IT's growth / austerity paradox

As the political world argues about economics, one of the intriguing things about IT is its ability to drive both growth and austerity

As the political world argues about whether to pursue growth or austerity economics, one of the intriguing things about information technology is its ability to drive both growth and austerity – to make so many IT products and services bigger, better and cheaper – at the same time. 

Paradoxically, IT is now the economy’s major engine of growth and its major engine of austerity. But thus far it’s the engine of austerity that has been the more powerful.

Consider that inside the IT industry, these are the best of times. Apple is now the world’s most valuable company; Google and Amazon are seemingly unstoppable. Despite its recent share price troubles, Facebook has created another generation of instant billionaires. With cloud, mobility, apps and the whole as-a-service world just getting started, IT’s future has rarely looked brighter. 

Tellingly, IT skills remain in high demand, a rare bright spot in the global jobs picture.

But within enterprise IT, it often doesn’t feel this way. In recent years, the focus has been mostly on cost-cutting, with many IT organisations tasked with managing large business rationalisation and consolidation projects. 

Off the record, CIOs say they could run their firms with substantially fewer people, as IT makes their companies more productive and as global sourcing options improve. Today’s high levels of capital investment and strong profitability are further evidence that businesses have been able to cut costs without fundamentally harming their core capabilities and performance.

If IT becomes seen as a creator of wealth for a few, but a net job destroyer for everyone else, the implications for our industry will be profound

The public at large is starting to notice. Increasingly, business IT is seen as a way to replace large numbers of traditional retail, support, middle management and other jobs with their automated and self-service equivalents. 

As MIT Professors Eric Brynjolfsson and Andrew McAfee argue in their important 2011 book Race Against The Machine, the sheer breadth of this automation may be making IT’s impact different from previous generations of technological progress, most of which also triggered fears of mass unemployment which eventually proved almost entirely unwarranted.

Quantifying IT’s growth and austerity effects is, of course, quite difficult. In the long run, we are confident that IT will provide enormous economic and societal benefits. However, if information technology becomes broadly seen – rightly or wrongly – as a creator of great wealth for a few, but a net job destroyer for everyone else, the implications for our industry will be profound. It’s an important issue for IT professionals to stay abreast of, particularly if unemployment remains high or even increases.

But the bottom line for most firms and their IT organisations is that to remain competitive, they have little choice but to embrace modern technologies and to be as efficient and innovative as possible. 

The challenge for our industry is to demonstrate a better balance, one where the engines of growth are at least as strong as the engines of austerity. This is why there needs to be an increasing focusing on IT’s ability to support the growth agenda of the firm. 

David Moschella (pictured) is the global research director for CSC’s Leading Edge Forum, a global research and advisory service for CIOs and their teams. His latest executive summary is available for download here: Fusing the growth and austerity agendas via information technology.

Smart growth self-assessment

The Leading Edge Forum offers a short smart growth self-assessment designed to assess the health of your firms’ growth strategy and culture, and compare your results to the other respondents. Click here to take part. 

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