A shortage of talent in Ireland’s IT sector is fuelling wage growth, which is nearly three times the national average, a new study has revealed.
The research by Enterprise Ireland and financial services firm Investec found that only 20 per cent of IT firms here viewed the availability of labour "to be good or very good".
Investec said the struggle to attract talent was the main contributor to wage inflation in areas such as software, which had seen average earnings rise by 11.4 per cent since 2011 compared to 4.3 per cent across the labour market as a whole.
“The ability to source talent depends on the jurisdiction. Domestically, Irish graduates are well regarded, but there are shortages, particularly in areas such as coding,” the report said, while noting that some firms reported difficulties in securing visas for employees.
The study is part of a series examining the State’s major export markets and the outlook for exchange rates.
In contrast to the issue of the availability and cost of labour, the availability of capital is viewed positively by most IT firms here, with 80 per cent rating it as “satisfactory to very good”.
The report also indicated that most companies believe the UK, US and euro zone will continue to offer the best export opportunities in the near-to-medium term. However, only a third in the software sector, which relies heavily on the UK as an export market, said they had taken steps to prepare for Brexit.
With global growth set to accelerate to a seven-year high of nearly 4 per cent in 2018, the timing was right for market diversification, Investec’s chief economist Philip O’Sullivan said.
However, he cautioned that the different pace at which the world’s leading central banks were moving to normalise monetary policy was likely to lead to elevated volatility in currency markets.
"The strengthening international backdrop is creating significant growth opportunities for Irish software companies. We are very encouraged by the ambition shown by many of the firms in this sector, which is supported by favourable funding conditions and the resources of agencies such as Enterprise Ireland.
“With that being said, we would advise firms to carefully consider the impact that sudden currency moves could have on their bottom line, and recommend that they take steps to protect their profits,” Mr O’Sullivan said.
In terms of long-term export trends, Enterprise Ireland predicted the US would remain significant due to innovation in areas such as artificial intelligence (AI) which many IT client firms view as the technology disrupter that will have the most significant impact on their business.
“There is a growth phase currently being experienced by software firms mainly due to the ubiquitous nature of developing technology and the adaptable nature of Irish businesses in terms of technological trends,” John MacNamara of Digital Technologies said.