Research by Datamonitor and Microsoft, launched at a summit on Technology, Innovation and Skills Training in Brussels on Tuesday, suggests that the potential economic impact of the European skills gap in information technology could jeopardise the future prosperity of the region, allowing overseas competitors to reap the rewards of the e-commerce revolution.

The researchers warn that whilst productivity gains from IT have the potential to boost GDP in the EU by 1.5% through 2002, this growth is dependent on the supply of 1.7 million extra skilled IT professionals. Regional analysis by Datamonitor of the loss of GDP shows that the central and northern regions of Western Europe stand to lose the most from the projected skills gap due to the comparative size of their GDP and the significance of IT to their economies.

According to Doug Wilson, Director at Datamonitor, the key to solving the gap and therefore enabling future economic security lies in the success of public/private partnerships: "There is no magic bullet solution to the IT skills gap," said Wilson, "The answer lies in industry, government and the education sector undertaking a wide range of initiatives, both large and small to respond to the demands of the digital workforce before any long-term economic damage results."

Wilson identifies three key areas of potential economic growth whose success is dependent on the EU solving the skills gap scenario:

Wage and Tax Revenues
Datamonitor's analysis of potential wages derived from skilled IT workers reveals that if the skills shortage persists, Western Europe is set to lose 100 billion Euros between 2000-2002. IT industries represent a small but growing share of the total average wage revenue for Western Europe and a shortage of qualified IT workers will prevent Europe from taking advantage of high-wage job creation which would provide a boost to the overall annual wage revenue.

E-commerce
Datamonitor warns that this potential new revenue stream can only be realised if organisations across all vertical sectors have the appropriate personnel to implement new technologies and business practices. Skilled workers are urgently needed in all areas of e-business from Java programming and web hosting to fundamental business re-engineering. As a result of the skills gap, projects are put on hold or fail through lack of adequate resources constraining business and leaving the path open for competition from outside of Western Europe.

Small and Medium Enterprises (SMEs)
Nowhere is the potential impact of the skills gap more acute for Europe than in the SME sector. SMEs are the key engine of economic growth and future productivity for Western Europe, accounting for over 99 percent of all enterprises and employing 66 percent of the workforce. Datamonitor predicts that if the skills gap continues to grow, many SMEs will be unable to meet the spiralling salaries IT professionals will command. This will then deprive them of the very backbone architecture that they need to take advantage of e-business solutions if they are to advance their position in the global marketplace.

Read more at www.datamonitor.com

Richard Byatt