Year of transition for the Irish technology industry

While there were some high-profile closures at the multinationals based here, most Irish subsidiaries escaped the worst, writes John Collins

The past 12 months could best be described as a year of transition for the Irish technology industry.

The latest figures from lobby group ICT Ireland suggest that 83,400 people work in the information and communications technology sector which supports 5,284 businesses and has a turnover of almost €53 billion.

The major multinationals based here have moved to strip out activities such as manufacturing which are no longer lucrative in our high-cost economy. They added functions such as research and development, supply chain and treasury which can be highly profitable thanks to the Republic's 12.5 per cent corporate tax rate but generally need smaller numbers of staff.

As a result, the threat of redundancies hung over many of the multinationals, particularly those with a manufacturing presence. Although there were some high-profile closures and cutbacks, such as Motorola's decision to close its software development centre in Cork with the loss of 330 jobs, to the surprise of staff (and even management) most Irish subsidiaries escaped the worst on this front.

Dell said it would reduce its workforce by 10 per cent globally but only parted with 100 staff in the Republic.

All summer rumours circulated that Intel would wield the axe in Leixlip but in the end a relatively small group of 200 staff was asked to apply for voluntary redundancy. Employees of its contractors have not fared so well with estimates circulating that 350 workers not employed directly by Intel have left.

Underlining the health of most of the industry, 22 companies turned up at a recruitment event for the staff laid off at Motorola. And while job losses attracted the headlines there was also good news in the form of investments by big international names such as Nortel, Amazon, IBM, Gala, VMWare and Blizzard, all of which announced new investments in the Republic this year.

The issues facing indigenous firms remain largely unchanged. None of the local firms have become a global multinational in the way that Kerry or Ryanair have come to dominate their sectors. Industry veterans saw this kind of transition will be necessary to encourage new entrepreneurs to establish technology start-ups.

Of the current crop, Norkom, which makes software to combat financial fraud, seems best placed to flourish. The firm recently announced a €11.4 million investment plan which will create 111 new jobs.

Invariably though, local firms have been acquired by US rivals before they reach a global scale. Havok and Demonware were two that cashed in their chips this year courtesy of Intel and Activision respectively.