The alliance, a trade group whose members include top software companies like Microsoft, Novell, Lotus Development and Corel Corp., predicts that software companies will employ 1.3 million by the year 2008. The industry will surpass the automotive industry as the largest industry sector by 2000, it predicts. For now, however, the software industry still lags slightly behind car makers. As of 1997, the U.S. automotive industry was contributing $81 billion to the economy, with the software industry right behind it at $73.7 billion, according to the alliance. In 1998, the 806,900 people the software industry employed made an average of $68,900 per year, compared to employees in other private industries, who made an average of $29,800.
”The software industry has emerged as one of the fastest-growing and most vibrant segments of the U.S. economy,” said Robert Holleyman, president and chief executive officer of the alliance, in a statement. “Not only has the industry added dramatic economic growth, it has fueled an information revolution that has changed the way we live and work.
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”It is important for these leaders of the information age to engage policy makers in discussions on issues critical to the industry’s continued success,” he said.
Capitalizing on its rising political clout, the alliance is pushing for several legislative reforms on Capitol Hill that would benefit the software industry. The issues include: easing restrictions on encryption technology exports – the technology which encodes computer files to protect data; protecting software companies from frivolous law suits stemming from the Year 2000 problem; and stronger protections against software piracy.
Anne Gavin, a spokeswoman for the alliance, said the software companies are also pushing for Congress to permanently extend the Research and Development Tax Credit, which is currently renewed on a yearly basis.
”This year we’re really pushing for it to be permanent,” Gavin said. “Part of what made this so successful is the ability to innovate, and innovation comes from research.”
That research has led to big increases in sales, which rose by 17.8 percent in 1998 to reach $140.9 billion. It also generated an income tax base of $28.2 billion in 1998.
Draining that growth, however, is software piracy, which is estimated to have cost the United States 109,000 jobs and $991 million in tax revenue in 1998. Without reforms, piracy will cost the U.S. economy $1.6 billion in tax revenue, according to the alliance.
But the software industry and the United States in general face other problems as well, say area experts. One of the most serious is lack of people in colleges being trained in computer science and Management Information Systems. The need for Information Technology is only going to increase as the public increasingly demands instant access to information.
If the United States cannot produce enough skilled IT workers, Waugh said, some companies may look to relocate in other countries.
“There’s going to be an enormous demand well into the (21st) Century for IT resources,” Waugh said, adding that the United States will have to look to reform its educational system if it is to compete. “What made the United States great (in the 19th and 20th Centuries) was that we made sure everybody could read and write. Today in the information age, several countries are far ahead of us in our educational systems.”
Alan Hecht, chief executive officer of Mesa Systems Guild of Warwick, echoed Waugh’s concerns about the lack of skilled IT workers locally. “We certainly have that problem in Rhode Island,” he said.
One issue that concerns Sharon Stasko, head of Vertere in Middletown, is Rhode Island’s work laws, specifically requirements for overtime pay. This makes it difficult to allow workers to use flex-time, such as working four 10 hour days instead of five eight-hour days.
