Alice Mansergh, Google

Investment in digital skills could contribute €9.5bn to Ireland’s GDP over the next three years

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Alice Mansergh, Google

6 April 2022

Substantial economic opportunity for Ireland exists if a meaningful investment in digital skills is made, a new report from Google has said.  

Developed in partnership with Amárach, the study provided insight into the digital capability needs, ambitions, and plans of 1,000 SME leaders throughout Ireland. Significant investment into digital skills could contribute an extra €9.5 billion to Ireland’s GDP by 2025, the research has proposed.

To help Irish businesses succeed online, it is important to first understand how they’re doing today and what their goals are. That is why Google commissioned Amárach to engage SME leaders on their lived experiences and expectations of their digital journey.

 

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Titled ‘Bridging the Gap – A Report on Digital Capabilities’ in Irish SMEs identified four key gaps in digital capabilities. This includes performance – how far businesses are from realising their full potential; competence – how businesses are struggling to use digital skills; investment – the role of funding, time, and talent in expanding competence; and advisory – the absence of qualified advisors and suppliers to meet digital needs.

Most Irish SMEs are in the process of adopting, developing, and evolving their use of digital technologies. But some are further ahead in the process than others.  When asked to rate their own progress, the majority (62%) of Irish SMEs said they are ‘less than halfway’ on their digital journey.

Recruiting people with the necessary digital skillset is also a challenge for Irish SMEs, with 41% of respondents agreeing that they do not have a person within the organisation who is tasked with developing digital skills. Only 26% of SMEs said their employees have all the skills needed in terms of basic digital capabilities.

Faced with multiple demands on their time and energy, the report indicated that business leaders believe the digital skills gap can be closed, but the challenge is prioritising it over other short and medium-term tasks.

Digital tools

The report found that 11% of Ireland’s SMEs feel their employees have the skills needed to successfully adopt and use new technology, a statistic borne out in the data where only 53% of SMEs have (or use) social media and video platforms and just 18% make use of customer insights tools.

When measuring the number of SMEs that have their own business website, Ireland (at 55%) ranks comparably lower than the EU average of 77%.

While Irish SMEs are ambitious when it comes to investing in digital capabilities, the research found that 50% lack basic knowledge about which skills to prioritise. It indicated that policy makers, advisors, and suppliers to the SME sector need to help address the priority gaps that will deliver quick wins, spurring decision makers to go further.

Irish SMEs are very confident (56%) that meeting their digital skills objectives could make a big difference to business performance, and not just on one or two metrics. SME leaders believe that improving digital capabilities would allow them to increase wages and salaries (28%) and over half of those surveyed (57%) said meeting their objectives [in digital capabilities] would help them to grow faster and become more profitable.

The report identified several gender differences in the areas of digital content and social media. Female decision makers in SMEs are more likely to use social media platforms (55% versus 51% of men). Women are more likely than men to see the creation of digital content as a top priority for digital skills development (35% versus 28% of men), as well as using digital tools and channels for marketing (21% versus 17%).

Even though more female leaders than male are likely to adopt and leverage digital tools, female leaders and decision makers in Irish SMEs are less likely to say their organisation is over halfway in its digital journey (58%) than men (65%).

For Ireland to achieve its digital ambitions, Google said it is vital that female entrepreneurs and SME business leaders are enabled to play their part.

Regional breakdown

Comparing SMEs across the regions, the report highlighted several key differences. It found 45% of firms in Dublin are likely to think they are more than halfway along their ‘digital journey’, which is significantly higher than regional firms based in the midlands (32%). 

When it comes to the adoption of digital tools, Dublin again maintains a distinct advantage with 62% of firms using a business website compared to only 47% in the border region. Firms in Dublin demonstrate a stronger appetite to upskill with nearly 70% of business leaders in the capital likely to undertake a course in the next 12 months, versus 59% of border firms. 

Google said these and other differences in the research point to the need for a strong regional focus in Ireland’s digital skills agenda to ensure an equitable and impactful benefit for all communities.

The Covid-19 crisis has amplified the power of digital in building business resilience. During the first few weeks of lockdown, Google recorded a 300% increase in the number of people taking digital training courses.

Research has shown that 80% of European SMEs increased their use of digital tools during the pandemic and those SMEs that embraced digital tools had 60% better revenue results and hired three times more employees during the pandemic. The report found that 64% of SMEs in Ireland say their experience of the Covid-19 pandemic has incentivised them to invest more in digital skills with 76% saying digital tools are more helpful to their business now than before the Covid-19 pandemic.

The report has shown how Irish SMEs are ready to invest in the digital capabilities that will propel their success in the post-Covid era.

“The timing of this report could not be more important, the decisions that business leaders and policy stakeholders make about digital capabilities in the coming months and years will have profound implications for the long-term productivity and profitability of the SME sector, and for sustainable economic growth over the rest of the decade,” said Alice Mansergh, director for small business at Google. “For its part, Google will use these findings to help shape the courses we provide via the Grow with Google initiative helping to train people in key digital skills that will empower them to embrace new business and commercial opportunities.”

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