The digital economy has a major role to play in Ireland’s economic recovery and Ireland is in a position to claim the title of Digital Capital of Europe, Ireland’s Taoiseach Enda Kenny said this morning. The key, industry leaders point out, will be to ensure that indigenous firms enjoy the same strengths as the multinationals and Ireland becomes a place that US and UK consumers buy from online.
Kenny was speaking at a discussion forum around findings in a UPC/Amárach report on Ireland’s Digital Future, which projects a doubling in the Irish internet economy to €11.3bn a year by 2016 if current trends are maintained.
This will be underpinned by 2.6m Irish online shoppers spending €5.7bn (7pc of all consumer spending) in 2016, compared to €3.7bn in 2012.
“We welcome the arrival of global digital brands into Ireland and the contribution they make to our economy and society,” Kenny said.
“The ongoing challenge for Government is to prevent a two-tier digital economy from developing and to ensure that Irish small and medium-sized businesses are encouraged to embrace the opportunities new digital technologies can offer.
“I want to see all Irish businesses live up to their potential and have the ability to compete globally. For the Government’s part, we will work to create a supportive and flexible enterprise environment so that Ireland’s digital economy can continue to go from strength to strength,”Kenny said.
Sizing up the digital prize
While the internet economy currently accounts for roughly 3pc of Irish GDP, this is set to double to 6pc over the next three years.
Using the Booz & Company Digitisation Index, the report estimates that this can translate into employment of 18,000 or more if Irish society and industry can keep pace with the digitisation levels of its EU neighbours and particularly its UK and Scandinavian counterparts.
Speaking with UPC country manager Dana Strong, I asked her if she believes there has been enough recognition at State level of the importance of the digital economy to a nation like Ireland.
“I do believe we collectively have to work together as Government and industry to maximise the potential that the digital economy presents. I’ve been in the country 20 months and in the past two years there has been a palpable increase in awareness and conviction within Government to help drive the economic recovery that the digital technology can enable.
“In the next few months off the back of the National Broadband Plan and the imminent publication of Minister Pat Rabbitte’s Digital Strategy a very clear vision is being presented about where Government can be engaged to help drive the opportunities the digital economy presents.
“We are going to see a lot more focus on SMEs and enabling them to develop the skill sets and capabilities to migrate businesses to transact online, reduce the cost of supply by purchasing online, but really getting that sector particularly transformed is going to be one of the top priorities and that’s a very important priority. Ninety per cent of private-sector employment comes from SMEs.”
I put it to Strong that Ireland currently exists as a two-speed economy. On the one hand, it has major multinationals, like Google and Facebook enabling the global digital economy from Ireland, while down the street or across the land once-prosperous ordinary businesses look forlornly at the front door of their premises, where once there was a steady traffic of customers coming and going.
Strong said the opportunity exists to digitise businesses and actually bring business back to them by focusing them on selling online and overseas.
“There absolutely is a risk that we feed economic growth to our international neighbours. Too much of the online purchasing today is purchased over US and UK websites. And OK, while consumer online spending is increasing and forecast to double, the real risk is that spending continues to grow with local companies and it is not benefiting the Irish economy. We need to reverse the trend and make it so that UK and US consumers buy from Ireland.
“While the GDP is growing the GNP (gross national product) hasn’t rebounded as quickly and so we do need to ensure our indigenous firms are enjoying the same opportunities multinationals enjoy.
“The infrastructure is here, the commitment is here and building awareness over next three or four years will be critical to help business take advantage of digital technologies,” Strong said.