By Guest Blogger Brendan Fay (IDA ICT Division)
As Ireland celebrates National Microelectronics Week, it is opportune to look back over the past year, a year which has been positive in terms of semiconductor and microelectronics investment and activity.
For example, Qualcomm announced in September the establishment of a new Global Technology Delivery Centre in Cork. Meanwhile Huawei, Hittite Microwave and u-blox also established new R&D centres.
Qualcomm, Huawei and Hittite Microwave join companies such as Intel, Analog Devices, Microsemi, ON Semiconductor, Maxim Integrated, Cadence, Xilinx, Altera and M/A COM Technologies, which have significant strategic operations in Ireland.
For instance, Analog Devices has over 1,000 people at its manufacturing, distribution, sales/marketing and R&D operation in Limerick.
New investment and ongoing activity reflects corporate confidence in Ireland as a supportive and successful location for the international activities of global corporations.
One recent example of such success is Intel’s new Galileo development board, containing the Quark SoC X1000 chip, which, with the support of IDA Ireland, was developed from inception at the company’s plant in Kildare. The new chip will enable a range of low power devices in wearable technology and the Internet of Things.
While the track record of companies is an important factor in influencing investments, the availability of suitably qualified talent, a strong publicly funded research base and a favourable corporate tax structure are also influencing factors.
Ireland’s talent availability is often cited by companies as a core reason for new investment.
Ireland currently has in place a National ICT Skills programme, which is helping to increase the supply of electronic engineering talent. For example, graduate output from masters degree electronic engineering programmes in 2013 is estimated by the HEA (Higher Education Authority) to be up by circa 60% on 2008 and is projected to increase by over 160% by 2018.
The country’s low 12.5% corporate tax rate, 25% R&D tax credit and IDA Ireland’s grant support are also factors that influence investment decisions.
Ireland has some of the most progressive research institutions to support semiconductor corporate R&D programmes; the institutions include the Tyndall National Institute, with over 460 researchers and support staff, CRANN (Centre for Research on Adaptive Nanostructure & Nanodevices), with over 300 researchers, MCCI (Microelectronics Circuits Centre Ireland) and CCAN (Collaborative Centre for Applied Nanotechnology).
Some world leading technologies are being developed at the aforementioned research centres.
Technologies include the development in Tyndall of the world’s first junctionless transistor, which will help facilitate increased miniaturization of electronic devices. CRANN have also discovered a new material that could transform the quality, lifespan and efficiency of flat screen computers and televisions.
MCCI is currently developing the world’s first skin cancer-detecting single chip phased-array radiometer, which may be developed into a handheld device that could be used in doctors’ surgeries.
Ireland has much to offer global semiconductor and microelectronics corporations. The success of the existing corporate base and ongoing greenfield investment is testimony to the confidence that currently prevails in the country’s semiconductor/microelectronics industry.
What is the underlying economic impact of a job in the technology sector?
All over the world as disruptive digital technologies push the established order aside, economists are keen to weigh up the economic value of the new jobs being created and those they are replacing.
This is no dry academic question. In virtually every major western economy, there is concern about the impact of what most loosely call increased computerisation or increased automation.
This trend is blamed by some for eliminating bookkeeping roles, clerical work, and production jobs in the manufacturing sector. Where will this trend lead next, many ask?
Some people have already made up their minds – one of the most interesting long form articles on the subject published recently (by TechnologyReview.com) carried the unambiguous headline, How Technology is Destroying Jobs.
While clearly many work roles in western economies have disappeared and will not return due to advances in technology and greater computer processing power, there are two common sense reflections we should not discard as this debate grows louder.
One is that jobs don’t die as such, jobs migrate. In economic terms we talk about creative destruction, but it is a lot more subtle than just companies going out of business and other companies taking their place. Instead activities in society (and by extension the economy) get re-prioritised and re-ordered, particularly in the services economy, but also in manufacturing.
Entirely new job types are being created every day. Ultimately nobody knows 20 years from now how many data analysts will be working say in the US, but it is likely to be a lot. US magazines are full of other types of roles we are likely to see in the future- from exotically titles roles like “urban shepherds” to microbial balancers”!
Forbes last year came up with a fascinating list of 10 jobs that didn’t exist 10 years ago (http://onforb.es/K2wf5X) and if you analyse it, it gives real support to the idea that activity previously not given strong economic (or social) priority, can suddenly be in strong demand, spurring a fresh burst of employment creation.
For smaller economies this kind of re-ordering of employment and economic activity, can be very challenging, mainly because the trends involved tend to come from larger countries and larger economies and trickle down to smaller ones over time.
For a country like Ireland this is very true. One of Ireland’s largest employers as recently as 2004 was clothing firm Fruit of the Loom, which at its peak (pre-2004) employed 3,500 staff in counties Donegal and Derry.
Now less than 10 years later, Google is one of Ireland’s largest employers, employing over 2,500 people in Dublin (for information on Google in Ireland see http://bit.ly/1eDwHdZ). Its not just about Dublin, regionally Ireland also has a large collection of tech players.
Last year this debate about high tech versus low tech, got revved up by the release of a book by economist Enrico Moretti, which suggested that for every high-tech job created in the US, another five additional jobs in the service economy were also created. Apple, Moretti pointed out, employs 13,000 directly in Cupertino but has spurred 70,000 indirect jobs in the region.
Clearly scale matters and the US is a big market. Also the precise roles matter to, in terms of the multiplier.
But even controlling for these factors, clearly attracting high end tech roles into a city and putting a supportive infrastructure around them, pays off hugely economically and also creatively.
Dublin, as Ireland’s capital is very much doing that at present with its large scale tech hub, where the likes of Google, Twitter, Facebook, Indeed.com, Dropbox, LinkedIn and Tripadvisor now rub shoulders within a small geographical patch.
At IDA we have also looked at a variety of multipliers and the results are encouraging, with tech jobs supporting a high ratio of spin-off roles in the wider economy.
While debates will rage on about what different sectors offer, all the evidence suggest that tech jobs create a very high level of secondary jobs and economic benefits- particularly when they are in clusters.
As a result for good economic reasons, Ireland’s government and various agencies, including IDA, will be seeking to enhance even further the critical mass already present in Dublin’s tech hub.
Alistair Tosh is Director of Executive Education at the Irish Management Institute.
Alistair is a specialist in the area of Management Development and Leadership at the IMI. He has over 10 years experience in training and development.
I downloaded the IDA’s App, ‘Landscape’, recently, and it’s excellent! Designed as a “tool for researching and investigating Ireland’s business landscape”, it’s full of information about companies and examples of why Ireland is the right place for locating a business.
Whilst navigating the tool, and looking at Dublin as a location for FDI, I was struck by the parallels with the work of Richard Florida – an ‘urban theorist’ and Professor in the School of Management at the University of Toronto. His recent book, Who’s Your City?, insists that modern-day creative economies are making our choice of the place where we live the most important decision of our lives.
Whilst technology makes remote working more and more possible, our choice of city, he argues, exerts powerful influence over the jobs and careers we have access to, the people we meet, our “mating markets” and thus our ability to lead happy and fulfilled lives.
Although not radical, it makes sense. Cities with high concentrations of technology workers as well, he says, of artists and musicians, exhibit a higher level of economic development. Referred to as the “creative class” these individuals foster an open, dynamic, personal and professional urban environment. This environment, in turn, attracts more creative people, as well as businesses and capital.
And it is this that brings me back to the real world!
I was recently in conversation with a Senior VP from one of the West Coast’s most successful software companies – a beacon for the creative workers I refer to. Having recently secured significant investment in terms of money and jobs from his global parent, and incubated his part of the business here in Dublin, he told me that Ireland, and Dublin in particular, is a hotbed for the type of ‘inside sales’ organisation he leads. Indeed he finds it easier to recruit for roles in Dublin than in other, more exotic locations.
What does he put it down to? Two simple reasons:
1. A Cluster of Expertise – there is a significant cluster growing up around this area (inside sales) in Dublin, with the likes of Facebook, LinkedIn, Twitter, Salesforce, Oracle etc locating in Dublin, and this self-perpetuating network of expertise and talent makes Dublin in particular a fantastic place for companies to invest and talented people to locate
2. Availability of Talent – when selling services my contact tells me that they can train for the sales skills but they need raw talent. Ireland’s universities provide that talent, and when they don’t, Dublin, as a city of choice for technology professionals, provides enough of a pull to attract the talent
And this brings me back to Ireland’s landscape. When it comes to an open, dynamic, personal and professional environment for technology companies Dublin, Ireland is the city.
…Ok, so you’ve heard of Dublin as an internet capital, and yes you’ve heard of Cork as a vibrant cluster area for pharma, and yes you’ve heard about the presence of medical devices in the west of Ireland too, but now get used to the concept of Ireland as cyber security hub.
IDA’s Communications team have been bringing some of the press around to meet some of Ireland’s growing collection of cyber security firms in recent days and this resulted in a piece in the Financial Times, focusing on Symantec, a key industry leader.
Symantec has a global response centre in Dublin and its just one of many cyber security firms either putting down roots here or expanding rapidly.
IDA client security software companies employ over aproximately 1,500 people already in Ireland and there is no reason to think this cannot be grown further.
The pace of growth of the industry is very impressive. In 2005 there were none of these firms, but now there are 8.
For example Lumension Security set up in Galway in 2009, Webroot in 2010, Total Defense and Mandiant in 2012, and FireEye in Cork 2013. MCAfee (Cork) expanded in 2009, 2011 and 2013, and Symantec expanded in 2011. Trend Micro (Cork) also had an expansion in 2009.
The reasons for coming to Ireland will sound familiar. Talent availability (both multilingual and technical), Ireland’s large existing base of software companies, ongoing investment in the sector, low corporate tax rate and improving competitiveness, particularly since the financial crisis.
The sector globally is growing due to the penetration of the internet, data proliferation and the complexity of cyber crime.
While it could be argued that Ireland is not a fully fledged cyber security `hub’ just yet, the building blocks are in place and further expansion is on the cards.
As Ireland has shown with its wider ICT footprint, once a niche or sector specialism gets rooted in an economy, it tends to remain and grow.
There are events all around the world in the period before St Patrick’s Day, but if you want to avoid the green hats, the beer and the crowds, but still want to know about Ireland and particularly its rapidly growing tech community it can be done right from your desk, or on the move via smartphone.
The #IrelandBiz tweet chat, held by IDA Ireland, is designed as an interactive question and answer session to share insights on trends impacting business. The first tweet chat will focus on the vibrant tech scene in Ireland, particularly opportunities and challenges for companies considering international expansion.
Our moderator is one of the most prolific Tweeters on the Irish business community in the US, Margaret Molloy @margaretMolloy, who is chief marketing officer of Velocidi, a startup digital agency based in New York City.
Margaret will pose questions to Barry O’Dowd, Head of Emerging Business at IDA Ireland, who will tweet from the Twitter handle @IDAIRELAND. O’Dowd is Senior Vice President of Emerging Businesses Division of IDA Ireland.
He is responsible for collaborating with companies looking to expand internationally by helping to facilitate the establishment and growth of business operations in Ireland.
The tweet chat will be conducted on Thursday, March 14th from 12 p.m. to 1p.m. EST / 4 p.m. to 5 p.m. GMT and is an important event, in the sense that Dublin has become a thriving hub for fast growth tech companies in recent years. Companies now are internationalising a lot quicker and establishing bridge heads in overseas markets very quickly in their development.
The chat will seek to talk about how this is done and what Ireland’s unique business proposition is.
‘Ireland is strong in software development and ICT’. This is how Chinese Vice President Xi Jinping described the sector when he visited Ireland in 2012. 9 of the top 10 global software companies now have important strategic operations in Ireland. Likewise, 9 of the top 10 US ICT companies are in the country in a big way. Activities vary from EMEA/International HQ’s, multilingual customer/technical support and shared services centres to supply chain management, R&D and manufacturing operations.
Foreign Direct Investment (FDI) in the ICT sector continued to evolve strongly in 2012, as evident by significant expansions from Apple, IBM, HP, Microsoft, Amazon, Electronic Arts (EA), Cisco, Xilinx, Salesforce.com, Workday and M/A Com, and first time investments from Dropbox, Total Defense, Guidewire, Datalogic ADC, ZMDI, Hubspot, Hittite Microwave, Zendesk, Mandiant, KeyedIn Solutions and Nuance Communications.
The new investments are testimony to company confidence in Ireland as a strategic business location for their international activities. Ireland’s ICT track record, technology base, 12.5% corporate tax rate, 25% R&D tax credit, top quality talent, English speaking base and EU/Euro membership all contribute to this confidence.
Looking ahead, IDA sees increasing levels of investment in cloud computing and ‘Big Data’ analytics. Ireland is well positioned to win investment in the aforementioned areas, due to, amongst other factors, a strong, internationally focused, innovative ICT corporate cluster, particularly in software/internet, a supportive R&D and educational environment (e.g. rapidly increasing computer graduate output), and solid telecommunications and datacentre networks.
World-class R&D centres in Cloud Computing (e.g. Irish Centre for Cloud Computing and Commerce –IC4) and Data Analytics (e.g. Clique Analytics Centre), coupled with the Irish Government’s Research Prioritisation Proposals in future networks, data analytics, digital platforms and smart grids/cities enhance the ecosystem further, as well as initiatives in broadband (e.g. next generation networks) and skills (e.g. National ICT Skills Action Plan).
Ireland is already viewed as a strategic location for cloud and analytical investments, as evident by recent datacentre investments from Microsoft, Google and Digital Realty, cloud based investments from Amazon, Salesforce.com, LogMeIn, Zendesk and KeyedIn Solutions, and analytics based investments from Accenture, Fujitsu and Infobright.
Looking forward, Ireland will continue to attract substantial ICT FDI, as the country is recognised as an excellent international business location for strategic corporate activities. Already in 2013, Huawei has announced the opening of a 50 person R&D centre.
ON a recent trip out of Ireland and the reaction to talk about Ireland exiting the rescue programme put in place in 2010 by the ‘troika’ is quite noticeable. Likewise similar reaction is to be found in the international press.
Europe needs a win after assisting a number of stricken economies to re-shape their balance sheets. But assisting them is not enough on its own, countries need to see that re-entry to the bond market is possible and Ireland is potentially going to be in that position in 2013.
Expect Ireland to become a key test case for wider European efforts next year.
The reaction of markets to the Budget in December will also be interesting.
Its recognised Ireland has made progress on lowering the costs of investment here, thereby boosting the return on capital for interested FDI investors. Now progress on Ireland’s funding sources is potentially around the corner, even in a climate of low growth.
This could all be very slow moving and fraught with potential setbacks, but 2013 could yet be a defining year.
So the deal done in Brussels in last week is now being analysed a little closer and the markets want to know how much debt could come off Ireland’s overall stock of sovereign debt. Nobody ultimately knows yet, pending detailed negotiations. However early guessimates are most interesting, particularly those from US sources. The influential Heard on the Street column in the Wall Street Journal- now apparently only known as the WSJ- estimates Ireland’s debt to GDP at peak could fall to 90%, from earlier domestic estimates of 120% at peak - if the restructuring is radical enough. In a similar vein, the Financial Times has said Ireland is a “major winner” from the summit last week. Next few months the haggling over the precise debt impact will begin and sentiment towards Ireland on credit markets is likely to gyrate accordingly.