What’s the outlook for the Irish software sector like? A new report from Enterprise Ireland illuminates the issue.
When you’re working in a fast-paced industry such as the Irish software sector, prescience is incredibly valuable.
Of course, anyone would find the ability to tell the future pretty valuable but, given that the Irish tech scene is awash with change in the wake of Brexit, shifts in US geopolitical policy and the rise of potentially disruptive technologies such as AI, it would be particularly valuable to know what the future holds for the industry in Ireland.
In collaboration with Investec, Enterprise Ireland compiled and published its new Export Market Watch report earlier this month. It draws on the insights of panels of those working in the ICT sector, to illuminate how the sector is faring now and its forecast for the future.
Visa issues and the looming tech talent shortage
Phrases such as ‘tech talent shortage’ and ‘skills gaps’ are bandied around so often that it can be easy to feel desensitised to them, but skills shortages are a startling reality that warrants consideration.
Of multiple Enterprise Ireland client companies in the software space surveyed, only 20pc viewed the availability of labour to be good or very good at this time, with a quarter characterising it as poor or very poor.
Irish graduates are domestically well regarded according to the report, but there are deficits in areas such as coding.
Also, though Ireland is perceived as ‘open for business’ with regard to bringing in skilled labour from overseas to take up roles domestically (unlike the US), some Irish firms with ambitions of global expansion have cited issues securing visas for employees.
This negatively impacts a company’s ability to establish its on-the-ground presence, an often crucial step in gaining a foothold in international markets.
Fortunately, Irish businesses feel very positive about the venture capital backdrop. The report notes that total funds raised by Irish firms rose 293pc between 2007 and 2016, ballooning to an impressive €888m according to data computed by the Irish Venture Capital Association. This capital is spread across seed/start-up, early-stage and growth/expansion.
The steep, steady wage climb
The law of supply and demand means that the aforementioned talent shortage has, predictably, led to wage growth.
Since Q4 2011 – a time the report characterises as “when total economy-wide earnings troughed during the recent downturn” – average wages in the software sector have climbed by 11pc, far outstripping the 4pc growth observed across the labour market as a whole during that same period.
John MacNamara, manager of digital technologies at Enterprise Ireland, said: “There is a growth phase currently being experienced by software firms, mainly due to the ubiquitous nature of developing technology and the adaptable nature of Irish businesses in terms of technological trends.
“Companies across all sectors are becoming increasingly receptive to embracing technological change, placing demand on the software sector.
“What this report is telling us is that, with issues attracting and maintaining top talent, demand versus supply of resources is a serious concern to many Irish ICT firms.”
For more information, the report can be viewed in full here.