The cost of doing business for ICT companies has risen by 20pc since 2002, according to a study by IBEC-based ICT Ireland.
“It would be foolish to ignore these costs in light of the growing competitive challenges faced by the global ICT sector,” warned ICT Ireland director Kathryn Raleigh.
The IBEC survey, which covered 41 ICT companies employing more than 14,000 people, found that technology companies also experienced significant increases in a variety of other costs. For example, transport and warehousing costs rose by 14.9pc between 2003 and 2004 despite experiencing a decrease between 2002 and 2003. In addition, the cost of professional fees increased by almost 50pc since 2002.
Raleigh commented: “The ICT sector is crucial to Ireland’s ongoing economic success. Almost 92,000 people are employed in the IT sector in Ireland with a turnover of €52bn in 2003. The recent investment announcements by ICT companies based in Ireland as well as some new comers, such as Yahoo!, are an indication that the sector continues to be strong.
“However, we cannot afford to become complacent. By increasing business costs to this extent, we run the risk of eroding our competitive position and losing our attractiveness as a location of choice for foreign direct investment,” Raleigh warned.
An area of particular concern is the cost of energy, which the industry says rose by more than 22pc since 2002 compared with 12.5pc for average customers.
“This level of increase is unsustainable for a sector that depends on reliable, secure and competitively priced energy supply to ensure its competitiveness in a global market,” Raleigh said.
“Furthermore, this increase does not take into account the most recent energy price increase announced by the Commission for Energy Regulation, which has resulted in an additional increase of 12.5pc for average customers,” she said.
However, there was some good news for the sector. Increases in insurance premiums were found to be moderate with the sector experiencing an increase of 5pc since 2003 compared with a rate of 22.3pc between 2002 and 2003. “Incentives such as the establishment of the Personal Injuries Assessment Board have had a major impact on the reduced rate of increase in insurance costs,” Raleigh explained. “It is a great example of how competitiveness can be restored to a service, when all stakeholders work together to seek a solution,” she said.
By John Kennedy