The internet economy supported an additional 650,000 jobs in 1999 as revenues soared to $523.9 billion, according to the University of Texas at Austin’s Center for Research in Electronic Commerce.
The internet economy now directly supports 2.476 million workers, more than the insurance, communications and public utilities industries and twice as many as the airline, chemical and allied products, legal and real estate industries.
Some of the jobs were newly created due to the explosion of the internet, while others reflect companies shifting workers. In addition, revenue for internet economy companies grew at an annual rate of 11 per cent from 1998 to 1999, nearly three times the growth rate of the economy as a whole for the same period.
“The fact that both internet job growth and revenue-per-employee rates are rapidly increasing at the same time underscores the profound impact the internet Effect is having on productivity,” said John Chambers, CEO of Cisco Systems. “The findings point to an internet century of dynamic growth and change in the economic landscape.”
In a comprehensive report on the internet’s impact on the economy, the University of Texas found that internet-related jobs increased by 36 per cent in 1999. In addition, revenues generated from the internet increased 62 per cent during the same period.
The study, sponsored by Cisco, is the third measurement of the internet economy by University of Texas economists since June 1999. It found that:
• Total revenues (internet and non-internet) at internet economy companies grew at nearly three times the rate of the U.S. economy as a whole. 1999 revenues for internet economy companies grew 11 per cent over 1998, compared to 4.2 per cent growth for US gross domestic product for the same time period.
• internet economy companies generated almost one of every five dollars in revenue from the internet. The University of Texas found that 18.5 per cent of the companies’ revenues were generated from the web. That figure has nearly doubled in two years: in Q1 1998, the portion of revenues derived from the internet was 10 per cent. That jumped to 14 per cent in Q1 1999 and
• Revenue per employee continued to rise as companies leveraged the internet to increase operational efficiencies and worker productivity. As a whole, revenue per employee jumped 19 per cent from year-end 1998 to year-end 1999.
• A snapshot of revenue for the largest companies in the internet economy study indicates growth continued at a rapid pace in the first quarter of 2000. Revenue growth was up 40 per cent from Q1 1999 to Q1 2000.
“The internet economy has grown more rapidly than anyone could have envisioned, opening up new vistas of communication, collaboration and coordination between consumers, businesses and trading partners,” said Dr Andrew Whinston, who along with Dr Anitesh Barua headed the research team.
The Internet Indicators study builds on the first comprehensive survey of the internet economy, which was performed last year by Dr Barua and Dr Whinston’s team and sponsored by Cisco. The study shows how the internet is transforming the U.S. economy by dividing the internet economy into four segments and measuring the economic impact of each. The four are:
• Internet Infrastructure: businesses that make or operate the internet’s essential hardware and equipment: worldwide connection networks, or backbones; internet service providers (ISPs); makers of networking hardware and software; personal computer manufacturers, etc.
• Internet Network Applications Infrastructure: businesses that develop new uses for the internet or connect new users to the internet – makers of on-line search engine software; consultants and providers or internet skills training; developers of multimedia applications and other applications.
• Internet Intermediaries: third-party businesses that use the internet to link customers with products or services produced by others: operators of internet portals; content providers for internet sites; on-line travel agents or stock brokers.
• internet Commerce: businesses that sell their own products directly through the internet – internet retailers of many types; internet sites that earn revenue from subscriptions or fees; on-line advertising firms.
The Internet Indicators study is based on an unprecedented survey of more than 2,000 U.S. companies that generated some or all of their revenues from products or services related directly to the internet. All the companies surveyed derived some portion of their revenues directly from the internet.
The study did not include companies that had indirect links to the internet, such as professional services or utilities companies that serve internet businesses. Data for the study was compiled from commercially available business research reports, Securities and Exchange Commission disclosures, product literature and commercial web sites.