Irish tech companies increasing in confidence
30 June 2014 | 0
Indigenous technology companies are showing a significant increase in confidence about their business, but to take better advantage of opportunities with multinationals here access to finance needs to improve.
These are some of the headline findings from the Irish Software Association Digital Technology Index report. The report found that the vast majority (82%) of technology companies expressed greater confidence about their business for the near future, compared to just two thirds (63%), in August of last year.
The report survey aims to examine the health of the tech sector and business sentiment among indigenous digital tech companies, as well as identifying key growth opportunities, and found that confidence is high, and expectations among most (94%) are that revenues will increase over the coming three months, with 87% expecting an increase in export revenues too.
A particularly encouraging finding was that R&D expenditure is expected to rise for two thirds (67%) of participants, which is up from 58% in August 2013.
Company profitability is expected to rise for 70% of survey respondents, compared to 66% in August 2013. On a less positive note, almost 17% of respondents indicated that their input costs have risen between August 2013 and Q1 2014.
Collaboration between the foreign direct investment (FDI) community and indigenous technology companies was highlighted as a major growth opportunity, with 82% of companies saying that such collaboration would stimulate growth.
“The sector is powering ahead,” said Edel Creely, chair of the ISA and MD of Trilogy Technologies. “Ireland’s strong international reputation means new indigenous companies are setting up and multinationals are being attracted by the competitive business environment and availability for skilled labour. But key challenges need to be addresses for the sector to fully realise its potential.
Another area of opportunity was greater licensed use of intellectual property (IP).
Some 88% indicated that licensing unused IP to indigenous companies on preferential terms would be beneficial, with nearly three quarters (70%) saying that they believed in the value of bundling/licensing of FDI and indigenous company products as a single offering.
Almost the same number (72%) felt that their organisations would benefit from in-company executive education programmes.
“Access to finance remains a challenge, the Central Bank numbers show that the level of credit outstanding for the technology sector has been largely unchanged over the last two years, despite growth in the sector. The tech industry has benefitted from the experience of successful entrepreneurs investing and advising new start-ups, but more need to ensure they have adequate access to finance. Government must enhance tax-based investment schemes and the venture capital environment, as well as introduce state-backed capital funds,” said Creely.
“Ireland ranks first for availability of skilled labour, however, the skills demand in the sector remains a concern,” said Donagh Kiernan, CEO, Tenego Partnering with whom the ISA carried out the research. “Industry must continue to work with government and the education institutions to increase the uptake of STEM subjects, and provide quality conversion course to ensure people have the right skills. We must also encourage the development of critical communications and broader business skills.”
“The technology sector has proven to be resilient and innovative during the crisis. This survey shows how confidence continues to grow across the board in the industry with as many as 87% expecting an increase in exports. However we must not be complacent. By showing leadership business will be able to deliver more jobs and sustainable growth.”
ISA reports that there are 1,056 technology companies located in Ireland, ranging from start-ups and SMEs, to large international and multinational companies. The number of Irish owned technology companies continues to grow, with an estimated 806 indigenous companies, totalling annual revenues of more than €1.8 billion.