“We were so accustomed to growth rates of 30, 40 and 50pc that 4 or 5pc seems like recession” – the words of Eoin O’Driscoll (pictured), who observes that although the technology industry is not actually in recession, it feels like it because expectations have not been lowered to match the new conditions. Until this happens, the sector will find it hard to feel good about itself, he argues.
A former head of Lucent Ireland who now runs a technology consultancy, O’Driscoll believes that the sector has perhaps reached its lowest point, but he doesn’t expect any great improvement in the coming year. If there are better times ahead they are likely to be driven, he believes, by understaffed companies investing in technology as capacity grows and by the momentum that is starting to build behind technologies such as digital subscriber line (DSL) and wireless hotspots.
A trained engineer, vice-chairman of ICT Ireland’s working group on R&D, and a board member of Science Foundation Ireland – it’s not hard to guess where O’Driscoll thinks investment should be made to keep Ireland’s economy growing.
“[In Ireland] Business expenditure on R&D is below European average and certainly way below the leading players like Sweden and Finland,” he observes.
The good news is that the Government is now giving priority to research through initiatives such as Science Foundation Ireland and new ways of boosting Ireland’s research capacity are being explored. One of these is technology clusters.
“There is a feeling that we need to look at clusters if we are to be successful going forward,” says O’Driscoll. “I think we have to focus on areas where we can build critical mass and capability. I think we have to do that for indigenous companies and, if we do, I think we will attract relevant investment from the multinationals.”
Clustering is not a new concept – the daddy of them all, Silicon Valley, was established in the Thirties – but it’s relatively new to Ireland. O’Driscoll’s view is that these clusters don’t need to be dotted around the country – Ireland is small enough to be the cluster – but that we need to focus our resources on a small number of promising technologies and achieve critical mass in each. Establishing a cluster is relatively straightforward; the trick is making it grow. What O’Driscoll calls ‘knowledge carriers’, who share information between research companies, are crucial in this regard, he believes. A carrier could be a website, a market research firm or a venture capitalist – anything in fact that helps share knowledge and create a ‘buzz’ around a certain area of technology. Potential clusters are beginning to emerge in areas such as photonics or optoelectronics, wireless development and e-learning.
Apart from research, another area where Ireland’s technology sector is lagging, he believes, is in the linkages between the multinational and indigenous sectors. This is seen in the lack of movement of personnel between the two sectors and the fact that multinationals buy relatively little technology from Irish companies and prefer to play it safe by buying from their own kind.
On the other hand, the Irish arm of many multinationals has very successfully repositioned itself in recent years to become a regional services hub for Europe, responsible for aspects such as treasury, supply chain management and logistics. O’Driscoll questions, however, whether this role of ‘higher-value middleman’ is a sustainable one and argues that these operations will also need to take on core customer-facing roles on a pan-European basis as well if they are to avert the risk of being marginalised.
Outlook for Irish tech sector: good