Access to US tech titans, favourable tax rates and a highly talented workforce are luring foreign firms to Ireland once more. We speak to the experts to find out how you can cash in
Down in Dublin’s docklands, a creaking coffin ship sits on the river Liffey. Few passers-by know the gruesome past of this barque replica: transporting starving emigrants across the Atlantic during the Famine.
Equally, few passers-by squinting up at the glass-fronted office blocks surrounding the Jeanie Johnston would assume Ireland has recently undergone its own emigration woes – sparked by a painful recession described by finance minister Michael Noonan as the country’s “biggest crisis since the Famine”.
Indeed, strolling around ‘Silicon Docks’ reveals the gleaming European headquarters of tech behemoths that have radically altered our lives – Google, Facebook, Twitter…
Arriving during the recession’s height, their presence signals Ireland is more readied for foreign investment than any time since the ‘Celtic Tiger’ phenomenon of the 1990s [when EU-assisted Ireland went from one of Europe’s poorest countries to second wealthiest].
In the 18 months since exiting the €85bn (then £72bn) bailout, Forbes magazine has declared Ireland “the world’s best country for business” (in December 2013), the IMF believes its economy is “starting to fire on all cylinders”, while other companies roll in, wooed by productive locals, eurozone access and a lucrative 12.5 per cent corporate tax rate.
British cross-platform gaming developers Digit Game Studios also moved to Silicon Docks during the downturn, aiming to scale and network in Dublin. “London’s competition for talent made it tough to compete with companies that have more money than you could anticipate,” says founder CEO Richard Barnwell of the firm’s 2012 move, as he leads Director around Digit’s converted centuries-old grain-mill office, passing a ‘steampunk rifle’, desk-hunched developers and sketches of orcs, trolls and griffins.
“Dublin has the EU’s highest-educated workforce, an incredible work/life balance and is phenomenally cheap to get to – Ryanair!”
Easy networking in Ireland
Backed by Ireland’s two-largest VC firms [Delta Partners and ACT Venture Capital], Digit launched its first game, Kings of the Realm, last September, helping generate a “healthy seven-figure revenue”.
As Barnwell notes, the ease of networking in Ireland combined with having US tech giants on your doorstep isn’t without its merits. “Because it’s such a small city, much knowledge-sharing goes on at a senior level. If you wanted a meeting at Google, I’d be surprised if you couldn’t get one within a day.”
Ex-10cc band member and video director Kevin Godley founded the WholeWorldBand app in Dún Laoghaire in 2008, employing 22 people and allowing amateur musicians to record with artists such as Ronnie Wood, Michael Bublé and Foo Fighters.
He also notes Ireland’s easygoing nature of doing business: “Trying to schedule a meeting in the UK, it’s all about ‘windows’. People will squeeze you in when there’s a ‘window in two weeks’. Here, it’s more like, ‘my brother’s uncle can meet you in the pub on Friday night’.”
Tech isn’t the only sector offering opportunities for British firms. Life sciences and pharmaceuticals are also thriving, with nine of the world’s top 10 pharma firms based in Ireland – including British multinational GlaxoSmithKline, which employs 1,750 people across the Republic, from a Sligo skincare products factory to a Co Waterford consumer plant, churning out 7.5 billion Panadol tablets a year.
Aidan Lynch, GSK’s vice-president and general manager, Ireland, believes the country makes a perfect test-market for British SMEs nervous about exporting. “We have to be the world’s easiest country for British companies to do business with,” says Lynch, who is also the British Irish Chamber of Commerce’s president.
“We speak the same language and bureaucracy is low. If you were a UK company wanting to export to Europe, it would make total sense to test your business model here.”
Today, Ireland imports more from the UK than any other country, with two-way trade at €1bn (£724m) per week. Government agencies IDA Ireland and Enterprise Ireland both actively seek entrepreneurs outside the Emerald Isle, offering funding schemes and a “hand-holding service” to help set up.
Opportunities exist outside of Dublin too. IDA Ireland recently helped ticket resale website Viagogo establish its Limerick operations centre, while Cork is a pharmaceutical hub partially thanks to University College Cork’s science graduates.
Cork’s largest employer is Apple (4,000 staff), which has been based there since the 1980s when Steve Jobs struck a deal with authorities. With two-thirds of Apple’s global profits in 2011 made by companies registered at its Cork offices, it also hits upon another truth: Ireland’s 12.5 per cent corporate tax rate (compared with the UK’s 20 per cent and the US’s 40 per cent) hugely favours multinationals.
Not just American firms either. In 2013, it was discovered Vodafone’s Irish royalties offshoot had a £380m turnover in 2007, yet employed no one. One less controversia tax scheme assisting smaller companies is Ireland’s 25 per cent R&D tax credit rate. “As we need to build new technology, we can put through an R&D claim, getting a third of costs back – a huge offset,” says Barnwell.
Tussle for talent
Some SMEs argue, however, that the Dublin-based US tech giants diminish their talent pool, making it difficult to recruit from Ireland’s well-educated workforce (the EU’s highest number of third level-educated people).
“With Google and Facebook hoovering up the first line of graduates, the employee pool will be poorer as a result,” says Adrian Harvey, CEO at knowledge retention company Elephants Don’t Forget, which has built a £2m turnover since launching in Dublin two years ago. “We’re experiencing young graduates aiming to score their CV with ‘I worked at Google’. That’s not helpful for the Irish economy or development of individuals… I’d say recruit before you go.”
Only five of the firm’s 12-strong staff are Irish. Digit’s Barnwell expresses similar recruitment fears: “A lot of high-level talent doesn’t exist in the city, which is why around half of our [25-strong] workforce is international. We’ve relocated them from Europe – not cheap.”
Tech-savvy foreigners aren’t the only ones landing at Dublin airport. Emigration fell by 20 per cent in 2014 – after reaching its highest point since the Famine, in 2012. As Lynch, who spent 12 years in Australia, notes: “This has happened throughout history – Irish people have been very good at moving away, learning other things before coming back.”
Irish people comprise one-in-six of foreign nationals on UK boards while constant expatriation has helped imbue home-grown firms with a global outlook. “The country is so small [4.5 million people], if they weren’t [globally minded], it would collapse,” says Barnwell. “Every funded business I know in Dublin has gone international within 18 months, most with US offices.”
The IDA’s Barry O’Dowd reckons this “Irish export-driven psyche is helping pull us out of recession”. The indomitable Irish spirit also contributes to the recovery, says GSK’s Lynch. “There’s a can-do attitude,” he says. “In the economic crisis, people in Mediterranean countries rioted. That didn’t happen here. Irish people are much more about problem-solving and moving on.”
He cites GSK’s Stiefel Laboratories, in Sligo, which was due to close during the downturn. “Productivity went up [40 per cent] while under the threat of closure. GSK subsequently reversed the decision to close and are now reinvesting in the site… That can-do attitude is a huge reason why companies invest in Ireland. You can get low tax rates, educated people but more important is how people approach work…”
Case study: Arklu
Toy firm Arklu was launched by Ian Harkin and business partner Lucie Follett in 2010. Despite “knowing nothing about dolls”, they produced a line for the Prince William/Kate Middleton nuptials the following year, before embarking upon 18 months of research in their quest to find a “wholesome doll” as an alternative to the “adult-driven character and body shape” of Barbie-style dolls. Consulting an army of psychologists, nutritionists and play experts, they arrived at the Lottie doll, which is based on the proportions of a nine-year-old girl.
Struggling to secure funding in the UK, Harkin was forced to sell his house, while Follett remortgaged hers to finance their nascent firm. Eventually they moved to Harkin’s hometown, Donegal in north-west Ireland, at the height of the recession. Arklu was eventually granted a loan from Enterprise Ireland under the proviso it would create 10 jobs within five years.
In August 2012, the Lottie doll was launched, receiving support from body image campaigners such as Jo Swinson [then a Lib Dem MP]. Today, Arklu has sold 300,000 Lottie dolls, 200,000 accessory packs and has a £1m turnover while Lottie’s interest in Stem subjects has resulted in a partnership with the European Space Agency.
“There are real advantages to being based in Ireland,” says Harkin, who operates from Arklu’s Donegal base (Follett works from the UK, flying over every month). “Because the network is smaller, it means you get closer access to decision-makers in a quicker time compared to the UK. Plus, once you’ve taken your product to the UK, duty-wise, you’re covered for Europe too.” lottie.com