Our place at heart of the internet can kickstart growth
We must not be complacent and push Ireland's growing global reputation as a world-class data centre hub, writes Maurice Mortell of Telecity Group
Data centres have become the heart of the digital economy.
Ireland has become the internet hub of Europe as the growth of the engine rooms of global e-commerce, data centres, become one of the cornerstones on which Ireland's digital economy is founded. TelecityGroup has also grown dramatically over the past 10 years and it now operates Ireland's largest enterprise data centres. The role of data centres has never been more important, with 90 per cent of all the data in the world generated over the past two years.
Being at the heart of the internet is a massive competitive advantage for Ireland -- a country that needs and aims to attract overseas investment. With over 30 giant data centres located across Dublin, Ireland has already become the choice for many of the globe's largest tech firms to locate their European data centre hub.
Data centres provide the environment where the internet lives and breathes and Ireland's data centres are becoming the platform for companies to launch into Europe. As these companies grow and as users and connected devices continue to generate more and more data, the demand for highly connected internet hubs grows.
Ireland has positioned itself as one of the key European locations for data centres and there are a number of reasons for this. Our cool climate, excellent international connectivity, young workforce and tax benefits all help attract and retain the data centre industry here.
The advantages of locating and hosting in Ireland also contribute to the success of the industry. A recent report from 451 Group assessed Ireland's suitability as a location for hosting digital content, examining eight key criteria including green energy, workforce and government support. What emerged was a portrait of Ireland as a launching point to the world.
With over 1,000 multinationals already here, Ireland was highlighted as a highly attractive location for international firms that have a need to service the EMEA region. It also found that our internet traffic is growing at a rate of 200 per cent a year and our data hosting market will grow 18 per cent a year between now and 2016, outpacing the UK and mainland European locations.
The technology giants that locate in Ireland undoubtedly help Ireland's reputation as the technology and business location of choice in Europe. The IDA does fantastic work in attracting worldwide brands to Ireland, and here at TelecityGroup we also work quite closely with international firms in the decision-making process. The data centre is a key part in the selection method when deciding where to set up in Europe. The availability of resilient, well-connected data centres, which provide scale for future growth is critical -- and Ireland performs well in this area.
Our reputation as home to some of the world's leading technology companies definitely has an impact in helping to kick-start Ireland's growth, but there is always more we can do. I feel there is a lot happening in education, seed investment and in the private sector to nurture the future requirements that we will need to remain a tech hub of choice. We do not have the luxury of being complacent in any of the areas that we excel in. In order to retain our competitiveness, we require constant benchmarking of the European competitor landscape to ensure we are not losing touch.
A simple example is our energy costs: Ireland has an excellent track record of consistent electricity supply and this is obviously important to the data centre industry and the technology industry. Data centres are large consumers of energy; however in European terms, Ireland does not compete well on energy costs and we need to be careful how we regulate and pass charges on to the industry.
In terms of nurturing small businesses, Ireland does perform quite well. Support from Enterprise Ireland and the networking opportunities from the IDA are critical for small businesses. Digital training, such as what the Irish Internet Association provides, is also important to help businesses compete online and membership to this body is highly beneficial to those companies. These organisations and others that provide invaluable support have helped Ireland become the easiest location in the EU to start a business.
If we are going to foster an environment for high growth start-ups with entrepreneurial spirit, we need to look at encouraging investment to provide these start-ups with the capital they need to grow. One element that affects investment is our capital gains tax structure. We should incentivise early investment into growing companies but differentiate between seed investment and pure speculation.
The opportunity we have in Ireland is immense. We are on the cusp of a new digital era where we are strategically placed from a geographic, infrastructure and knowledge perspective to herald the dawn of the next phase of Ireland's economic growth. The Irish Software Association estimated recently that the technology sector in Ireland employs a total of 105,000 people across an array of sectors and career disciplines and is responsible for €72bn (40 per cent) of Ireland's exports. As technology evolves, and once Ireland evolves with it, this figure will grow even more -- which is hugely positive for the future.
Maintaining our competitiveness is key. The static nature of our cost base over the past couple of years has assisted in us maintaining a strong cost advantage internationally when you consider the overall decision process when investing in Ireland. We do not want to repeat the manufacturing and call centre exodus we had a number of years ago so we need to work to ensure we create an attractive business environment for a wide range of industries.
In Ireland, we are so good at so many things. We have a great country and place to work in. We are innovative, clever and, according to Forbes, the best country in the world to do business in.
However, we should do more to amplify this message. Our competitors are continually looking to improve their position at our expense. While there are many advantages for business to locate and develop here, it is incumbent on us all to push the Irish message and agenda, which will attract and develop more enterprises and help secure our road to recovery.