HP claims return on investment from Ireland

28 Nov 2003

Ireland was the least hit by HP’s restructuring since the computer maker’s US$21bn acquisition of Compaq and the company, which employs 4,000 people here, regards its return on investment from Ireland to be satisfactory, the managing director of HP EMEA has told siliconrepublic.com.

HP is understood to have invested up to €500m in Ireland prior to its acquisition of Compaq, a figure that does not include previous investments in Ireland by Compaq and Digital which had operations in Galway and Dublin. Investment figures for the period since the US$21bn acquisition 18 months ago are not yet available, a spokesperson said. The company employs 4,000 people in Ireland, spread across five business divisions, making it one of the largest IT employers in the country.

Following the acquisition of Compaq, HP embarked on a major restructuring push that saw more than 20,000 workers axed. However Kasper Rorsted, managing director of HP EMEA and senior vice president of HP’s Enterprise Systems Group, told siliconrepublic.com: “In the last 18 months, Ireland was the country least impacted within HP’s restructuring. All of EMEA was hit. Less than 100 workers in Ireland were made redundant. With 4,000 people, the Irish operations represent 10pc of the total European HP workforce and it was one of the few, if not the only country, not to be hit severely by the restructure.”

Rorsted is responsible for driving the revenue of HP’s enterprise products and solutions as well as its services, personal systems and printing and imaging business across the EMEA business region, which accounts for 39pc of HP’s worldwide revenue. Prior to the merger he was vice president and general manager of Compaq EMEA.

“Ireland has been a good example of how European countries can transform themselves into competitive economies. We’ve been in Ireland around 40 years and are satisfied with our return on investment. This is due to good dialogue with the government in Ireland and the fact that the Irish have shown leadership in the past 20 years in transforming its economy with tax reforms and continuing to evolve its economy.

“My expectation for Ireland is that it will continue to evolve and offer a competitive environment. I am concerned about the fact that real estate pricing is continuing to go up in Ireland. Besides that we are happy with our presence and feel that we’ve got a good return on investment,” Rorsted said.

In terms of the threat to the Irish economy by lower cost investment locations and the drive towards offshore outsourcing, Rorsted nonchalantly stated: “Right now it is very fashionable for journalists to write that all the jobs are moving to India. Twenty years ago we were saying the same things when all the manufacturing jobs were moving to Eastern Europe. The fact is that we’ve moved from being a local economy, to being a regional economy, to being an international economy to becoming what is now a global economy. This does not mean that Europe will go out of business. The fact is that Europe has not been price competitive from a labour standpoint for the past 20 years. Europe should now look on itself as a knowledge economy.

“People speak about offshoring, but the interesting opportunity should be near-shoring insofar as Eastern Europe and the induction of the new accession states creates good opportunities too. HP is heavily investing in Eastern Europe. We have established an E-government Competence Centre in Bulgaria and call centres in Poland. My expense claims are processed in India. We are looking at everything from the point of view of a global economy.

“Everybody talks about cost, but what happened to value?” Rorsted asked. “The dialogue needs to be more sophisticated in terms of discussing price and value. If it was all about price, then everything would move to China. The fact is that Europe is a knowledge economy that continues to evolve and evaluate opportunities.

“That seems to be the impression we have of Ireland, a willingness to evolve and move up the value chain. There is a willingness to do business and we believe that the Irish Government has allowed this happen,” said Rorsted.

By John Kennedy