The world economy is constantly on the move. Emerging countries struggle to shift into consumer-driven industries, while developed countries continue to push the boundaries of new technology. And if there’s one thing that’s become clear over the past few years, it’s this: Data is big business.

The globalization of data accounted for $2.8 trillion of the world’s GDP in 2014, and it’s the result of an astronomical rise in technology. That’s good for a 10.1% rise in global GDP over 10 years.  McKinsey & Co.’s report “Digital Globalization: The New Era Of Global Flows” says that “[data flow] is projected to increase by an additional nine times over the next five years as flows of information, searches, communication, video, transactions, and intracompany traffic continue to surge.”

#-ad_banner-#But what does that really mean?

Data flows include things like digital transactions, communications, digital information and networks. It’s a vast “economy” that doesn’t necessarily stand on its own, like, say global trade does. Physical goods are easy to understand. Someone wants to buy a widget, so they buy one from a company that makes widgets.

What the digital economy does is allow that customer to find that widget on the internet, pay with PayPal, and share his purchase with all his friends on Facebook. It also allows the company that makes the widgets to advertise, send emails to its customers, and connect with other widget investors to produce the next best widget…

The way that data flows work best economically is through enabling efficiency and productivity.

The Economics Of Data Flows
In 2014, the total GDP attributed to cross-border outflows was $7.8 trillion. This includes things like flows of goods and direct investment. Data flows accounted for $2.8 trillion of that figure, or nearly 36% of total outflows. That’s a bigger slice of the pie than trade, which accounted for $2.7 trillion of global GDP!

One of the reasons why the globalization of data is so valuable to the world economy is that it’s a two-way street.

Some may argue that trade is, too, but data flows are different. Because they enable efficiencies, productivity and direct connections between producers and consumers, data flows can increase the value of trade and investment.

In fact, impact of data flows become obvious when countries lag behind better connected economies. In other words, the rate of adoption of these technologies and capabilities has a direct impact on how fast this digital “economy” grows. McKinsey & Co. calculated that if India alone had increased its capabilities to produce the same level of data flows as those produced by the top 25 countries, it would have added another $1.2 trillion to the global economy between 2004 and 2014.

That in and of itself is an opportunity. Some countries that haven’t been as proactive in implementing digital improvements could see their GDP boosted by 50% once they get on the bandwagon, according to the McKinsey report.

Two Big Players In This Market
This surge in data flows is going to require huge amounts of investment in digital infrastructure, like servers, communication technologies and security.

There are two companies that fit into this trend nicely: Syntel, Inc. (Nasdaq: SYNT) and NCR Corporation (NYSE: NCR).

SYNT helps manage information technologies, applications, cloud and other IT infrastructures, and things like business process management. In essence they are in the business of enabling digital transformations.

NCR offers both products and services that customers interact with directly. Think ATMs and self-service kiosks, for example. If you’ve shopped at a Wal-Mart recently, you may have used one of this company’s self-checkout machines.

Both companies have a market cap in the $3-4 billion range, and both offer services to a number of different industries… But on key difference is that NCR focuses more on how to help companies interact with their customers while SYNT is focused on how to make businesses more productive and efficient. For the digital world, both spheres are very relevant to the digital economy. Here’s how both of these companies have performed over the past five years.

The next five years could be just as lucrative. Earnings reports show that over the past five years NCR had average annual earnings growth of 10.8%. SYNT has performed even better, with earnings growth of an average of 19.4% a year. Over the next five years, NCR and SYNT should see earnings grow by 13.3% and 15.0% a year respectively.

Risks To Consider: There’s a big difference between the few highly-connected countries and the majority of the rest of the world. And while this presents an amazing opportunity for growth in this space, it won’t be evenly dispersed, and could be affected by local economic factors, such as recessions, geopolitical concern, and other issues that impact investment.

Action To Take: Companies in the information technologies and services industry could offer opportunities. Both Syntel  and NCR Corp. epitomize this massive digital growth. SYNT and NCR each expect to grow earnings by double digits every year for the next five years, though SYNT could see revenue climb at a higher rate than NCR.

Though past performance is not an indicator of future performance, I’d give the edge to SYNT over NCR. Analysts seem to think so, too, with a price target gain of 14.4% versus 4.6% for NCR.

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