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Skills Shortage In Software Sector

The consequences of skills shortages in software development could cost Ireland thousands of jobs, according to a new study published on the sector. The 'Irish Software Landscape Study', was conducted by Lero - the Irish software engineering research centre; the Kemmy Business School at the University of Limerick, and the Centre for Science, Technology and Innovation Policy at the University of Cambridge.

The report argues that unless skills shortages and insufficient investment incentives are addressed, thousands of Irish software jobs could be forced overseas.

Indigenous companies, which make up almost 80% of the total number of software firms in Ireland, have created employment faster than foreign/multinationals over the last three years. The indigenous firms that responded to the survey grew their software-related employment by 39%, while multinationals grew theirs by 23%.

According to Prof. Brian Fitzgerald, chief scientist at Lero: “The Irish software industry has the potential to be one of the core engines of Irish economic growth, high income employment and exports, but we need to address a number of critical issues including a skills shortage.” He adds that a major barrier to growth is the availability of skilled technical staff. For indigenous firms, accessing personnel with appropriate sales and marketing expertise is also a major challenge.

“The challenge is particularly acute for our vital indigenous sector, as graduates tend to be more attracted to multinational household names. Even amongst multinationals there is the danger of an 'arms race' whereby firms compete for top graduates, salaries are pushed up and, as a result, Ireland loses competitiveness.”

Another shortcoming noted in the report concerns access to venture capital, particularly regarding second-round funding. Says Prof Fitzgerald: “The UK has now moved ahead of Ireland in relation to incentivising investment and a number of Eastern European countries have eliminated income tax for software employees. Ireland needs to review its current investment and taxation policies to ensure that it does not lose out to more highly incentivised models in the UK, including Northern Ireland, and Eastern Europe.”

According to Professor Helena Lenihan of the Kemmy Business School, the shortage of suitably qualified Irish candidates has encouraged companies down the route of inward immigration. “Currently, somewhere between 40% and 55% of jobs are filled in this manner. These immigrants make a major contribution to Ireland but more attractive tax jurisdictions may attract them home. It would be a real missed opportunity if the success of the Irish software industry had more employment significance for Eastern Europe than for Ireland.”

The report also found that the structure of the Irish software industry has changed. Says Lenihan: “The dominant business model is a blended products and services model, with the latter very much complementing the product business. This is a significant change from the all too common problem of the past where services were a way of earning revenue but a distraction from the main product business.”

A number of key technology platforms were identified in the report that are of growing importance to driving the competitiveness of Irish-based firms. Among them were cloud computing, data analytics and cyber security.

The full report is available here. (July 2014)

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