A decade ago, when Ireland rivalled Greece for the title of Europe's most lacklustre economy, the government decided that the future would be computer driven, and it would provide whatever financial incentives, education and infrastructure the computer industry needed. Now Ireland has the fastest-growing economy in Europe.
In 1987, Ireland's Industrial Development Agency "did a deal with a small software company called Microsoft, which now employs about 1,400 people in Dublin," explains Frank Ryan, manager of the IDA's electronics and engineering division. Intel followed in 1989, invested $3bn and now employs 3,500 people. There are also four large PC makers - Dell, Gateway, AST and Apple. With these key players in place, component companies have flooded in: Hewlett-Packard, Motorola, Seagate, Quantum, Alps, Fujitsu, NEC, Brother, 3Com, Bay Networks and many others.
For Microsoft, "taxes and talent" were the key reasons for setting up in Dublin, says Julia MacLauchlan, director of Microsoft's worldwide products group. But tax isn't relevant to her development operation now: "We spend money; we don't make it."
John Shepheard, general manager of Gateway 2000, admits that tax and other financial incentives played a part in Gateway's decision to move to Ireland, but he says all EU countries offer them. "You couldn't build a business on that basis. It's really the people and the other resources you need, such as telecoms and transport." Shepheard claims that Gateway and Dell are the most efficient operators in the computer business, and "that's more important than any tax break".
Grants are no longer Ireland's key attraction. Average government funding per job created last year was pounds 11,920, "which makes us one of the lowest payers of grants in Europe, and way below what is on offer in the UK or Northern Ireland", says Ryan. He admits that the 10 per cent corporate tax rate helps, but insists that "the big difference is people". Besides being well educated, they are also flexible. "People are willing to work extra hard at short notice. The culture is similar in style to that of the US. Even the civil service works similar hours," he says.
Despite a low tax rate, the IDA sees a return of pounds 5 for every pounds 1 it spends and computer hardware and software currently account for about one-third of Irish exports.
Frank Quinn, a computer magazine publisher, believes that with so many big computer companies in Ireland, there is also a "me too" attitude among more recent settlers. Specialist magazines are a good barometer of industry growth, and his publications are up 20 to 25 per cent on last year.
Ireland had a computer boom in the early Eighties, when 17 mini-computer makers operated there. But they were eclipsed by the PC. Wary of another swing in technology, the IDA adopted a different strategy for the PC sector and "went after the companies that controlled the enabling technology", says Ryan. He sees the key challenge as encouraging those companies to increase the amount of research and development they do in Ireland, to give them a strong commitment to the country.
"We wish to attract companies that are either number one or number two in their markets, and have the resources to be long-term competitors," Ryan says. The IDA also targets only growing markets, such as electronics, having seen past job creation efforts dissipate when the companies either got into trouble, or went elsewhere in search of lower costs.
However, the computer industry has grown so quickly that the Irish are now worried that there won't be enough skilled people to meet demand. "There is now considerable competition for the right people," says Quinn. His recruitment Web site (www.jobfinder.ie) has about 1,000 jobs on it at any time, especially for Unix, C and Cobol programmers, system administrators and network managers, and pay rates now match UK levels.
"Ireland used to be a cost-effective country to set up in, but the shortage of skills is going to drive the prices up and make it uncompetitive," says Robert Booth, managing director of the Trinity Group, a diversified technology company.
Microsoft's Julia MacLauchlan disagrees. "The skills shortage is not Irish, it's worldwide," she claims. Besides, she says she has found Irish colleges and universities "very flexible in providing the programmes relevant to jobs".
Irish universities regularly meet companies to ensure that their graduates have the required skills, and are willing to change, or even switch courses to meet industry needs. Some 40 per cent of all school-leavers go on to tertiary education, one of the highest rates in Europe, of whom 60 per cent study subjects directly relevant to the IT industry (such as computer science, languages and business). Indeed, all school-leavers are sent a leaflet telling them where the most likely job opportunities will be in the future, before they choose their courses, "to ensure that they'll have good job prospects when they graduate", explains Ryan.
"We want the best, and Ireland has a well-educated population," says MacLauchlan. "If we couldn't find great people, we'd be somewhere else."
The English-born Shepheard also praises the system's flexibility. When Gateway launched in Sweden, there was a lack of Swedish speakers, so a specialised marketing and business course in Swedish was immediately started.
Also, when it was realised this year that the number of engineers and technicians would soon equal demand, funding was quickly put in place to ensure that 3,000 extra third-level places would be available this autumn in computer sciences and language skills, although this will still take two to three years to feed through.
Indeed, Shepheard feels that the Irish government is highly responsive to the industry's needs. "It takes even minor issues very seriously, and we have found them to be good business partners," he says.
Unlike many other EU countries, Ireland has sensibly targeted its EU funding on those areas most likely to help business: education, telecoms and now roads and ports, in an effort "to give us a long term competitive advantage", Ryan explains. It now has one of Europe's most sophisticated digital telecommunications services, thanks to pounds 2bn of EU aid.
Of course, such investment doesn't benefit only the American computer giants; local companies don't usually find it so easy to get grants or other help. Trinity has had no assistance from the government, although it now employs 57 people and has grown from being a hardware and software distributor to encompass software development, electronic messaging and satellite com- munications. It also has offices in the UK. But Booth says it has benefited from the foreign influx, which has "created a much more vibrant economy because there is a rising demand for goods and services which local suppliers can fulfil". Most of the staff Trinity recruits have worked with the multinationals and "the people we've had most assistance from have been Digital", he says.
IT COMPANIES IN THE IRISH REPUBLIC
Allied Management Systems
Andersen Software Centre
Boole & Babbage
Cadence Design Systems
Digital Equipment Corp
Electrolux Application Centre
Electronic Data Systems
Wang LabsReuse content