Technology

Thursday 21 August 2014

Microsoft's cloud to create silver lining for Irish workers

Adrian Weckler

Published 29/05/2014 | 02:30

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Microsoft Ireland managing director Cathriona Hallahan has been with the IT giant for 27 years. Picture: Arthur Carron

How does one celebrate a 30th birthday? For Microsoft, it will be by building a brand new technology campus in Dublin. The IT giant is feeling bullish about its Irish operations and thinks it's here for the long term.

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"As a company, it's a continued commitment to Ireland," says Cathriona Hallahan, Microsoft Ireland's managing director and a 27-year veteran of the IT giant.

"We have acquired some land and are in the planning process at present. That will take six months, realistically. So we should be breaking ground on it early next year."

Will it be an Irish version of Apple's mega-campus? Hallahan isn't saying. However, the new campus will house all of the company's existing 1,200 full-time employees. And it may well kick off a new phase of growth in Microsoft's workforce here.

"Our focus is to evolve the investment here and to demonstrate that we can attract European talent here in Ireland," says Hallahan. "We see ourselves as a gateway into Europe."

It's not unusual that Microsoft is considering a bigger future in Ireland. The country has become red hot for tech firms looking to scale somewhere outside the US. Facebook (550 employees), Google (2,500) and LinkedIn (500) are all expanding rapidly at present. Smaller firms such as Hubspot (75), Nitro (50) and Adroll (50) are also in a hiring frenzy. It's not just purely online companies either. This week, software firm SAP announced an extra 280 jobs here, while Ericsson announced 120 new positions.

But instead of this providing competition for Microsoft, it may well be increasing the chance that it might hire more people here itself.

"We're seeing this accelerating and growing," says Hallahan of the tech ecosystem in Ireland. "That is as relevant to investment as us being able to get the skills. We need to have an ecosystem out there evolving, creating this innovation island. If we can get the other countries to see Ireland that way, I have every confidence that Microsoft will continue to invest here."

If this deepening ecosystem is playing a critical role in convincing companies like Microsoft that Ireland is Europe's top tech spot where doubling down on investment and recruitment is a good bet, it is competing with other factors affecting the world's biggest software firm.

Microsoft is in a state of flux at present. It is having to hurriedly change its business model. It's not enough anymore to largely rely on licensing revenue from products such as Windows and Microsoft Office. It's scrambling to catch up with developments in mobile, hardware and 'cloud' (meaning online services) technology. Ironically, all of this is to the good for Microsoft Ireland, says Hallahan.

"We are the only place globally for Microsoft that has all of the functions based here," she says. "There's nowhere else in the world. We have a developer centre, operations, sales, a data centre and more. When we started out, this was a manufacturing location. Now we develop some core features here."

But if Microsoft is to invest more in Ireland, it needs to have a clear roadmap of what its business priorities are. The company's accounts show that the majority of its income still comes from licensing fees associated with two products: Windows and Microsoft Office. Its massive investment in mobile software and devices is struggling at present.

Last week, the company announced an updated version of its tablet device, the Surface Pro 3. While the Surface machines have been critically acclaimed (this newspaper has given previous versions of the device a five-star rating), they have struggled to gain mass market acceptance, with Microsoft losing over $1bn on the gadget to date. Its smartphone platform, although boosted by incorporation into every new Nokia Lumia handset, has also struggled against Apple's iPhone and Google's Android systems with just 3pc market share.

"This is something that the company is starkly aware of," says Hallahan. "If you look back a couple of years, we would have been the dominant player in the PC world with over 90pc market share. We're now in a very different environment and trying to shift the company into thinking about being a challenger brand. Not being the big dog is a big difference. Having said that, I believe that Windows Phone has reached a tipping point. It's now at 10.3pc market share here in Ireland. In countries like Italy and Finland (Nokia home country) it's now over 30pc. So it has reached that point where developers are starting to really get engaged with it."

The new top man at Microsoft, Satya Nadella, isn't expected to visit soon but Hallahan expects him to arrive next year.

"We're working on that," she says. "Although the actual 30th anniversary is September, we're celebrating the whole year. And there's no question that he's the relevant person to mark it because of the uniqueness of the Irish site and all of the functions that it does. But right now, he's not travelling much because he's working on changing things."

After a year as Microsoft Ireland's managing director, Hallahan has found her job to be very different from her predecessor, Paul Rellis.

"Part of my job is now about helping the company transform," she says. "We're moving into this world of cloud first and mobile first. But the company traditionally has been focused on being a license selling engine. So how do we change the skills and capabilities in the company to get people to trust us to move into the cloud with us? That's a total cultural shift and a large part of my job is to transform the organisation to allow this to happen."

Hallahan is also heavily involved in community initiatives outside Microsoft, including schemes to get people back to work, or into work for the first time. One of these is the Youth2work scheme, which helps people without formal technical qualifications to train for jobs they're probably well capable of doing.

"A lot of people think that IT skills are all about being an engineer or a heavy technical role," she says.

"But there are lots of people coming out of school or who are unemployed who could absolutely fill gaps in the market that I see all the time. I talk to small businesses around the country and they're just looking to be able to set up a website and market it. So this is about providing people with relevant skills to get them a real job."

Microsoft also operates schemes to retrain people for new jobs and is a participant in JobBridge, the government-funded internship scheme.

Late last year, the company announced 95 new positions, many of them engineers. However, the firm has not materially increased its headcount in Ireland in the same way as companies such as Apple or Google have. Hallahan sees the near future as a rich one for the firm.

"The opportunity for the company is vast now because the number of devices that technology can enable is just growing and growing into the whole area of the internet of things," she says.

"If you think about the trillions of devices that will need some sort of software, some estimates put it at 1.7 trillion. Interoperability is a critical thing that we have, between phones, tablets, PCs and home entertainment systems."

And the company's Irish base, she says, will be at the heart of all of this.

"In hardware, we're responsible for the supply chain for the whole of Europe, Middle East and Africa.

"Our Windows team here develops some of the keyboard functionality for touch on Windows. That's a core part of the engineering, not a localisation piece. We're also building some of the technology for Office 365 here and there's our gaming division and an MSN division looking at sports technology. These are all core features.

"So we're able to try out some of the changes that need to happen here and show the company where the breakpoints potentially are."

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