Developing rapidly from a tiny base 15 years ago the Irish software sector has come to a point where today Ireland has thriving multinational and indigenous software sectors. The multinational sector is made up of approximately 140 companies employing 15,500 people. The value of this sector (in export terms) is £4.5 billion (€5.71 billion) and the sector is growing by roughly 15 per cent per annum. Employment in the sector is expected to reach 20,000 within the next few years. Many of the big names in international software development have Irish operations including Microsoft, Lotus, IBM, SAP, Logica, Oracle and Sun Microsystems.
Microsoft is one of the longest established and largest companies in the sector. It was set up here in 1985 and currently employs 1,500 people in three operating divisions covering product development, sales, manufacturing and distribution. In addition to direct labour, the Microsoft operation supports several hundred jobs in local supply companies and the company sources more than £270 million in raw materials and services in Ireland each year. Ireland is home to the largest Microsoft Data Centre in Europe and to the company's European Product Development Centre which was established here in 1988. "The emphasis of the Irish multinational software industry has changed quite a bit over the past number of years and has moved progressively towards more advanced and higher added value operations," says Mr Paul Hanratty, new business manager with IDA Ireland. "The industry is mature and producing high calibre jobs and there are excellent career development opportunities for employees. We have also seen the industry split into a number of key sectors such as telecoms software, electronic and engineering, business software, financial services and professional services. Within each of these segments we have the leading names. For example, Ericcsons, Motorola, Siebel Systems, Novel, Informix, AIG, Fidelity, Cap Gemini - the list is long.
"Software is a fast-moving business and the business model for software is changing again with the growth of e-business. There is going to be a lot of development within this niche in the years ahead. What has worked well for us in Ireland is the regionalisation of the software industry and the development of software clusters. For example, there are successful clusters developing in Galway, Limerick, Castlebar, Cork and Donegal." On the indigenous side, the home grown software industry comprises around 600 companies employing approximately 14,000 people. Its revenues are more than £1 billion per annum and around 80 per cent of revenues are earned through exports. Many Irish software companies are still small (employing between 10 and 25 people) and have only come on stream within the last five years.
Their promoters are usually male and in their 20s and 30s. Female entrepreneurs are underrepresented in the sector.
According to Ms Jennifer Condon, national software director with Enterprise Ireland "the increased availability of venture capital has been crucial to the rapid development of the sector. In the past it was notoriously difficult to get funding but as the sector has become established the number of Irish and overseas venture capitalists willing to put money into software development companies has gone up significantly", Ms Condon says.
According to Ms Condon, the development of the Irish software industry has been largely product (rather than service) led. This has enabled even small companies to generate income fast and to go to the global marketplace at a comparatively early stage in their development.
Apart from spawning a large number of small companies, the Irish software sector has also had a number of big success stories. Iona Technologies, Smartforce, Baltimore and Trintech are all quoted on the Nasdaq and their market capitalisations run into millions of dollars. There is, however, one possible cloud on the horizon. The Indian software industry has taken off over the past five years and with better availability of labour and a far lower cost structure, there is a concern that it may overtake Ireland as the place to be for software developers. But Jennifer Condon is not unduly worried about the prospect.
"One can see India as either a threat or an opportunity and we are encouraging companies to see it as an opportunity," she says.
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