Down and out, the Irish turn to tech
Outside Google's European headquarters in Dublin. Large, multinational tech companies are drawn by Ireland's low, 12.5 percent corporate tax rate.
By now, what went wrong in Ireland is a familiar story -- a burst housing bubble, a bailout, an economic crisis and record unemployment. But on the banks of the Liffey, the river that runs through Dublin, is a burgeoning technology sector that many people in Dublin hope can help pull the country out of its doldrums.
John Dennehy, the founder of an Irish tech company called Zartis, is one of them. On an unusually sunny day for Ireland, he guides me through what’s come to be known as Dublin’s “Silicon Docks.” He stands in front of a row of bustling, waterside cafes and restaurants and points to buildings that house hundreds, if not thousands of employees for Google and Facebook. Twitter's new digs are just down the road.
Many of the world’s largest -- mostly American -- tech companies have their European headquarters in Dublin to take advantage of Ireland’s super low, 12.5 percent corporate tax rate. The list includes LinkedIn, PayPal, DropBox and Microsoft, to name a few. Dennehy says 90,000 people work in the country’s tech sector, and the scene here is unlike everything you’ve heard about Ireland over the past few years.
“It’s almost like we live in two different universes,” says Dennehy. “One is, you know, the newspaper headline of unemployment hitting record levels. And the other one is towering blocks of offices filled with really high-value jobs, with highly paid people, and it feels like a different world.”
In fact, Dennehy says there aren’t enough qualified developers and multi-lingual salespeople in Ireland. By his estimates there are about 4,500 unfilled positions. Dennehy heads a campaign called “Make IT in Ireland,” established to attract more talent from overseas, but he struggles to overcome Ireland’s reputation as a country in crisis.
“If you take a 24 year old who’s coming out of college, all he’s heard for the last four years is a bad news business story about Ireland,” says Dennehy.
Take Simon Dempsey. I met him pitching his web-based travel app, LikeWhere, at a showcase in Dublin for tech startups. In his words, “LikeWhere essentially shows where to go in a new city based on what you like in cities you already know.”
Dempsey is one of the few who’ve actually moved home to Ireland at a time when many young people are emigrating to find work.
“You know you just heard story after story of people struggling,” Dempsey says. “There was statistics of a thousand people leaving Ireland a week.”
What lured him back was money. Last year, the Irish government sank more than $40 million into tech startups like his in the hope that one turns into an Irish success story.
“You struggle to find somewhere else in Europe where the government are so actively involved in pouring money into early stage companies,” says Dempsey. “And that’s really great."
It’s thought Ireland is home to around 500 tech startups. But Constantine Gurdgiev, an economist at Trinity College Dublin, says they can’t compete with the likes of Google and Facebook when it comes to paying top dollar for developers and engineers.
“Startups simply cannot afford the workforce that they require precisely because the multinationals are effectively hoovering it all out,” says Gurdgiev.
He warns Ireland is relying too much on big, foreign technology companies for growth, just like it relied too much on buying and selling property in the past. And we all know how that ended.
“This will come to an end as well,” Gurdgiev says. “There has to be slow down. There will be a slow down.”
Besides, he says, Ireland’s European neighbors are determined to strip the country of the low tax rate that’s attracted the likes of Google, Facebook and Twitter. The question is, will those companies leave once the tax perks are gone.