The IT industry has long struggled to keep pace with technology changes, but the costs are on the rise.
The cost of running a business from one server to the next is increasing as servers become cheaper and the computing power required for processing business-critical data increases, according to a recent report by PricewaterhouseCoopers LLP.
And IT services are on average paying $30,000 more than the cost of a similar job that used to cost $100,000, the consulting firm said.
The rising costs are driven in part by the proliferation of cloud computing and the increased ability to automate tasks.
But a number of organizations have begun moving away from traditional server-based systems, including the government and universities.
“The industry is moving away to virtualization and containerization, which are more cost-effective and scalable,” said Mark Zain, vice president for IT services at Pricewaterhill.
“These are going to be the main drivers of costs in the future.”
The consulting firm also noted that more than two-thirds of IT jobs are now done on mobile devices.
While it’s true that there are more computers in the world today than there were at the end of World War II, IT has grown exponentially over the last two decades.
The average number of devices per employee has more than doubled over the past decade, from just 6.6 devices per person in 2001 to 22 devices per household in 2016.
Zain said IT services were “very prevalent” at the time of the financial crisis and they’re “still in the drivers’ seat” today.
As more and more IT jobs move to the cloud, the cost is only going to go up, he said.
“What we are seeing is that costs are getting cheaper, and there’s a greater demand for services,” he said in a phone interview.
“It’s not going to stop.”
The government is also moving to a cloud-based approach, which has also led to a higher cost per employee.
The U.S. Department of Defense is the largest IT employer, and it’s currently spending $13,000 per employee on cloud services, according the U.K. government.
A new report from McKinsey & the World Economic Forum predicts the cloud will become a $2 trillion industry by 2040.
“Our report shows that IT services will cost $2,000 for every employee in 2020, $6,000 in 2024 and $10,000 by 2026,” the report said.
That would be $3,000 higher than IT’s costs today.
“This is a real opportunity for the private sector to be able to compete against the global IT services industry,” said David Stavins, director of McKinsey’s global innovation center.
The report predicts cloud services will grow to more than 1.4 trillion dollars in 2020.
“They are a major factor in the growth of the cloud-first, cloud-business model,” said Zain.
“As they move towards cloud-centric environments, there is less reliance on traditional server systems and more reliance on cloud computing.”
But for some organizations, the increased cost of IT services can be a drag.
The consulting company found that for a government agency, the IT cost of an employee working in the cloud had a higher impact on total compensation than any other service.
The result was that IT costs increased at an average annual rate of 2.5 percent.
The government agency would have been better served to hire more employees in the traditional way, Zain noted.
“In my view, it would have made a more effective use of the money to do things like build infrastructure, pay for salaries, hire consultants and more.”
For a company, the cloud may also be the best option for certain IT tasks.
In 2016, the New York Times reported that IBM is the fastest growing cloud-computing company.
In 2017, it reported a 35 percent jump in cloud computing revenue and 25 percent jump across the board in the number of customers using its cloud.
IBM also said it is the top choice for government agencies and private companies to use its cloud service.
“There is a demand for more IT services, especially when it comes to infrastructure, but cloud computing is a great way to do that,” Zain told Bloomberg.
The consultant noted that the government’s cloud-ready IT system “is not perfect,” but it’s a better option than other cloud options.
“I would expect the average salary of a new employee to be $10 an hour, or the lowest-paying salary in the industry,” he added.
Zilker, the president of the Institute for IT Services, said IT workers are becoming more educated about their jobs and are more likely to take the risk to migrate to a new location when it’s cheaper.
“We’re going from a job where we had to be in a certain geographic location to where we can work from wherever,” he told Bloomberg on Thursday.
The IT services market “will probably grow 10 to 20 percent to 20 to 30 percent over the