The second report in the Developing the Future' (DtF 2007) series commissioned by Microsoft that researches the UK software development sector in the UK has been released. The report reveals that the UK economy is fast approaching a point where the Knowledge Economy will contribute 50% of UK Gross Domestic Product (GDP). The report also reveals that the software sector is the most significant contributor to growth and prosperity for the creative industries and shows the greatest contribution to the UK National Accounts for the creative sectors.

The Knowledge Economy' includes sectors such as financial services, IT, business services and creative services and today employs 41% of all workers by occupational classification and 40% of GDP by industry classification - expected to rise to 50% by 2010. The fastest growing component of the UK economy, it is predicted to have a 40% graduate workforce by 2020.
This report also reveals that the software sector is the most significant contributor to the growth and prosperity for the creative industries.
In 2005/6 the number of graduates from IT related degrees that chose to enter careers in the IT professions was only 30%. This is set against the UK IT workforce averaging 156,000 - 179,000 per annum that covers both new jobs created from growth and replacement demand. Put another way, 70% of IT graduates chose or found alternative activities or jobs outside of the IT profession in 2005/6, with 10.1% going on to study for higher degrees or other qualifications,
The question facing the UK is whether there will be enough people working in the primary IT sector to develop the tools, applications and technologies that will be needed in other sectors that are heavily IT dependent such as financial services.
Writing in the report, Sally Ernst, chief executive, Sinodode believes that China can repeat the competitive success of Indian, and establish a powerful software industry of it own.
Concerning the IT industry, she asserts that a plethora of factors including acceleration of affordable travel, ease of immigration, free trade agreements, and robust enabling technology, have made China an attractive and viable location.
She cites the Chinese literacy rate of over 90% contrasted with India's, which is less than 65% and the fact that China currently has 35 national training schools and aims to train 800,000 software engineers versus India's 600,000, as evidence of China's growing importance - so much so that the country's software and IT services sector is on track to catch and exceed the UK's output in as little as five years.