‘Ireland needs to get competitive to keep winning investments’ says Dell

23 Jul 2009

Reduced costs and smarter kids will set Ireland on road to recovery, says Dell’s Dermot O’Connell.

It is a pattern we can expect to see more and more of in the coming months. Earlier this year, Dell announced it was closing its Limerick manufacturing arm, with the loss of 1,900 jobs later in 2009. We all expressed shock, but the truth is the writing was on the wall for some time. Ireland had become too expensive.

Ireland’s largest tech employers are battling to stay relevant in the face of a changing world economy. Just this Tuesday, for example, Intel revealed it is to cut 294 jobs at its Leixlip manufacturing facility where 4,500 people are currently employed.

For Dermot O’Connell, country manager of Dell Ireland, the market changes that have led to the impending Limerick closure of Dell were inevitable. But the fact of the matter, he adds, is Dell is still a significant employer in this country, with 2,000 remaining workers, and there is still potential to win new investments that could grow employment here. If only we can get our costs in line.

“The team in Limerick held on for as long as they possibly could. When it became a major competitive issue for us, that was that,” O’Connell says.

When he started in Dell in the mid-Nineties, there were 100 people in a call centre in Bray and a similar number in Limerick in manufacturing.

“For a long time, we saw nothing but growth. But the same lesson that Ireland as a whole has learned this year is you can’t grow indefinitely. We learned more in the past year than we did in the past 30 years.”

O’Connell believes the recession is a good opportunity for Ireland to reset its economy and return to being the lean, aggressive player it was 10 years ago.

“Our strategy in Ireland is to bring high-tech jobs into the Irish market. Unfortunately, manufacturing doesn’t pay anymore, it’s just not possible.

“But what I have seen among Dell workers is an ability for them to grow within the company, and a lot of the jobs still here are in controlling functions across EMEA as well as analytics and purchasing, wireless R&D. We have people today managing relationships with the biggest sales account Dell has in the world. The Enterprise Expert Centre in Cherrywood has experts for all of Europe. So these are jobs that Ireland is perfect for.”

What O’Connell is getting at is the fact that Ireland needs to be in a position to win the new investment jobs. Not only will we have to get our costs in line, but we need to be fielding a smarter, more tech-literate workforce.

“When I first came here, multilingual call centres were all the rage and you only had to speak German. Now we need people who can talk businesspeople through how to fix a storage area network in any language. This is a rare capability – it costs a lot of money to keep these people and they are key to the operation going forward.

“For Dell, the more complex the system, the more valuable it is to your operation. For the higher-end investments, you need higher-end people. From an Ireland perspective, per capita Dell has more people here than any other country outside the US.

“We will continue to be a major operator in Ireland, but unfortunately not in manufacturing. We still have 2,000 people and the vast majority of them are in sustainable, high-level jobs that are critical to the company worldwide.

“The truth was Ireland was heading for a cost position that was so out of bounds that actually there was a danger no jobs would be in Ireland. Why would you locate a job in a country that costs four times more than any other country? Ireland went from trading dotcom shares to trading

houses until there was nothing left to trade.

“The good news is there is evidence that costs are falling, particularly utility costs, but there’s still some distance to go.”

O’Connell believes that Ireland – its political and business elite in particular – has not grasped the importance of digital infrastructure and how it could regenerate the country’s economy by making it relevant for investment and giving start-ups a fighting chance on the world stage.

“When I think of what small software companies could do from Ireland, we have the smarts, we have the people, but what we’re not doing is putting this into a cohesive plan.

“If somebody in a small town somewhere in Ireland had an idea for a great online business right now, they potentially have no connectivity to anything and where do they even start? We are in danger of creating a two-tiered society of the digital haves and the digital have-not’s. Unfortunately, where you live is still a factor in your ability to create a business.

“The other opportunity that hasn’t been grasped is technology in schools. If you look at some of Ireland’s more well-off schools, they decided that IT was their strategy, they had principals who drove the strategy and several of them are world class.

“But if a school down the road has absolutely no technology in place, those pupils aren’t being given a fighting chance for the world that’s coming. The real shame is we are not exposing young people to technology in education until at a much later stage in life, when they are at college and playing catch-up. So what if kids are able to use Bebo or Twitter, there’s a lot more that can be done. When an Irish teacher breaks chalk, we’ll give her a new box of chalk. But does she know that her counterparts in other countries are giving lessons and collaborating with students digitally?”

O’Connell points out we made visionary investments in education in the Sixties, but asks where is that vision now?

“With our small open economy, we have relatively less bureaucracy than other countries. We could really run with a strong digital development plan that could sort out a lot of issues such as graduate quality, our location in the world and the ability of our businesses to start-up and compete.

“As a country, we are relatively well connected internationally and we have large data centres in Ireland. Unfortunately, within the country, our digital infrastructure and policies around start-ups and ICT in schools are lacking.

“Trying to land the big industries of the future with the present digital infrastructure would be like trying to land a Concorde in a field. If we don’t have the entire infrastructure across the country, this will continue to be a problem for us,” O’Connell concludes.

By John Kennedy

This story is part of the Digital 21 campaign to encourage Ireland to develop a National Digital Development Plan, ensuring the country and its economy are strategically well placed to thrive in the 21st century. For more stories, and to add your comments, visit www.digital21.ie