Efficiency through openness: the economic value proposition of open source software

This study identifies the mechanisms inherent to Open Source Software (OSS) production that help fuel innovation in knowledge-based economies. We furthermore assess the impact of Open Source Software on job and skill creation in the United States. We forecast that overall employment in software development occupations is to grow substantially. According to our estimates computer specialist occupations are expected to increase by over 22%, adding 762,000 jobs in the US from 2008 to 2018. This occupational group is one of the fastest growing – twice the average growth rate for all jobs - and software development occupations enjoy an average salary across all industries that is more than twice the national average for all occupations. We estimate that the number of OSS-related software development jobs in the US is estimated to be between 801,590 and 1,201,391 jobs in 2008. This will grow to between 910,007 and 1,477,794 by 2018 according to estimates based on employment projections by the US Bureau of Labour Statistics. The economic value proposition of OSS will reverberate well beyond the software industry. The broad diffusion of software development jobs throughout the US economy suggests that most sectors are in a strong position to adopt OSS. Information technology (IT) user sectors employ the majority of computer specialists in most software development occupations: 68% of computer systems analysts, 58% of computer programmers, 61% of computer and information scientists, and 48% of computer software engineers. This suggests that OSS adoption can be usefully implemented to cut costs and boost innovation efficiency in a variety of industries. As US industries are exposed to the benefits of OSS, open innovation processes outside software development may be adopted through a process of learning and imitation. This is likely to stimulate even greater innovation efficiency gains in all sectors of the US economy.