1. Once upon a time in Dublin… Presenter : Tony O’Dowd …the Story of the Irish Localization Industry

2. Tales of an Irish Software Engineer… AgendaBackground Historical Context to the Irish Software & Localization Industry Current Status Current round-up of the industry today Are we still relevant? Innovation or Evaporation – Your choice?Q&A

3. Background 1960s Ireland has few natural resources Reliance on Agriculture & Fishing Almost no manufacturing sector What little there was government owned Workforce was categorised as ‘low-skilled’ 1970s Government back scheme Overseas Foreign investment Focus on high-value add industries Preference on hiring high quality university graduates Workforce was categorised as ‘skilled’

4. A breakthrough…. 1980s Launched “International Services Programme” Managed through the IDA Major Government policy shift Defocus on manufacturing - Asset based incentives New focus on higher skilled IP jobs – People based incentives Financial incentives were adjusted Away from supporting fixed asset investments Towards investment in highly skilled staff  Educational Grants on a per employee basis

5. Attracting Overseas Investment 1980s (cont’d) International Services Programme Tremendously successful in attracting US software firms to Irish shores Largest Software Companies in the world Lotus Development Corp. (now IBM) Digital Equipment Corp. (now HP (via Compaq)) Microsoft Corp. Ireland Inc. No. 1 Choice For Manufacturing & Localization Oracle, Novell, Informix, SAP Software Research & Development Sun Microsystems, Motorola Ericsson, Amhahl (now Fujitsu), Nortel Networks

6. Graduates - A good surplus 1980s (cont’d) Ireland Inc. produced more graduates than it needed Cheap & ready supply available Big attraction to foreign companies Irish Trade Association defined the “Irish Software Industry” sector National Software Directorate Middle 1980s Major Shift in Government Policy Blurring of definition adopted Manufacturing = 10% Corp. Tax Software Localization = Manufacturing Everyone Happy!

7. A new beginning… 1990s Employment soars 10 year employment growth of 300%+ Average annual employment growth of 20%+ Ireland Inc. referred to as the “Silicon Valley of Europe” Indigenous Software Sector accounts for 40% of employment figure YearEmployment 19917,793 19938,943 199511,784 199718,200 199924,891 Source: IDA Annual Report 1991-1999

8. World’s Largest Producer of Software 1990s (cont’d) Exports explodes as localization comes on stream 300%+ growth in Exports Annual growth of 30%+ Ireland Inc. is “Grand Central” for Localization Localization – Translation, Engineering & Testing services Manufacturing Manufacturing – CD duplication, Box picking and packaging Indigenous software sector accounts for 8% of software exports Year Exports (€m) 19912,044 19932,339 19953,570 19975,436 19996,520 Source: IDA Annual Report 1991-1999

9. A strange thing happened… YearEmployment 199718,200 199924,891 200131,500 200323,950 200524,000 2000s New millennium challenges the industry A large drop in employment during 2001 and 2003 25% contraction in employment Even today, employment levels now at 1999 levels Source: IDA Annual Report 1991-2005

10. A Bump in the road 2000s New millennium challenges the industry A bump in employment during 2001 and 2003 25% contraction in employment Even now, employment levels now at 1999 levels However However, exports continue to surge ahead! YearEmployment 199718,200 199924,891 200131,500 200323,950 200524,000Exports 5,436 6,520 12,257 14,852 23,475 Source: IDA Annual Report 1991-2005

11. State of the Nation – Irish Software Industry 2005 Irish Software Industry consists of 900 Companies 140 of them are foreign ISVs (predominantly US based companies) Employing 24,000 highly-skilled professionals Exporting €23bn worth of products Irish Serial Entrepreneurs Pat McDonagh – CBT-Knowledgewell- Riverdeep Jay Murray – Aldiscon-Apiion-Aepona Companies Little or no growth in 2002 and 2003 However, growth is starting to gather momentum again and employment is rising

12. Why has it been successful? Supply of Graduates Supply of Graduates – Colleges and Government policy has been amazingly successful here Telecommunications Infrastructure Telecommunications Infrastructure – World Class standard and positive for overseas companies English is our spoken Language English is our spoken Language – a clear advantage over most other European and EE countries Flexibility of the Irish Workforce Flexibility of the Irish Workforce – Adapting to change has been one of our core strengths Low Rate of Tax Low Rate of Tax – and other financial incentives from the Irish Government have also been a contributing factor Stable Government with centrist policies Stable Government with centrist policies – A change in government has had little discernible effect on industry policy (remember 1997 and doubling of College places.)

13. The Current Threats Further recession in the United States Largest source of overseas investment into Ireland Current process of software localization is unlikely to continue for long Internet-based services will play an increasingly important role Making location less of a factor Eroding Ireland’s importance in the process  Companies may simply not need to locate facilities in Ireland to conduct localization Supply of software in package format ESD may become the norm! Software as a Service may dominate

14. The Current Threats (cont’d) The biggest threat however is… Shortage of skilled people Number of Graduates in IT disciplines Declined sharply after the industry bad news in 2001-2003 So in a time of renewed growth and recruitment companies cannot find suitable staff! America experienced this in the late 1980s Major factor in the growth of the Indian outsourcing industry!

15. A closing word…. Ireland Inc. has been great in handling adversity. Let’s see how we cope with opportunity!