Barry O'Leary: Foundry's opening is a milestone for both city and Google
As the internet giant launches its digital innovation centre, IDA CEO Barry O'Leary says that Dublin holds an increasingly important position within Google's global ops
This week will mark an important milestone for Irish business and particularly for the city of Dublin as Google marks its 10th year of investment in Ireland when it opens the Foundry, its digital innovation centre.
As the company pointed out last September, it now employs more than 2,500 people in Ireland, making it one of the largest employers in the country.
While the number employed is clearly very large and welcome in an Irish context, Google's growth has been very rapid too, going from about 2,000 people to 2,500 between 2011 and 2012 alone.
The IDA hopes to work with the company in the years ahead as it develops its business further.
While the company is known by many for its search engine activities, the breadth of its work in Ireland is now very wide, and Dublin is the company's EU headquarters, giving it an important position within Google's range of global operations.
Located in the heart of the historic dockyards district (aka Silicon Dock), Google has helped put Dublin on the map as a technology hub in Europe.
The Dublin office is made up of thousands of Googlers from over 65 countries, overseeing sales and infrastructure for its businesses in Europe, the Middle East and Africa (EMEA).
In many ways, the Google Dublin operation sums up the modern multicultural, multi-lingual, technology-led workplace, where different services, disciplines and functions are pulled together in one centre, often serving the EMEA region.
Ireland has been successful in recent years in attracting these kinds of multi-disciplinary operations, and there is little doubt that Google's Dublin office put Ireland on the international map in that context, or as we like to say, it allowed Dublin to become the internet capital of Europe.
While this week's event represents an important milestone in Google's relationship with Ireland, the event and the growth of Google generally highlights a key dynamic for Ireland as an economy – the growing influence of the US West Coast on patterns of FDI into Ireland.
For the IDA, the West Coast is now the largest single source for FDI projects, a trend unlikely to change at least in the medium term.
The IDA West team over recent years has delivered a very strong pipeline of business, but the work has been put into this market by Ireland for many years, starting with the first wave of Californian tech companies which located in Ireland in the late Eighties, like Intel and before that Hewlett Packard.
In more recent years, Ireland has attracted other West Coast giants like Facebook, McAfee, PayPal, Twitter, Blizzard, eBay, Qualcomm, Oracle, Yahoo and Sun Microsystems.
There is also a strong emphasis in the IDA on what we call emerging companies, where we now have a specific division. That division targets companies that have been through a few rounds of VC funding and are generating strong revenue growth, but may not be profitable yet.
They would have historic sales of up to €30m, with up to 200 employees. We aim to attract projects where 15-20 jobs or more can be created in Ireland and then aim to work with those companies as they expand and internationalise.
This activity should provide Ireland with a good pipeline of future investment opportunities, and among them may very well be the next Google.
But can Ireland sustain its West Coast investment portfolio and grow it further in future years? I am confident we can. The IDA West Coast team concentrates heavily on observing the latest trends in the 'Valley' and from our two offices, Irvine and Mountain View, Ireland is well served in terms of personnel and resources. The Valley has its own unique economic eco- system, and IDA staff there are immersed in this world where innovation is prized more than anything else. They also work closely with their colleagues in the Department of Foreign Affairs and Enterprise Ireland.
Connectivity was one factor that was militating against IDA growing the portfolio, but from next April, Aer Lingus will launch a direct service to San Francisco, removing this disadvantage.
This was a service the tech companies themselves wanted – and Aer Lingus, to its credit, has responded. It will mean executives no longer have to take expensive and time-consuming detours through London, Paris etc. It also means that Irish indigenous companies can develop their business links into the US West Coast region, creating additional export opportunities for these firms.
Of course there are challenges for Ireland in exploiting opportunities on the West Coast. As a market it often tends to look westward to Asia, rather than to Europe.
It is also a market where the search for talent is very intense, and that is something Ireland needs to be very conscious of. Ireland will only get a reasonable share of US West Coast investment if it has the human capital to offer inward investors. That is a constant battle for us all to be in engaged in.
Ireland's 12.5 per cent tax rate also remains a crucial selling point on the West Coast, although it is not the primary factor for winning investment. But there is little doubt that Ireland's steadfast determination to retain its 12.5 per cent rate has provided comfort to many companies already in Ireland, and also to many companies actively considering Ireland among a group of potential locations for the future.
Of course, none of Ireland's successes on the West Coast means other regions of the US don't matter. The East Coast is still a prime economic engine for the entire US economy, particularly in financial services, but also increasingly among emerging tech firms too. The IDA, for example, has its US HQ office in New York.
In fact, competition between the East and West coasts of the US is healthy and helps drive creativity and innovation – something that large tech companies like Google continue to thrive on.
Barry O'Leary is chief executive of IDA Ireland