Once upon Once upon a time in Dublin…a time in Dublin…

Presenter : Tony O’Dowd Presenter : Tony O’Dowd

……the Story of the Irish the Story of the Irish

Localization IndustryLocalization Industry

Tales of an Irish Software Engineer…Tales of an Irish Software Engineer…

AgendaAgendaBackgroundBackground

Historical Context to the Irish Software & Localization Industry

Current StatusCurrent StatusCurrent round-up of the industry today

Are we still relevant?Are we still relevant?Innovation or Evaporation – Your choice?

Q&AQ&A

Background Background 1960s1960s

Ireland has few natural resourcesIreland has few natural resourcesReliance on Agriculture & Fishing

Almost no manufacturing sectorAlmost no manufacturing sectorWhat little there was government owned

Workforce was categorised as ‘low-skilled’Workforce was categorised as ‘low-skilled’

1970s1970sGovernment back scheme Government back scheme

Overseas Foreign investment

Focus on high-value add industriesFocus on high-value add industries

Preference on hiring Preference on hiring high quality university graduates

Workforce was categorised as ‘skilled’ Workforce was categorised as ‘skilled’

A breakthrough….A breakthrough….

1980s1980sLaunched “International Services Launched “International Services Programme”Programme”

Managed through the IDA

Major Government policy shift Major Government policy shift Defocus on manufacturing - Asset based incentives

New focus on higher skilled IP jobs – People based incentives

Financial incentives were adjustedFinancial incentives were adjustedAway from supporting fixed asset investments

Towards investment in highly skilled staff Educational Grants on a per

employee basis

Attracting Overseas InvestmentAttracting Overseas Investment1980s (cont’d)1980s (cont’d)

International Services ProgrammeInternational Services ProgrammeTremendously successful in attracting US software firms to Irish shores

Largest Software Companies in the worldLargest Software Companies in the worldLotus Development Corp. (now IBM)

Digital Equipment Corp. (now HP (via Compaq))

Microsoft Corp.

Ireland Inc. No. 1 ChoiceIreland Inc. No. 1 ChoiceFor Manufacturing & LocalizationFor Manufacturing & Localization

Oracle, Novell, Informix, SAP

Software Research & DevelopmentSoftware Research & DevelopmentSun Microsystems, Motorola

Ericsson, Amhahl (now Fujitsu), Nortel Networks

Graduates - A good surplusGraduates - A good surplus1980s (cont’d)1980s (cont’d)

Ireland Inc. produced more graduates Ireland Inc. produced more graduates than it neededthan it needed

Cheap & ready supply available

Big attraction to foreign companies

Irish Trade Association defined the Irish Trade Association defined the “Irish Software Industry” sector“Irish Software Industry” sector

National Software Directorate

Middle 1980sMiddle 1980sMajor Shift in Government PolicyMajor Shift in Government Policy

Blurring of definition adoptedBlurring of definition adoptedManufacturing = 10% Corp. Tax

Software Localization = Manufacturing

Everyone Happy!

A new beginning…A new beginning…1990s1990s

Employment soarsEmployment soars

10 year employment growth of 300%+ 10 year employment growth of 300%+

Average annual employment growth of 20%+Average annual employment growth of 20%+

Ireland Inc. referred to as the “Silicon Valley of Europe”Ireland Inc. referred to as the “Silicon Valley of Europe”

Indigenous Software Sector accounts for 40% of Indigenous Software Sector accounts for 40% of employment figureemployment figure

YearYear EmploymentEmployment1991 7,793

1993 8,943

1995 11,784

1997 18,200

1999 24,891Source: IDA Annual

Report 1991-1999

World’s Largest Producer of SoftwareWorld’s Largest Producer of Software

1990s (cont’d)1990s (cont’d)Exports explodes as localization comes on streamExports explodes as localization comes on stream

300%+ growth in Exports300%+ growth in ExportsAnnual growth of 30%+Annual growth of 30%+Ireland Inc. is “Grand Central” forIreland Inc. is “Grand Central” for

LocalizationLocalization – Translation, Engineering & Testing servicesManufacturingManufacturing – CD duplication, Box picking and packaging

Indigenous software sector accounts for 8% of Indigenous software sector accounts for 8% of software exportssoftware exports

YearYear Exports (€m)Exports (€m)1991 2,044

1993 2,339

1995 3,570

1997 5,436

1999 6,520Source: IDA Annual

Report 1991-1999

A strange thing happened…A strange thing happened…

YearYear EmploymentEmployment1997 18,200

1999 24,891

2001 31,500

2003 23,950

2005 24,000

2000s2000sNew millennium challenges the industryNew millennium challenges the industry

A large drop in employment during 2001 A large drop in employment during 2001 and 2003and 2003

25% contraction in employment

Even today, employment levels now at 1999 levels

Source: IDA Annual Report 1991-2005

A Bump in the roadA Bump in the road2000s2000s

New millennium challenges the industryNew millennium challenges the industry

A bump in employment during 2001 and A bump in employment during 2001 and 20032003

25% contraction in employment

Even now, employment levels now at 1999 levels

HoweverHowever, exports continue to surge ahead!

YearYear EmploymentEmployment1997 18,200

1999 24,891

2001 31,500

2003 23,950

2005 24,000

ExportsExports5,436

6,520

12,257

14,852

23,475

Source: IDA Annual Report 1991-2005

State of the Nation – Irish Software IndustryState of the Nation – Irish Software Industry

20052005Irish Software Industry consists ofIrish Software Industry consists of

900 Companies

140 of them are foreign ISVs (predominantly US based companies)

Employing 24,000 highly-skilled professionals

Exporting €23bn worth of products

Irish Serial EntrepreneursIrish Serial EntrepreneursPat McDonagh – CBT-Knowledgewell-Riverdeep

Jay Murray – Aldiscon-Apiion-Aepona Companies

Little or no growth in 2002 and 2003Little or no growth in 2002 and 2003

However, growth is starting to gather However, growth is starting to gather momentum again and employment is risingmomentum again and employment is rising

Why has it been successful?Why has it been successful?Supply of GraduatesSupply of Graduates – Colleges and Government policy has been amazingly successful here

Telecommunications InfrastructureTelecommunications Infrastructure – World Class standard and positive for overseas companies

English is our spoken LanguageEnglish is our spoken Language – a clear advantage over most other European and EE countries

Flexibility of the Irish WorkforceFlexibility of the Irish Workforce – Adapting to change has been one of our core strengths

Low Rate of TaxLow Rate of Tax – and other financial incentives from the Irish Government have also been a contributing factor

Stable Government with centrist policiesStable Government with centrist policies – A change in government has had little discernible effect on industry policy (remember 1997 and doubling of College places.)

The Current ThreatsThe Current Threats

Further recession in the United StatesFurther recession in the United StatesLargest source of overseas investment into Ireland

Current process of software localization Current process of software localization is unlikely to continue for longis unlikely to continue for long

Internet-based services will play an increasingly important role

Making location less of a factor

Eroding Ireland’s importance in the process Companies may simply not need to locate facilities in

Ireland to conduct localization

Supply of software in package formatSupply of software in package formatESD may become the norm!

Software as a Service may dominate

The Current Threats (cont’d)The Current Threats (cont’d)

The biggest threat however is…The biggest threat however is…Shortage of skilled peopleShortage of skilled people

Number of Graduates in IT disciplinesNumber of Graduates in IT disciplinesDeclined sharply after the industry bad news Declined sharply after the industry bad news in 2001-2003in 2001-2003So in a time of renewed growth and So in a time of renewed growth and recruitment companies cannot find suitable recruitment companies cannot find suitable staff!staff!

America experienced this in the late America experienced this in the late 1980s1980s

Major factor in the growth of the Indian Major factor in the growth of the Indian outsourcing industry!outsourcing industry!

A closing word….A closing word….

Ireland Inc. has been Ireland Inc. has been great in handling great in handling

adversity. Let’s see adversity. Let’s see how we cope with how we cope with

opportunity!opportunity!