Making Ireland a Global Technology Powerhouse. Technology sector recommendations for an ambitious Government
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1 Making Ireland a Global Technology Powerhouse Technology sector recommendations for an ambitious Government
2 About ICT Ireland and the Irish Software Association (ISA) ICT Ireland and the ISA are the technology sector associations of Ibec. Representing over 200 members, we advocate on behalf of Ireland s indigenous and foreign direct investment (FDI) technology companies to Government and policy makers. We make sure Ireland is the most competitive location in the world to grow successful technology businesses. We also develop our own initiatives and services to help member companies prosper. Our mission is to make Ireland a global
3 The Irish tech sector Over the past decade, the technology sector has bucked the trend, becoming an engine for growth. Ireland is now home to 9 of the top 10 global software companies, 9 of the top 10 US technology companies and all of the top 10 born on the internet companies. The sector employs over 105,000 people, up 40% from Recently, it has often been the case that where one company finishes a recruiting round, another has a major jobs announcement. We also have a scaling indigenous technology sector that employs 12,000 people and has a total sales revenue of more than 2 billion per annum. Many of these companies are leading exporters and becoming tech multinationals in their own right. It is true to say that Ireland is a global technology hub. Core to this success is the availability of talent and ideas. Ireland is ranked first in the world for the availability of skilled labour and first for the adaptability of our workforce. David Marcus, former President of PayPal, summed it up best when he said about Ireland: There is really nowhere else in Europe where we can get such a talented pool of candidates that we can hire at this scale, and it has truly been a great experience for PayPal from the beginning. To back all this up, in 2014, Forbes Magazine ranked Ireland as the best country in the world for business. Not the best small country the best country. This final ranking is important in what it means for our potential. We should not limit ourselves in terms of size, but only be limited by the extent of our ambition. We have a track record of delivering, a confidence from investors that we will do the job and an entrepreneurial spirit, recognised as one of the strongest in Europe. To some, the list of statistics quoted on the strength of the tech sector may read like we are coming to the peak of what Ireland can achieve. This is not the case. Ireland is only at the beginning of an exponential curve and with the right actions we can continue this upward trajectory. Outlined in this document are 30 clear actions focused on achieving three outcomes. If these actions are implemented by an ambitious Government, the outcomes delivered will yield further high-quality growth in our burgeoning tech sector. Outcomes the next Government can achieve to make Ireland a global technology powerhouse: Ireland is the best country in the world for talent in tech companies Ireland is a global digital leader Ireland drives growth through competitive tax structures Barry O Brien, IBM, Chairperson, ICT Ireland Cronan McNamara, Creme Global, Chairperson, ISA Paul Sweetman, Director, ICT Ireland and the ISA
4 Outcomes the next Government can achieve to make Ireland a global technology powerhouse Outcome 02 Ireland is a global digital leader 2
5 Outcome 01 Ireland is the best country in the world for talent in tech companies Outcome 03 Ireland drives growth through competitive tax structures 3
6 The tech sector employs over 105,000 people up 40% from Making Ireland a Global Technology Powerhouse
7 Outcome 01 Ireland is the best country in the world for talent in tech companies Investment in education and preparing students for life beyond the classroom The single biggest challenge for the global tech sector is access to the right talent - talent that matches the creativity and boldness needed by tech companies. This is not simply about science, technology, engineering and maths (STEM) abilities, but business acumen and savvy, critical communications skills, team work, project management and the ability to embrace and be comfortable with ambiguity. A country that can address these needs best will lead the technology revolution. To give Ireland its due, we are turning this global demand for talent into a competitive advantage. As the issue emerged, Ireland moved first and fast. We have an effective ICT Skills Action Plan. Record levels of students are sitting higher level maths. More students are undertaking 3 rd level courses in engineering, science and software development. A new generation of coders are growing up through Coder Dojo. Tech professionals globally are now seeking experience in Ireland to enhance their careers. We also have a new apprenticeship programme the ICT Associate Professional for the digital sector. You can design and build the best country in the world; but only the creativity and talent of our people can make it a reality. Our education system must encourage the right skills and attitudes to prepare young people for life beyond the classroom. Students must be provided with constant information on opportunities open to them. We also need to develop students mindsets from automatically thinking that there is a job for you to create a job for yourself. The failure to develop critical minds and critical thinking is undermining our ability as a society to adapt to a fast-changing workplace and world. Actions for the next Government 1. Fully implement reform of the Junior Certificate curriculum and carry this reform through to a new Leaving Certificate curriculum. 2. Change the thinking around entrepreneurship for young people by embedding key aspects such as resilience, analytical and critical thinking, intelligent risk-taking and collaboration across the curriculum from primary to higher education. 3. Ensure that Irish science and technology teachers have access to the most advanced training and support services available and embed the use of technology in all subjects. Technology sector recommendations for an ambitious Government 5
8 Outcome 01 / continued 4. Fully deliver the recommendations launched in the recent Digital Strategy for Schools, in particular, the development of a computing and coding curriculum at second level. Competitor jurisdictions such as the UK have already rolled out a computer science curriculum at second level. 5. Reform the career guidance service by providing schools with the resources to contract in specialist providers. 6. Establish a Languages Advisory Board to modernise and integrate language teaching in primary, post-primary, further and higher education. 7. Continue to support the important work of Smart Futures in promoting careers in science, technology and engineering. The programmes and initiatives coordinated through Smart Futures are of real significance and achieving solid results in encouraging participation in and uptake of STEM courses. Training and upskilling Companies and their employees need to continuously upgrade their skills to stay competitive. The National Training Fund, which is financed by business, was set up to support this. Understandably, during the crisis, we saw most of the fund diverted to support people into jobs. Only 20% of the fund is now allocated to developing skills for those in employment. Ireland also has a poor take-up of lifelong learning and upskilling. At 7.3%, we are below the EU average of 10.5% and worryingly, the gap is widening. Investing in skills supply can help to transform the kinds of employment on offer, as employers can more easily recruit skilled workers who, in turn, improve the quality of work. We need to shape rather than merely respond to the demand for skills. Upskilling and reskilling underpins the sustainability of existing employment by improving competitiveness and allows tech sector employers to address skills needs in a modular fashion. Actions for the next Government 8. Ensure at least a 50/50 balance in National Training Fund allocation between preparing people for employment and upskilling people already in jobs. 9. Establish a ring-fenced fund to support the development of new apprenticeships. Ensure that the capital and operating costs of a modern apprenticeship system will be properly resourced. The new apprenticeship for the tech sector the ICT Associate Professional programme - is a game changer. The next Government must promote this innovative educational scheme and encourage participation. 10. Restore funding to upskilling programmes with a proven track record, such as Skillnets. 6 Making Ireland a Global Technology Powerhouse
9 Ireland to be the world leader in addressing the gender imbalance In the US, 1 in 4 technology sector workers are women. 18% of the candidates for computer science degrees are women. Only 7% of funding from venture capitalists (VCs) goes to companies run by women and just 20% of software developers are female. In Israel, women represent less than 10% of tech company founders and in Silicon Valley only 11% of executive positions are held by women. At a time when the industry is expressing major concern over the skills and talent demand, it is obvious that if we improve these numbers, the talent demand will abate and we can focus more efforts on the job of innovation and turning ideas into real assets, products and services. Right now in Ireland we have a plethora of great activities focused on promoting women in technology. However, like we have done with a variety of different issues in the past, can we make the sum of these activities greater than each individual effort? Can we work together through the private and public sector, with industry, Government and NGOs, to create one national plan where together we flip these statistics and become the world leader for gender balance in the technology sector? No one has yet done this, but Ireland has the ability. Actions for the next Government 11. Form and lead a national coalition to pool initiatives and ideas and, create a dedicated and fully resourced long-term action plan to address the gender imbalance in the tech sector. 12. Make the bold statement, by the highest levels of Government leadership, that Ireland will commit to correcting the gender balance in the technology sector by 2025, being the first country in the world to do so. Promoting a global workforce Since 2008, over 40% of Silicon Valley tech companies have had at least one founder from outside the US. This is a crucial statistic. It points to the importance of diversity in creating an innovative world-class tech hub. Ireland is home to technology businesses from across the globe and is a hotbed of indigenous digital technology companies. It stands to reason that this global footprint of companies be matched by a global workforce. In fact Ireland should go one step further and be seen as a global location where tech professionals come to fast-track their career. We should market having worked in Ireland - not just in a particular company as a significant achievement for talented tech professionals. Actions for the next Government 13. Support the cross industry and Government department/agency initiative to market Ireland as a leading location to develop a tech career. 14. Support ongoing reform of the visa and work permit process, and maintain the newly established trusted partner regime for Enterprise Ireland and IDA client companies. Technology sector recommendations for an ambitious Government 7
10 Outcome 01 / continued 15. Tackle the undersupply and excessive cost of rental accommodation in major metropolitan centres in Ireland. 16. Ensure reforms to emergency tax structures are enacted to ease the pressure on those newly entering the Irish tech sector workforce from abroad. A new ICT Skills Action Plan The ICT Skills Action Plan, launched in 2014, aims to build the supply of technology talent for the sector. It contains 22 detailed actions, heavily supported by industry and Government with a strong implementation structure. The Plan has served two purposes. Firstly, addressing talent demand in the sector and secondly, enhancing Ireland s reputation to deal with serious sectoral challenges. In many ways, Ireland is now a leader in managing a skills demand issue that the sector globally continues to grapple with. Actions for the next Government 17. Maintain the strong support for the ICT Skills Action Plan, ensuring it is the flagship document to capture and implement all initiatives that support Ireland as the best country in the world for talent in tech companies. 18. While the current ICT Skills Action Plan is due for completion in 2018, the sector s fast pace of change means the Plan must be revised in Along with current initiatives to be completed, the next iteration of the ICT Skills Action Plan must be augmented to include: n A reassessment of the current and future skills requirements of the tech sector, focusing first on the skills and talents needed; n Actions that utilise both the higher and further education sectors in meeting the talent demand; n Support for alternative routes into the tech workforce, such as the ICT Associate Professional programme; n Measures to develop skills needed by the sector, outside of technical skills; n Support for the recommendations of the Government STEM Education Review Group and the new National Skills Strategy; n Initiatives to improve retention levels at third-level institutions. 8 Making Ireland a Global Technology Powerhouse
11 A global technology powerhouse needs an ambitious Government. Technology sector recommendations for an ambitious Government 9
12 Outcome 02 Ireland is a global digital leader Digital leadership To be a world leading economy Ireland must show digital leadership at the highest levels of Government. It is now time to strongly consider the establishment of a single Department and cabinet-level Ministerial position to develop our digital economy. In tandem, Ireland must, as a matter of urgency, appoint a Government Chief Information Officer (CIO) to fill the current vacancy. Ireland is also an emerging frontrunner in key areas of the digital economy. It is important to recognise these areas and enhance our competitive offerings for the growth of these niches. Actions for the next Government 19. A full Department and Minister for Digital Affairs should be established and appointed at the start of the next Government to lead all matters relating to the digital economy. Ireland was one of the first countries to appoint a Minister of State for Data Protection. That position has proved invaluable in addressing many competitiveness issues for our economy and should form the basis of the portfolio of the new Minister for Digital Affairs, encompassing: n Developing national digital infrastructure and digital public-services; n Advancing Ireland as a world leading data economy, that supports technology innovation and the protection of citizens data; n Data protection and cybersecurity: Fully resourcing the new National Cyber Security Centre and appointing a Chief Cyber Risk Officer for Government; Leading the implementation of the National Cyber Security Strategy (published in 2015); Supporting the work of the Data Protection Commissioner (DPC), ensuring the DPC s office is properly resourced and meets the needs of the public and business. n Overseeing the Government CIO Office and roll out of the Public Service ICT Strategy; n Acting as the lead department to work with our EU partners to complete the Digital Single Market, making sure enterprise and regulatory agencies are capable of supporting companies to take advantage of new business opportunities; n Working with our development agencies - Enterprise Ireland and the IDA in their efforts to promote and enhance the digital economy. 20. Enhance and support Ireland s competitive advantages in the following areas: n The Internet of Things (IoT), with a particular focus on promoting and fostering crosssectoral collaborations; n Ireland as a location of choice for data driven companies and data centres; n Advanced high-tech manufacturing and Factory Making Ireland a Global Technology Powerhouse
13 21. The Government Data Forum, chaired by the Minister of State for Data Protection and bringing together key stakeholders to debate the economic and social development of data in Ireland, is an important group. The Forum will have met three times by the general election and the next Government must continue support for the group. 22. Increase national research and development (R&D) spending on science, technology and innovation to 2.5% of GDP by Continue to invest in innovation and R&D supports that encourage FDI and indigenous companies to create and participate in Centres of Excellence, particularly in areas such as IoT, Data, FinTech, AgriTech, Software, Connected Health, elearning, Cybersecurity, AdTech and TravelTech. To achieve success in the digital economy it will be important to evaluate academic research outputs against business needs. 23. Ensure the Department of Justice and Gardaí are adequately resourced to conduct essential clearance checks in a timely manner, enabling tech companies to recruit and fill vacancies in areas such as cybersecurity. 24. Appoint a Government CIO as a matter of urgency. This is a crucial leadership position to drive change and bring significant value to the public and Government. As this document goes to print, the Government CIO role remains unfilled. For a country that aspires to be a digital leader and one that is home to numerous top-tier technology companies, this is not acceptable. Being unable to fill the position reflects poorly on Ireland s reputation as a digital nation. Ireland must show digital leadership at the highest levels of Government. Technology sector recommendations for an ambitious Government 11
14 Outcome 03 Ireland drives growth through competitive tax structures Supporting entrepreneurs Ireland is a relatively easy place to start a business but a difficult country for startups to scale. Reform of key taxes and schemes would make it easier for technology entrepreneurs to secure investment. A fairer capital gains tax (CGT) for productive enterprise activity would encourage sustainable investment, supporting Ireland s ambition to be a location of choice for technology entrepreneurs. Actions for the next Government 25. Improve the attractiveness of tax supports for technology businesses by reducing complexity. Key schemes include the Employment Investment Incentive Scheme (EIIS) and the R&D Tax Credit. 26. Reduce the CGT rate for entrepreneurs to 20% to bring it closer in line with our competitor jurisdictions. 27. Introduce a new Seed Enterprise Investment Scheme (SEIS) to encourage investment in Irish small and start-up technology businesses by offering tax efficient benefits to investors. 28. Introduce a scheme similar to the EMI scheme in the UK, where share options are afforded relief from income tax and the Universal Social Charge (USC). Supporting FDI Attracting FDI will continue to be a central part of Ireland s strategy to create high-value employment and economic growth. Other jurisdictions are becoming increasingly competitive for FDI, particularly the UK, which has reduced its corporate tax rate from 30% in 2007 to a planned 18% by Ireland needs to improve its offering in order to remain a leading location for mobile investment. Enhancements to our corporate tax regime will deliver more and better jobs and increased tax revenue. Actions for the next Government 29. Ensure that Ireland s corporate tax offering remains more attractive than that in competitor jurisdictions. 30. Supplement our competitive tax offering with a best in class R&D tax credit scheme, a personal tax system which is attractive to high skilled individuals and an enhanced Intellectual Property (IP) tax regime. 12 Making Ireland a Global Technology Powerhouse
15 Tax enhancements will deliver more and better jobs. Technology sector recommendations for an ambitious Government 13
16 Irish Software Association ICT Ireland 84/86 Lower Baggot Street Dublin 2 T: E: isa@ibec.ie ictireland@ibec.ie W: Ibec Head Office 84/86 Lower Baggot Street Dublin 2 T: E: info@ibec.ie W: Galway Ross House Victoria Place Galway T: E: galway@ibec.ie W: Brussels Avenue de Cortenbergh 89, Box 2 B-1000 Brussels BELGIUM T: + 32 (0) F: + 32 (0) E: europe@ibec.ie W: Cork Knockrea House Douglas Road Cork T: E: cork@ibec.ie W: Limerick Gardner House Bank Place Charlotte Quay Limerick T: E: midwest@ibec.ie W: Donegal 3rd Floor, Pier One Quay Street Donegal Town Donegal T: E: northwest@ibec.ie W: Waterford Waterford Business Park Cork Road Waterford T: E: southeast@ibec.ie W: Extend Ireland s global reach. Join the
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