Continuing our series where business leaders suggest ways of kick-starting the economy, Paul Rellis of Microsoft says a focus on the cloud, encouraging SMEs and education are all crucial
AT the start of the new year it is important to consider the proactive, positive things that can be done to help support Ireland's recovery efforts. Despite the ongoing negative sentiment and eurozone instability, the Irish economy appears to be stabilising with growth rate forecasts hovering around the region of 1 per cent. This level of growth -- even if it is realised -- leaves the prospects for genuine job creation and a full economic recovery some way off yet.
The outcome of the eurozone crisis, the performance of the world economy and the ongoing European and international policy and fiscal debates will all contribute significantly to the actual level of growth that we experience in Ireland in the year ahead.
However, as we continue to examine the external factors that contribute to our economic performance, there is limited action here in Ireland. This is, I believe, slowing down our recovery.
We need to start focusing on -- and doing -- the one or two things that each business or individual can do to stimulate some growth in their own sector. This would be more fruitful than forecasting the future of the euro. Right now, too much time is being wasted looking at the things that we can't control. Instead in the year ahead, it is critical that we all focus on the things that we can do and can influence. There is a significant responsibility on those of us in a position to do something to help fuel growth.
If we do this at a micro level, we can have an impact on the broader macro agenda.
Businesses, policy-makers and individuals all have a role to play in helping to get Ireland back on the road to recovery. The time for looking back is over.
There are three key areas that I believe can have an impact on Ireland and our recovery. These are: positioning Ireland at the cusp of the development and implementation of new technologies -- specifically cloud computing; harnessing and empowering indigenous industry in the SME sector; and investment in education and skills -- ensuring that we are equipping our workforce with the skills needed for today and tomorrow.
New technology, and specifically the cloud, is something that has huge potential for growth in this country with applications far beyond the IT sector. Working for Microsoft, it might be perceived as rather predictable that I would champion an IT development as a driver for economic recovery, but the reality is that cloud represents a seismic shift, similar to the advent of the internet, that will impact on how all of us do business, delivering massive costs savings to the public sector and Irish businesses.
Microsoft commissioned an independent report to quantify the potential that cloud computing could deliver for Ireland. The report by Goodbody Stockbrokers found that by 2014, €9.5bn in annual sales per annum could be generated, providing 8,600 jobs in the IT sector, with a further 11,000 jobs generated in 2,000 new non-IT SMEs due to the reduced costs associated with operating in the cloud.
That is almost 20,000 jobs within the next three years -- and we're talking highly-skilled roles. In addition to generating employment, cloud computing can also deliver efficiencies in existing sectors and this is particularly relevant in the context of our public sector and the programme for reform on which our current administration has embarked.
The Government committed to deploying cloud computing in its Programme for Government published last year and an interdepartmental Cloud Implementation Group is due to publish its recommendations to Minister for Jobs Richard Bruton. It is important that steps are then taken quickly to integrate the cloud into the transformation strategy and to select some high-profile projects. Once the Government takes a leadership position in the area, the private sector is likely to follow. Only then will the economy reap the efficiency gains from the cloud.
If we don't do this, Ireland's opportunity to capture a large share of the estimated €70bn global cloud computing industry will be missed. The time for action on this is now. Then Ireland can truly position itself as a global leader in this area.
The second pillar for growth is facilitating the development of a vibrant SME sector.
Strong and healthy indigenous companies are vital for a sustainable economy. A vibrant start-up community, exporting services globally, can play a central part in helping Ireland return to a position of economic strength.
At Microsoft, we have a programme called BizSpark, designed to support high-potential start-up companies with a package to strengthen their ability to develop innovative technologies and solutions while growing in markets. Relative to our population size, Ireland has been the most prolific country utilising BizSpark.
In 2011, two Irish companies, SkillPages and Inishtech, were selected to join a global Microsoft fast-track programme for the fastest growing BizSpark companies in the world. Both are already international businesses and have huge potential. It is companies such as these that will deliver growth and jobs for our economy and there is an onus on companies such as Microsoft to support them.
By nurturing more companies like these, we give ourselves a real chance to have some homegrown multinational companies that can help Ireland become a strong economy.
In addition, companies that are already entering the mature phase of growth will require support as they prepare to move into other markets beyond Ireland. Efforts should be made to pick the companies that show most potential and place some bets -- providing supports to those that have the best chances of success.
A public/private partnership approach could be taken whereby industry and government provide relevant supports to the selected companies under some form of a venture capital in-kind arrangement -- success is shared by all parties, with the risk also shouldered equally.
Thirdly, when considering how we can achieve success we must consider the individuals who will be responsible for delivering it -- the workforce. Traditionally, Ireland's well-educated population has always been an asset that has helped to attract foreign direct investment.
Recent figures from the CSO ranked Ireland joint-first in the EU for third-level attainment among those aged 25-34. This statistic is welcome, however in a country with almost 15 per cent of our population on the Live Register, it is imperative that we are not simply educating our students for emigration.
It is also important to ensure that we are matching education with the types of jobs available in the economy now. As important is ensuring that we are also educating and training people for the jobs of the future -- the kinds of roles that we don't yet know about but which will evolve as industries change.
It is reported that there are up to 4,000 open vacancies in the hi-tech sector right now -- this at a time of rising unemployment. Engineers Ireland recently pinpointed 1,200 hi-tech engineering vacancies across Ireland in the pharmaceutical and biomedical sectors with nobody to fill them.
There is a need to build the skills that businesses require from an early stage. Relevant skill-sets -- such as IT literacy -- must be integrated into the school curriculum.
But that is just the basic starting point. Ideally, we should be teaching our children coding languages at the same time as we introduce them to Irish. It is also vital that the educational sector is kept informed of the emerging skills needs of industry.
We need to be flexible and responsive in the areas of curriculum and courseware.
The world is changing at a rapid pace and we need to ensure that Ireland retains the competitive edge by being ahead of these needs. There is an opportunity right now to tailor specific courses so that graduates and unemployed people can be upskilled so that they can qualify for some of the open positions currently in the economy.
Microsoft is actively working with a number of academic partners to provide support for this process as there is a growing number of job vacancies within our own ecosystem of partner companies. By approaching this issue in a focused way we should be able to help people get back to work in the short-term -- helping to support the growth of many indigenous companies while also getting more money back into the economy.
The last few years have been tough. We've been drowned in negativity and as a nation our self-confidence and pride have been bruised. It's important that we rise above all of that. We need to be smart about identifying the areas where we want to excel and actively seek to develop pockets of excellence that will create jobs, attract investment and encourage start-ups.
It's a new year. Let the resolution be that we no longer get distracted by the negativity and by the international economic developments but instead set goals and timelines and start doing something that will make a difference. Only then can we start to recover. We all have a responsibility to make things better.
Paul Rellis is the managing director of Microsoft Ireland
Sunday Indo Business