Fringe benefits

IRELAND has a number of key advantages when it comes to developing its information technology sector but suffers from high telecommunications costs, according to the chief executive of Reuters Holdings plc.

Mr Peter Job said a capacity for innovation among its workforce, and the existence of a bank of people with key skills, augured well for the development of the sector in Ireland.

He said he felt Reuters had an insight into the "big and thriving information technology sector in Ireland" through its own activities here.

The company employs about 30 people in its Irish office and has 176 clients, most of whom buy its financial services.

Mr Job is to address the annual IBEC business conference in Dublin on Thursday, and his topic will be the positioning of Ireland in the information technology sector.

He said technological developments would mean Ireland's geographical position "on the fringe of Europe" would become less important.

"You can work on constructing software at home and then send it to Japan if you want." However "the big issue is infrastructure and how much it costs. Ireland needs to take advantage of the technology but you need to be able to afford it."

High speed lines capable of carrying large amounts of information are central to the information age. A typical Reuters line into a financial dealing room carries 1,500 "changes" per second. Mr Job said the cost of a two megabyte circuit in Ireland is 5,200 ECUs per month. This compares with a cost in Britain of 1,500 ECUs per month.

The Irish price is not the most expensive in Europe, and the British rate is far more competitive that most others. "But the real benchmark is the US. It's there that people have stimulated the industry by lowering dramatically the cost of communications."

"The Irish price is not a good thing when you're trying to encourage the software industry".

Mr Job said there were a number of Irish companies which had developed good financial software and he suspected that that situation was mirrored in other sectors.

The reasons for this positive development included "structures for fiscal attractiveness" such as the corporation tax rate, as well as government planning in education so as to produce the type of skills needed by the sector.

"The software sector is more education intensive than capital intensive. Companies can be quite small and still do very well. They can range in size between say 20 and 400, and still not have any difficulty."

He said Irish workers rated strongly when it came to inventiveness.

Another key issue was stability of employment. In the US the information technology industry was "growing by leaps and bounds and the gap with Europe is widening.

Reuters has noticed a tendency in the US software sector for workers to "drift" from employer to employer in search of equity.

"They don't want just to get paid, they want a share of the company.

"This is destabilising from the point of view of a European organisation like Reuters. The attrition rate can be quite high."

In general Europe has not "yet" experienced this wave of instability. Mr Job said he suspected that stability of employment in Ireland was quite high. The small size of the country might be an advantage in this regard.

The link between Ireland and Reuters goes back to 1851 when the company was first established, Mr Job said. Steamers coming from the US were met by a boatman who set out from Crosshaven, Co Cork.

A "canister" containing the latest news from the US was thrown to the boatman, who then brought it to Cork. From there it could be sent by cable to London, beating the streamer by around eight hours.

Irish, Brutish and other newspapers were then sent the news by cable from London. In 1865 Reuters was the first European news organisation to circulate news of the assassination of Abraham Lincoln.

The news was collected from a canister thrown from a steamer off Crosshaven, and then relayed from Cork to London by cable. HE IBEC Annual Business Conference takes place in Dublin Castle on Thursday. The theme is Celtic Tiger in a Global Jungle. Speakers from Ireland, the US and Europe will explore how the Irish economy can maintain its attractiveness as a location for foreign direct investment and its aggressiveness in winning new export markets against increasing global competition.

European Monetary Union and the implications for Ireland and the UK will be explored by the governor of the Central Bank, Mr Maurice O'Connell, and the chairman of Coopers and Lybrand in the UK, Mr Peter Smith. Trade Board chief executive, Mr Oliver Tattan, will examine new challenges facing exporters.

IBM executive vice president, Mr Patrick O'Toole, and Avonmore managing director, Mr Pat O'Neill, will look at Ireland's ability to compete in global markets from the perspectives of a foreign owned firm and an indigenous firm. Mr Job will talk about the information revolution and how it will change our lives.

The conference will be opened by IBEC president, Mr Tony Barry, who is chairman of CRH. The Minister for Finance Mr Quinn will make the closing address. The fee for the conference is £180 per participant.