Targeting of top US Net firms bears fruit

Analysis: Yahoo's decision to locate its European operations headquarters in Dublin is a welcome boost for jobs and the Government's strategy of attracting internet companies to the Republic.

More than 400 new Irish jobs are scheduled to be created over the next five years as the world's most popular internet portal expands its operations in Ireland.

Most of the new jobs created by Yahoo in Dublin will require third-level qualifications and will be highly paid. The operation will also act as the US firm's financial shared service centre for the whole European region, funnelling a huge amount of corporate tax to the Irish Exchequer.

If Yahoo continues to grow at its current pace, then further growth at its planned operations centre and its web advertising subsidiary, Overture, is possible.

IDA Ireland's success in attracting Yahoo, which is one of the biggest internet brands, to Dublin also underlines that the Government's strategy of targeting US internet firms is bearing fruit.

Three of the most successful US internet firms, Google, eBay and Amazon, have set up Irish operations over the past two years.

And with companies such as AOL and Microsoft already operating in the Republic before the latest wave of investment, Dublin is now a key location to place the operational divisions of internet companies.

Yahoo's chief operating officer, Mr Dan Rosensweig, stressed the importance of Ireland's skilled workforce and the flexibility of the Government in securing the investment.

But low Irish corporate tax rates and the track records of other US firms operating here were also crucial elements for the internet firm.

The ready availability of low-cost international bandwidth and web hosting facilities in the Republic are also vital components that the IDA can use to win investment from internet firms.

Yahoo plans to establish much of the critical IT infrastructure that supports its network websites in data centres in Dublin.

To do this, it will have to sign international connectivity deals that use the undersea cables connecting Ireland to the rest of the world.

According to the most recent pricing data supplied by the Commission for Communications Regulation (ComReg), the Republic is the cheapest location in Europe for this connectivity.

This follows the Government's controversial €80 million trans-atlantic fibre optic cable deal with Global Crossing, agreed in 1999. It had to write down the value of the deal when the internet bubble burst, but the extension of the cable to Ireland has undoubtedly helped to make Dublin an attractive location for major internet investments.

Attracting internet companies to regional locations is another matter entirely, however. Lack of cheap internet connectivity and the desire of young, technically-skilled staff to live in Dublin mean these firms are unlikely to set up outside the capital.