Freeman said. "Skills needed for Internet-related jobs often lend themselves to new forms of training that are accessible via the Internet and can be rolled out quickly to large numbers of employees across geographies,"he said.
Accenture recently implemented a distance learning program to train more than 20,000 employees of British Telecommunications plc (BT), the global UK- based telecommunications company. BT used the program to train its UK sales force, as well as professionals throughout the UK, Continental Europe, Asia and the United States.
Employees, who accessed hands-on training programs from their office desktops via the Internet, were given the skills needed to become Internet savvy and eCommerce ready within six months, a goal that could not have been accomplished using traditional training techniques.
*The report was prepared by Spectrum Strategy Consultants for Accenture.