With around 1,500 people working at Google’s European headquarters in Dublin, the company is one of the jewels in the crowns of Ireland’s emerging internet industry. John Herlihy believes the internet could be fundamental to steering Ireland through to 2010.
Q.In a very short space of time, both Ireland and the world’s economic fortunes have changed. In your opinion, what are the priorities that need to be addressed to steer this country back to a sound economic footing?
A. We are experiencing the first global downturn of the digital age. It has spread very quickly to all global economies, and the uncertainty is at levels previously unseen.
The internet is revolutionising the way businesses operate and go to market. There are now over 1.5 billion people online – all connected, creating, communicating and searching for information. Online business will be a key factor in the rebuilding of the Irish economy in the coming months.
At an enterprise level, businesses that focus more on online opportunities will have a greater chance of speeding up their growth during the slowdown, and creating space between themselves and their competitors. In the internet, there are no borders and, for the first time, our island location is not a barrier to competing for and winning business abroad. Ireland’s businesses are behind their UK and European counterparts in recognising the potential of the internet, and this could come against us in the future.
Q. More than ever, Ireland needs breakthrough science and technology business stories, with local companies reaching global markets. What’s missing and what areas of technology could deliver rewards?
A. There are some great Irish companies that made the breakthrough – Havok, Norkom and Iona are just some that spring to mind. We have to look outwards to succeed, as an island nation with a population of four million people, if you’re in business, the likelihood is that 90pc of your customers will be outside the country.
There is also a much larger opportunity that we can capitalise on. Looking beyond western Europe toward the addressable markets of Europe, Middle East and Africa (EMEA), we have a market of nearly two billion people on our doorstep. This is a cultural mind-shift that has yet to happen for most Irish businesses and educators.
I believe many Irish companies are missing a trick, and there is a big opportunity for businesses to go out and capitalise on the shift of consumers to the online arena. Research shows people are becoming increasingly value-conscious as a result of the credit crunch, and are choosing to go online to both inform their purchasing decisions and to look for the best value available. If you don’t have an online presence, then you’re losing business.
Q. Ireland is continuing to win its share of foreign direct investment (FDI). Why is this and how sustainable is this going forward?
A. Ireland remains an attractive location for FDI. There are many positives – a flexible and adaptive labour force, a very pro-business environment that makes Ireland an easy place to do business, a competitive taxation system and a stable political regime. All of these are important considerations when considering investment in a foreign country. IDA Ireland has done a great job in marketing Ireland overseas.
And the Government are very aware of the importance of FDI to Ireland’s economic success, and is committed to growing that investment further. We saw this most recently in the budget, with the introduction of new R&D tax incentives and the decision to ask the Commission on Taxation to look at intellectual property.
As the global environment contracts next year, there will be less investment flowing internationally, and we will have to compete more aggressively for new investment projects. We cannot become complacent, and we must continuously benchmark our competitiveness internationally and take quick and effective action to ensure we can attract industry to Ireland. Where we can identify pain-points from this process, we need action, rather than discussion.
But we need to monitor the quality and cost of living in Ireland, so we can attract a rich vein of talent from other countries to help us to continue to grow.
I think Ireland has a unique opportunity with the cluster of internet services companies in Ireland to develop as a location of excellence for these industries, much as we did in the Eighties and Nineties with computer companies, and more recently in attracting leading pharmaceutical companies to Ireland. With the presence of Google’s EMEA headquarters in Dublin, as well as operations such as Yahoo!, Microsoft, Amazon.com, eBay, and, lately, Facebook, Dublin is developing the potential to become a world centre for excellence in online business development and advertising.
Q. Education was the bedrock of the economy that was known as the Celtic tiger. But the evidence is Irish schools are not receiving the same level of investment as counterparts in neighbouring and competing economies. What can and should be done about this?
A. From the middle ages, when the monastic centres of Ireland were seats of learning, Ireland has always valued education. There has been a great investment in education, and we are able to produce graduates who are valued for their flexibility and their high standards of education. But more and more, what will set us apart is an education system that enables people to think logically and succeed in the ‘thinking economy’.
Think about it, with the internet and search engines like Google, huge quantities of information are at our fingertips, so knowledge is now accessible to everyone. But it is the ability to think through the data, analyse it and then use it that will be critical in the future. Our education system needs to adapt to give people the skills they need for this new world.
As well as developing people for the ‘thinking economy’ we need to develop our language skills, particularly because as an open economy we depend on export trade to survive. At Google, when we release a product, we aim to release it in 40 or so languages simultaneously. We need to be able to converse in the languages of those we want to do business with.
The recent debate on education missed the fact that the overall spend on education actually increased in the recent budget. We need to focus on where the money is being spent, and ensuring that those who are teaching our young people have the necessary skills and support to teach maths, science, language and engineering subjects, which will be the bedrock of our future success.
A large part of recent controversy has focused on first and second level, yet has not questioned our strategies for third level. Here we need to ask – is the focus in the right areas? Within third level, we hear constant bemoaning about the level of remedial teaching that has to be done, yet the percentage of first- and second-class honours awarded continues to grow. We need to produce graduates of the highest quality with the right skills.
Q. In terms of infrastructure, is Ireland, in your opinion, adequately equipped to perform as an agile economy in 2009, and do you think it could emerge stronger as the economic storm clouds clear?
A. Again there has been a lot of investment through the National Development Plan in physical infrastructure, and it would be a mistake to stop critical investment projects in the current climate. Investment in education, transport, R&D and communications should be given priority. Our success will be dependent on making Ireland an easy place to access for international business, and ensuring we maintain a standard of living that makes us an attractive place to live and work.
Part of this will involve a heightened focus on current expenditure, which will need to be trimmed. We want to avoid the situation where we, as a nation, end up covering day-to-day operating costs with borrowings – for example, where the exchequer would be analogous to the householder who has to pay for groceries with credit cards.
If we accept that as a country we cannot live beyond our means, if we prioritise and invest in areas that make us more competitive and attractive as a location and if we can capitalise on the opportunity presented by the digital economy, then, yes, we can emerge stronger from the current downturn. We did so before and we can do so again.
By John Kennedy