Ireland 5th in software league

THE Irish software industry is now one of the largest in the world, according to Forbairt's two yearly survey of the industry…

THE Irish software industry is now one of the largest in the world, according to Forbairt's two yearly survey of the industry published last week.

"The survey positions Ireland within the top five global software exporters," the director of the Irish Software Association (ISA), Katherine Lucey, told the ISA's eighth annual conference on Thursday. "We now rank with Israel and it is now important that we take this sector of the economy seriously."

Employment in indigenous Irish software firms rose by 28 per cent between 1993-95, to 5,773 workers. Meanwhile job levels at foreign owned software developers in Ireland grew by 35 per cent, to 6,011 people.

Opening the ISA conference, the Minister for Commerce, Science and Technology, Pat Rabbitte, said the software industry was on course to reach its target of 20,000 jobs by the year 2000. While the sector now employs almost 12,000 people, "only nine years ago it is estimated that there were just over 2,500 people employed ... by any measure, a four fold increase over such a period is significant," he told the meeting.

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But he said Irish owned companies tended to be small, with over 250 employing fewer than 10 people. While their exports had almost doubled in past two years to £226 million, they still heavily dependent on the market.

"While often technically strong, many of these companies lack the expertise and resources to develop a feasible marketing strategy and to subsequently execute it," he said.

By comparison, exports by overseas software companies in Ireland accounted for 99 per cent of their total revenue of £2.6 billion. Microsoft's European HQ in Dublin would probably take over a third of this at the time of Windows 95's launch last August, Microsoft said the software produced for the European market by its Irish centre was worth around $1.6-$1.7 billion a year, or just over £1 billion.

The Minister announced that Forbairt was in the process of setting up a "software product commercialisation unit" to tackle the problem of breaking into new markets. "Firstly it will provide a service to small Irish software companies who are developing products, and secondly it will build up a body of knowledge, based on experience, which will be available to the software industry in the future."

On the question of skills shortages within the sector, he said he was aware of arguments that "this could cause salary levels to rise and put us in danger of losing competitiveness". While some firms felt that "the very future of the industry is seriously at risk as a result of this shortage", he said "personally I think this is over egging the pudding." Several delegates were strongly critical of his speech, arguing that he didn't have a basic understanding of the industry.

£10m venture fund

Other initiatives included a venture capital fund announced a week ago by the Department of Enterprise and Employment. John Tracey of ICC Venture Capital, which will be managing the fund, told the conference that this was "the first specialist venture capital fund focused on investing in Irish software companies". ICC expects to invest up to £10 million over four to five years, primarily in "established, profitable Irish software companies with good growth potential".

No more than £1.5 million will be devoted to any single investment, which will generally be "in the range of £200,000 to £1 million".

Other speakers at the Dublin conference included Jim Heriott of Sun Microsystems (responsible for marketing its much talked about Internet product Javasoft internationally), Chris Hom of Iona Technologies, and software engineering consultant Ed Yourdon.

The Forbairt survey showed that R&D expenditure by indigenous software firms was £41 million last year, almost double its level of £21.7 million two years before. Meanwhile R&D spending by overseas firms had grown from £94 million to £111 million.

Revenue per employee in the entire sector rose by almost 18 per cent between 1993-95 to £66,854. During the same period, profit per employee actually fell by 24 per cent, from £7,868 to £5,979.