Global crisis could be Ireland's opportunity

NET RESULTS:In post-Dell Ireland, we are more aware of why an indigenous tech sector needs more than one major customer

DURING HIS public talk on Monday, former Intel chief executive and chairman Craig Barrett made a compelling argument that Ireland must move rapidly towards developing home-grown technology companies.

Large-scale, jobs-rich outside investments from multinationals – or FDI, foreign direct investment – is unlikely to be as central to the country as it has been in the past, and will not act as the primary fuel for a resurgent Irish economy in the medium to long term. Ireland’s moment has passed for attracting many of those investments and they will go to hungrier, lower-cost, emerging economies.

That’s in great part because Ireland has priced itself out of anything except those high-value, knowledge-economy jobs we keep hearing about, noted Barrett. We will need to create many of those for ourselves.

It’s not a new argument, but it makes a far greater impact to hear it from someone like Barrett, who, out of Intel, can speak freely and bluntly as an international businessman who also has a good understanding of Ireland.

The need to think seriously about our indigenous tech sector also hasn’t been seen as particularly urgent over the past two decades, as the State and its agencies excelled at luring in impressive big-hitter multinationals and convincing those already here to expand operations.

Many went from having an Irish-based office to having an Irish based “campus”, employing thousands. As one well-connected Irish business friend based in the US told me a few years back: “Ireland doesn’t even have to sell itself any more. Any American technology company thinking about basing in Europe has to look at Ireland, and Ireland already will be on the shortlist.”

Too often, the indigenous sector has simply taken the role of the smaller “ecosystem” that could survive nicely servicing those big multinationals. In a post-Dell Ireland, we have a far greater awareness of why an indigenous sector has to have more than one major customer and why it is important to look beyond these shores for markets.

Some of that good old FDI no doubt will continue to opt for Ireland, but already the scene is changing. Many of those investments are bypassing Europe entirely, or are smaller investments.

Increasingly, too, IDA Ireland is moving towards smaller-scale, research and development- focused FDI, not the big jobs wins. That’s an important shift: it signals increasing Irish competence in attracting and doing basic research, and, as Barrett noted, it is the basic research that tends to convert into the big ideas that eventually create game-changing companies, not the shorter-term, product and services-oriented research (however valuable that may be to the RD mix).

Of course, it is easy to say we need more indigenous tech companies, but far harder to go out and create them, especially the successes that will provide jobs. There’s no doubt that we have the basic ingredients to bake our own companies: smart graduates, a growing spread of research and development, an international reputation in some areas (for example, Ireland is ranked sixth in the world in the hot area of nanoscience, quite an achievement in its own right).

But Ireland has had a hard time converting good people and ideas into viable companies. Very few of our indigenous technology companies have made it on to the Nasdaq exchange in the US, a good benchmark of tech achievement. One reason for this, historically, must surely be that so much talent leaves the State in regular waves.

If that is the case, perhaps this particular economic crisis may have built into it a unique impetus for the fresh growth of an indigenous technology sector. A downturn will always provide a context for young companies to emerge and succeed. This always happens anyway because some of those who lose their jobs will go on to seize the chance to start their own business.

But as Dublin Institute of Technology business lecturer Brendan O’Rourke told me after Barrett’s talk, “This time is different, because there’s nowhere for many to go outside the country to find jobs.” In short, the emigration safety valve of Britain and the US has vanished, because they, too, have few jobs. That’s unique.

Commentators have viewed this as a negative. Maybe instead it will prove to be our remaking, the right context to kickstart a stronger, broader indigenous technology sector. This time around, smart entrepreneurs may stick around and start a company here, instead of leaving to work for a company somewhere abroad.

The State’s challenge now, as Barrett noted, is to create the environment that nurtures rather than crushes entrepreneurship, ideas and creativity.

klillington@irishtimes.com

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