How low can we go?

17 Dec 2002

Slowdown, downturn, recession – call it what you will, the global technology industry has been stagnant for over two years now.

While the job losses have not been exceptionally large, they have been there nonetheless, especially in the US where the growing popularity of the phrase ‘I got caught in a RIF’ (meaning ‘reduction in force’) tells its own story.

The question on everyone’s lips – when will the green shoots of recovery appear? – is not easy to answer. The consensus among the industry figures interviewed below is that a fragile recovery may already be under way and that it will be patchy and above all gradual. 2003 is unlikely to be a stonking year for the technology sector. The old enemy of recovery – uncertainty – continues to haunt the industry. The possibility of another Gulf War, the struggling US and European economies, the ongoing problems in the telecoms sector, all of these factors are chipping away at investor confidence and boardroom resolve.

For Ireland’s technology sector, the coming year will be less about growth than positioning itself for the future. We face growing competitive threats from the low-cost countries of central and eastern Europe, not to mention China, and so stemming any further erosion in productivity is crucial. So too is continuing our move up what’s called the value chain, away from low-grade manufacturing and towards higher-value services and operations. In the last decade, the US has been a crucial investor in our tech sector and equally an important market for our products. While we should continue to nurture links with the US, there is a risk of over-dependency and while efforts are being made to broaden our horizons and cultivate new markets and sources of investment, this process needs to be accelerated. The agenda for our interviewees was the state of the economy. We deliberately avoided the well-trodden topic of infrastructure, but there is plenty of evidence to suggest that the industry considers it imperative that broadband is delivered on a national basis.

There is no doubt that the unfolding adventure of the State’s efforts to roll out broadband infrastructure, starting with 19 towns, will be a crucial project in 2003. Progress has to be made because a country that is so heavily dependent on the presence of US multinationals cannot stand accused of being a technological laggard for long if it wants to maintain its strong relationship with blue-chip business.

In the last few months, the head of the US chambers of commerce was one of many people to send out clear warning signs to the Irish Government that it needs to get its house in order not just on communications infrastructure but also in terms of transport infrastructure, cost of living and general quality of life.

Finally, we need to bolster an area that has been at the core of our success to date, namely our pool of high-calibre technologists and engineers that, in one interviewee’s words, is “a tremendous asset that needs to continue to be sold to the outside world”.

Additional funding for the Institutes of Technology will be welcomed and a growing awareness that attention needs to be paid to all levels of the education system will hopefully not prove to be too little too late. While our industry insiders may differ on the precise timescale of the recovery there is no doubt that one will come. It is imperative that we continue to nurture a skilled workforce if we want Ireland’s aspirations to move up the knowledge chain to be more than hype.