Eire to the IT throne

Ask most developers which country, after the US, exports the most software and they would probably reply India, the UK or maybe Germany. They would all be wrong. It is, in fact, the Republic of Ireland. Economists have dubbed it the Celtic Tiger, and Ireland now exports 60% of all packaged software sold in Europe.

Ireland has Europe's fastest growing economy and its backbone is now based on workers with technology skills rather than the age-old stereotypes of an unskilled labourer or the wandering minstrel.

Dublin, its sophisticated capital city, now hosts an A-Z of the IT industry, and plans are being prepared for a #1.6bn development in Dublin's docklands area which will create up to 40,000 new jobs, mostly in IT. The whole development is being called a 'technopole' - an adopted phrase to describe the use of IT as a force to regenerate blighted areas.

And it's not just software that is booming. Computer support service businesses are flourishing, and SAP has recently opened a new centre. Most of the leading PC manufacturers have assembly operations in Ireland - Dell, AST, Gateway and Apple have bases in Wicklow, Cork and Limerick, and Compaq is also to join them.

The list of component manufacturers who have suppliers is as long as your arm. Intel has a massive plant employing over 2,200 people just outside Leixlip; NEC Semiconductors is based in Balivor, Co Meath; and Digital has operations in Galway and Limerick.

Ten years ago, Ireland had the weakest economy in Europe and was haemorrhaging staff. Programmers abroad with IT skills could not get work at home. Today, Ireland has a thriving IT industry and IT recruitment agencies are enticing Irish IT professionals who emigrated to the UK to go 'back to a future' reinforced by a promise of 'excellent' salaries.

For the last 150 years, Irish emigration has been running at 40,000 people a year. It now stands at 11,000, and due to people returning - many with IT skills - Ireland now has net immigration.

So what has happened? The short, if perhaps too simple, answer is that successive governments' strategies of generous grants, low taxes and long-term investment in education has finally kicked the whole economy into gear.

Grants to foreign companies have been available since the 1950s, while free education for all was introduced in 1967 and greatly expanded in the 1970s and 1980s.

Many economists believe the crucial catalyst was European Union membership. Apart from the hugely positive psychological impact, grants to the tune of 4% of GNP in the early 1990s helped modernise the country's infrastructure. For example, grants of #2bn helped build Ireland's digital telephone backbone, which is one of the newest in Europe.

This has helped Ireland's economy to grow, on average, by 7% each year since 1994. For the first time, in 1996, it overtook the UK. Researchers at the Economic and Social Research Institute in Dublin predict that this is no flash in the pan and that Irish income per head of population will exceed both that in the UK and the European average by early next century.

Minister for enterprise, trade and employment Mary Harney announced last month that five IDA-backed firms - Diva Technologies (US), Kerridge Computer Systems (UK), Visio, Exact BV (Netherlands) and Wall Data (US) - would create another 369 jobs in Dublin within three years.

'Internationally traded services are increasingly important to us. Services will create 15,000 to 20,000 jobs here in the next four years. Within that, more than half of this growth will be in software,' Harney predicted.

Microsoft was one of the first foreign companies to spot Ireland's potential. Enticed by grant funding from the Irish Development Authority (IDA), Bill Gates set up his European headquarters in Sandyford, a Dublin suburb, in 1987. It now employs 1,400 people and their output alone helps explain Ireland's lead in software exports.

Purists and cynics might at this point invoke statistics and the devil. After all, an initial software package might cost #20,000 to develop, but the second, third and fourth will only cost an extra #5. Many people believe that Ireland's software industry is only skin deep, a clutch of packaging and assembly operations set up to take advantage of generous government and EU grants, which would vanish if the grants were taken away.

Those intimately involved in the Irish IT industry disagree. 'All European countries give grants. In the IT sector, we give on average around #11,000 per job created, because most IT operations do not require a massive infrastructure. We give chemical manufacturers more - about #17,000 per job - because they need to invest far more,' explains Mary Barton of the IDA.

'People, not grants, are what our IT industry is based on,' believes Barton, though she admits that low corporation tax of 10% does help.

Professor Michael Ryan, head of the computer science faculty at Dublin City University, believes that Ireland's attitude to IT education is the most important factor in its continuing success.

'Ireland is unique in western Europe in that we have almost as many people in full-time education as are working, and half of our population of 3.6 million is under the age of 28,' explains Ryan.

'There is a lot more interest in education here than in other countries, and every third-level course has a computing element,' he says. In fact, 84% of school pupils take the Irish Leaving Certificate, whereas less than half of UK students continue to A-level, the equivalent level of exam. Moreover, a massive 50% of Irish pupils go on to third-level study; again the UK figure is much lower.

'There is no complacency among kids in Ireland. With an unemployment rate of 11% (compared to 8% in the UK), they know they need skills to get jobs and there is much greater awareness about which sectors are producing those jobs,' Professor Ryan believes.

'IT careers do not have the nerdy image among young Irish people that they seem to have acquired in the UK. This year we had 3,300 applicants for IT courses, while we only take 160 people,' he said.

There are 20 third-level colleges in Ireland, all of which offer computing courses - degrees, certificates and diplomas. Unlike the situation in the UK all are oversubscribed. This year 47,000 school leavers applied for 17,000 places. While 3,000 of these were specifically IT, 60% were science, engineering, physics or business based.

'It is extremely important for companies to realise that thousands of excellent young people fail to get into university here because so many apply. We turn away people in the top 20% for their age group - way above average. They then go to regional training colleges where they can gain programming skills on excellent two-year diploma or certificate courses,' Professor Ryan explains.

'Some companies arrive here and say they need our best graduates, sometimes for things like Cobol maintenance. This mistake is so common. I tell them there are many other courses which place very heavy emphasis on DP, MIS and Cobol programming and that they certainly don't want our best graduates for those jobs,' says Professor Ryan, whose students are doing projects involving Java, C++ and a host of more recent technologies.

The Irish government takes a strong interest in making sure that IT courses are tuned to industry demands and colleges have very strong links with industry. One recent development is aimed at giving graduates with non-IT degrees a one-year Masters course in IT. The seven universities will turn out 600-700 such people for the first time next year.

The Dublin Docklands Development Authority (DDDA), under its new chairman, Lar Bradshaw, has just come up with a #1.6bn plan to revitalise the city's grim inner heart through technology-led industries. Of this, #350m is to come from the public sector and #1.25m from the private sector. The plan also involves a digital park, 10,000 new houses and promises 30,000 to 40,000 new jobs over the next 15 years.

Professor Ryan estimates that there are now at least 16,000 software developers in Ireland. Though most work for the 120 overseas companies in Ireland, they also work for 340 home-grown companies, notably CBT Systems, a leading provider of software training packages, which floated on Nasdaq last year.

Foreign companies are also buying up the best. Aldiscan, which makes software for GSM phones, was recently acquired by Logica and Kindle; a 400-person banking software house was recently bought by Misys. Some, like Iona Technologies, founded by chairman Annrai O'Toole, grew out of research projects and are now recognised as global leaders in technology development.

Overall, the IDA estimates the number of IT specialists in Ireland will rise to 20,000 by the millennium.

At the other end of the spectrum, there is a growing number of call centre operations which need people with language skills who provide much lower-level technical support. Courses have also been set up specifically to supply people with these skills. One such is a free two-year diploma course which will equip 504 people with telesales and language skills. Students get a #2,000 grant.

The strongest factor to suggest that Ireland's IT industry has a bright future is the continued interest across all sections of the population and at the heart of business, education and government. Every candidate currently preparing for the forthcoming presidential election has a Web site, and the battle certainly promises to be played out in cyberspace.

Meanwhile, Telecom Eireann, the state-owned telco, has recently announced that Ennis, a small town in County Clare, is the winner of its Information Age Town project. Every house and business in the town will be hooked up and the occupants will each receive training in the latest hardware and software, at a cost of #15m.

The inhabitants may be pondering whether the Internet will make it easier to get a pint of Guinness at closing time.

Finding some relief

Grants are available to foreign firms from the IDA, relating to the number of jobs created. Software development qualifies for a special low rate of 10% corporation tax. Within special Enterprise Zones, capital allowances of up to 100% are allowed for refurbishing buildings. If the occupier does not own the building, he can claim relief for up to 10 years. Rates relief is also allowed for 10 years. However, the European Union is seeking clarification from the Irish government on special tax relief in these areas and will deliver its findings at the end of October 1997.