NET RESULTS:We need to rethink our generally weak system of support for our indigenous tech and internet firms, writes KARLIN LILLINGTON
TWITTER IS coming. The Government and IDA will be celebrating, following the announcement this week that the microblogging social media company will create some sort of base in Ireland – though what exactly it will be, and how many jobs it will involve, remain a mystery.
The Government has been stalking Twitter to add to its little black corporate book for ages, ever since the company went into exponential user expansion and, thus, became one of the hottest global dotcoms.
Lack of a clear business model has not prevented Twitter from being valued in the region of $7 billion (€5.1 billion). It employs about 650 people, according to its website, and has its base in San Francisco and other offices in Tokyo and London. It boasts about 300 million registered users, although the actual user base – the people who remain tweeting after creating an account, making a few tweets and then letting it go dormant – is probably considerably lower. The firm suggests 100 million are active users.
A sign of how mainstream the service has become is the fact that people can actually use “tweet” as a verb or a noun these days without feeling like a total idiot. A little foolish perhaps, but then, didn’t we all feel that way when we first admitted we googled?
If Twitter follows the route of other companies such as Facebook, PayPal and Google, the likelihood is that it will launch with a modest number of jobs and then expand its workforce at a much faster pace than officially expected.
All of this is good for Ireland. It provides jobs, it provides international profile, and it enables the IDA to sell the country ever more effectively as a destination for multinationals and foreign direct investment (FDI).
It is also an indication, if one were actually needed, that Ireland remains extremely competitive as a location even when up against the increasingly savvy UK, which would like some of that FDI itself these days.
Indeed, much had been made in a number of articles online and in print over the past week or two of a growing rivalry between Ireland and the UK, with the tussle for Twitter highlighted as epitomising how edgy the competition was becoming.
In recent months, British prime minister David Cameron has made a particular effort to welcome internet and technology companies, bringing key figures into Downing Street. There have been promises of creating a supportive internet enterprise environment within London, for example, and statements of intent to revise confusing enterprise laws to make FDI into the UK a more attractive, fluid and transparent process.
Some commentators predicted in the past week that this level of romancing had already convinced Twitter to select London over Dublin. That turned out not to be the case.
Highlighting dramatic rivalries makes for good copy, the reality is a lot more boring. The UK system remains more complex, the tax rate is higher, and as more than one senior technology industry figure has noted to me over the years, there’s less government bureaucracy and more government accessibility here for FDI companies than the UK.
Thus, for at least a decade, Ireland has been pretty much an automatic shortlist choice as a location for technology companies. The various competitive advantages, and the growing ecosystem of companies across a wide range of sectors, just makes it far too attractive to ignore, and going on evidence, more often than not wins the deal.
That’s why the Twitter announcement was only one of several in recent months heralding new arrivals, such as games company Zynga and online retailer Gilt, with other significant expansions to jobs within existing technology and internet companies. For example, VMware recently announced it would add 250 jobs to 550 existing positions in Ireland. Such announcements often get buried and it’s easy to forget what significant employers such companies are.
It’s also easy to miss that the FDI tech sector has been, and remains, a very significant economic force for Ireland. Exports from Ireland’s multinational technology companies were credited with driving the unexpectedly strong 1.6 per cent growth in the economy in the second quarter. Those companies are the ones that are going to help lift Ireland out of its morass of debt.
As a business columnist in the Los Angeles Times wrote last weekend: “It was the second straight quarter of growth for the Irish economy, which despite the real estate crash that killed the so-called Celtic Tiger continues to be a magnet for dynamic multinational companies such as Microsoft and Google.”
In short, we do the basic FDI shtick well and while the pitch and backing structure always need ongoing maintenance at every level, from financial inducements to supporting research and education, the Irish approach remains aN example of what countries like the UK should be doing.
A better strategic focus for the Irish Government, because it is an area of ongoing neglect, should be rethinking our generally weak system of support for our indigenous technology and internet companies. We also need to find ways of luring foreign entrepreneurs and supporting our home-grown innovators, to create fresh companies and jobs.
Those are bigger challenges, and are extremely important to get right if we are to create a firmer base of economic growth than exports from Ireland’s FDI portfolio, no matter how glittering a jewel that may be.
