Homegrown Irish tech sector thinks differently to overcome talent bottleneck
Justin Keatinge, CEO, Version 1

Homegrown Irish tech sector thinks differently to overcome talent bottleneck

17 Dec 2013

Forty per cent of Ireland’s GDP – some €72bn per annum – comes from its technology sector, which employs more than 105,000 people. Since 2010, more than 18,000 jobs have been announced in the sector, making Ireland the go-to place to locate international tech headquarters.

It also makes Ireland one of the prime destinations outside of Silicon Valley, California, in which to advance a career in technology.

However, out of the €72bn a year export machine that is ICT, indigenous players form a sliver of the action – employing 30,000 people with total sales of more than €2bn per annum.

The local sector has to battle household tech names like Google, Facebook and Microsoft, who have deeper pockets and offer more perks to attract engineers and programmers who are becoming as rare as hen’s teeth.

According to the Irish Software Association, there is a shortfall of about 7,000 ICT professionals the local indigenous sector would happily snap up.

In spite of this, exports by indigenous technology companies were up 19pc in 2012, according to Enterprise Ireland.

IT’s Happening Here

The export agency kicked off a campaign last year, called IT’s Happening Here. Indigenous companies partly funded the campaign, which aims to encourage skilled professionals to locate in Ireland and to consider indigenous tech companies, as well as multinationals.

Sixty per cent of the vacancies in Irish tech companies are in core software development. The vacancies also include roles in IT project management, deployment and product management.
Indigenous companies are challenged to match the Silicon Valley salaries and perks multinationals offer, such as gyms, sushi chefs and free dry cleaning.

Ann Lanigan, senior development adviser at Enterprise Ireland’s Software Solutions Department, said one of the things indigenous software companies offer prospective employees over their multinational counterparts is the chance to gain more experience and leadership roles on projects.

“Because of the size of the companies and their export goals, it’s a more challenging environment,” Lanigan said.

IT’s Happening Here’s efforts are focused within the EU. The campaign has achieved success in attracting graduates and experienced IT workers from Spain and Portugal to relocate to Ireland and work in local tech companies.

“We are also looking at the north-west UK, where they haven’t as acute a skills shortage but have plenty of IT graduates,” Lanigan said.

She added Ireland’s indigenous industry is very buoyant, noting the 12pc increase in exports in 2012 over the previous year.

“It really is a success story that no one is talking enough about,” Lanigan said.

Exports account for the majority of indigenous companies’ turnover and this is a reflection of their progress, she added, yet if the talent issue isn’t properly addressed, it will hurt these companies’ ability to grow into the future.

Work permits for Ireland

One way of countering the shortfall has been to increase the number of work permits granted to skilled professionals from outside the EU and the Department of Jobs, Enterprise and Innovation recently moved to remove the red tape that has held up the granting of work permits.

However, the impact of the changes to the work permit scheme has yet to be seen. Some 4,005 work permits were issued to companies in Ireland that were bringing in skilled professionals from overseas in 2012, down from 5,200 in 2013, according to Visafirst.com.

“So far this year, only 3,276 visas were issued despite the Government relaxing bureaucracy in order to alleviate pressure on ICT and life-sciences companies that have invested in Ireland,” said Edwina Shanahan, a migration expert with Visa First.

“There are a variety of reasons for the fall in permits overall – there are more people trained up in Ireland in certain areas of expertise so they are now able to fill positions that only non-nationals could fill a few years ago,” she said.

Despite the skills bottleneck, one thing the indigenous IT sector is not short of is ambition.

Ambition is at the core of Version 1, said Justin Keatinge, the company’s CEO, and its strategy is to continually expand through new growth and acquisition.

“In the next 10 to 15 years, we aim to be the first €1bn Irish services company,” Keatinge had said.

Last month, Version 1 acquired UK Forest Business Operations for an undisclosed sum. Established in Dublin in 1996, Version 1 completed two previous acquisitions, with Prose Software and PMCentrix in 2010. The company now employs more than 400 people in Dublin, Cork, Belfast and London.

Keatinge said Version 1 intends to grow both organically and through acquisitions. Its model is to buy niche consultancies or services players with large customers, he added.

“It will probably take us 10 years to be a €1bn player but we expect to achieve 30pc growth year-on-year – half through acquisition and half organically.”

In terms of battling the skills bottleneck, Keatinge said Version 1’s size and maturity were factors in enabling it to take on 30 graduates and interns this year.

“We’ve worked hard on our culture and making it a great place to work,” said Keatinge, who added that to compete with multinationals an organisation needs to have a culture and value set that is different.

“Two years ago, we were No 14 in the Great Irish Places to Work (list) and last year we went to No 5, and so being recognised in this way is a significant help.”

Diversity attracts workers

What also helps Version 1 attract graduates and experienced workers is the diversity of the projects the company works on, said Keatinge.

“We employ people from all over the world, but certainly it is easier to get EU people,” he said.

“Getting people from outside the EU is a slow process. I reckon we could fill 7,000 jobs in 2014 if we granted work permits to people with the right skills.”

Keatinge also said the IT industry is battling wage inflation, which is not helped by the grandiose salaries and perks that are becoming commonplace within the Silicon Valley community, and divisive in cities like San Francisco, California, where communities feel encroached upon by wealth and attempts at gentrification.

“Wage inflation is a big implication of a skills shortage. It certainly isn’t as bad here as it is in San Francisco, where whole communities are up in arms over wealthy techies moving in,” Keatinge said.

“With Silicon Valley firms able to offer comparable salaries to what they pay on the west coast, it has implications here for sure.”

Karl Flannery, CEO of IT solutions company Storm Technology, sees a light at the end of the tunnel as more Irish people wake up to careers in IT. He said he feels the IT skills problem is already easing up a little.

“We’re finding it slightly better than it was but certainly finding the top tech talent remains difficult. Yes we’re competing against multinationals, but it really comes down to what individuals themselves are looking for.”

Storm Technology was set up in 1995 and works as a software partner and systems integrator on Microsoft technologies like Azure, Office 365 and SharePoint for public and private-sector firms in Ireland and overseas. The company employs 85 people between Galway and Dublin.

Flannery is philosophical about the challenge and thinking back on his own career beginnings at Digital Equipment Corporation in Galway, he said young IT graduates would be best served trying to get experience in both indigenous and multinational IT companies.

“Definitely you would get more variety working in a small company that looks after projects for large companies. As a place to hone your skills and grow your technical capabilities, you get a good grounding and hands-on experience working on demanding projects,” Flannery said.

He added such employees also receive more autonomy and more opportunities to be more entrepreneurial. They get to be involved in the success of projects and products, and provide more input into how projects are run. The result is their experience increases.

Storm Technology’s overseas talent

Flannery said bringing in talent from overseas has been integral to Storm Technology’s ability to grow and 90pc of its workers from overseas come from within the EU. Many employees have joined the company from Southern Europe, particularly the Iberian Peninsula, and they fit in well, Flannery said.

Yet in many cases, those employees tend to stay in Ireland for about three to five years and then move back to focus on their families.

“Realistically, we need to be ensuring more people emerge from our schools and colleges with an understanding of the industry we have here and we need to be looking at a society that is literate in the sciences, not to the exclusion of the arts of course,” Flannery said.

“The longer-term solution would be to build more awareness among the general population about what the opportunities are in the IT industry.”

Flannery makes a valid point – 40pc of GDP is nothing to sneeze at.

A version of this article appeared in The Sunday Times on 15 December

John Kennedy
By John Kennedy

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years. His interests include all things technological, music, movies, reading, history, gaming and losing the occasional game of poker.

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