Govt policy is endangering tech investments – Havok boss

20 Apr 2009

Ireland may not get the full benefit of an €8m expansion by one the country’s most celebrated technology success stories because of retrograde income tax decisions and the lack of a proper, long-term national education strategy.

Emmy Award-winning Havok is one of the world’s best-known games technology companies. Its physics middleware powers many of the top 10 global retail games, as well as special effects in top blockbuster Hollywood movies.

The company, which grew from humble origins as a Trinity College Dublin campus spinout, was bought by Intel in recent years for over US$100m.

Havok is planning to embark on the next phase of its growth and will invest €8m in creating 40 R&D jobs as part of a strategy to develop software to power next-generation computer games and movies.

The plan has the potential to grow to over 100 jobs in time, and the company is in discussions with IDA Ireland.

However, Havok CEO David O’Meara (pictured) said that Ireland may only get 20 of the jobs because recent decisions in the budget around taxation will make it very difficult to attract some of the world’s top programming talent to the country.

Not only that, he believes that since 2004 Ireland’s education system has stopped producing the quality and quantity of graduate companies such as Havok need.

“The biggest issue for me is that the Irish education system is at best only average by western standards and is not producing the calibre of graduate we want in quality and quantity. We need people who are innovative and capable of commercial and quick thinking.

“The other issue on the education front for me is that it is not a question of money, but teaching. We don’t demand accountability from our teachers when it comes to important subjects such as maths,” O’Meara said, indicating that other factors like the cost of office accommodation and electricity prices will prove detrimental to this country’s prospects if not altered quickly enough.

At a time when UK Prime Minister Gordon Brown is highlighting the need for greater broadband investment as part of the Digital Britain strategy, O’Meara fumes that there is a lack of similar joined-up approach here in Ireland.

“Our base has been historically in Ireland. You would think that the development centre for the next generation of Havok’s software would be in Dublin. But 10 years into the company’s history and we are looking at other major development centres, where we have operations in Munich and San Francisco.

“At present we have 40 pure R&D workers in those centres representing the best of world talent in the sphere we are targeting. We would love to have those people here in Dublin. Our next phase of development will see us create 40 jobs and that could expand to 100 jobs, but right now it looks like we can only give 20 of these to Dublin,” O’Meara said.

A key factor in a business like that of Havok is the attraction of talent, and recent changes in Ireland’s taxation in the budget have led to Havok staff in Dublin seeking a transfer.

“When you look at the recent increase in levies, it turns out that taxpayers are actually paying 51pc of their income in taxes. We met with our tax advisers and sought a clarification on the new levies, and what many people don’t realise is that the tax increases are backdated to January. I am unaware of any government in the western world that has taken such a retrograde step.

“Since the Government has retrospectively changed the taxes, two very talented senior developers have asked to be transferred to San Francisco because the effective tax rate on individuals is 51pc. This has made it harder to attract people to come here.

“The kind of talent I’m talking about are very mobile and can work anywhere in the world. And believe me, any country in the world would be delighted to have them.”

O’Meara said that of the 40 development jobs, six people have been recruited so far. To illustrate his point, he said that only one of the six new hires is an Irish PhD graduate, and he had to be encouraged to return to Ireland from Vienna.

He said that Ireland as a country has so much going for it, but its chances of success are being impaired by a political establishment and civil service that don’t appear to be at the races.

“We need another TK Whitaker in the civil service. We need another Sean Lemass among the politicians. I cannot see any evidence of this right now.

“Ireland is not the Titanic, it can be turned around. What we need are bright, courageous people not afraid to make the right decisions. The entire stratosphere of Government needs to be changed.

“We live in a country where the governor of the Central Bank is paid more than the head of the European Central Bank. If this is what’s happening, how can we believe that the people running our country have the intuitive feel or understanding for the pace of change and the mobility of a smart economy?

“On the one hand, out in front, we have brilliant organisations such as IDA Ireland doing an impressive job internationally. But they are being let down by the policymakers.

“For national sustainability, the most important place to begin is a reform of the education system,” O’Meara concluded. “The big question now is: where are the TK Whitakers of our time?”

By John Kennedy

Pictured: Havok CEO, David O’Meara