Microsoft boss: 'The recession is our chance to leapfrog global competition'
Tackling issues digitally will return people to work says Microsoft general manager Paul Rellis.
These are interesting times for the world's biggest software giant Microsoft, which has never been more creative in terms of products but never more challenged in terms of its business environment.
On the one hand, the Seattle-headquartered firm, set up by Bill Gates in 1975, is mere months from releasing its latest operating system Windows 7; has revealed a new competitor to Google in the form of Bing.com; and is seeing its Xbox gaming platform become a major entertainment hub for games, movies and social networking.
But on the other, earlier this year Microsoft revealed plans to lay off 5,000 workers worldwide. A month ago the company suffered a major psychological blow in the form of the first decline in profits in its entire history, reporting a 32pc decline in net income and a 6pc fall in revenues of US$13.65bn.
Just months after the company cut 20 positions at its Irish operations, Microsoft Ireland last month said it plans to cut an additional 60 jobs. However, the company, which employs over 1,700 people locally, revealed that 40 new jobs will be created in a separate investment.
Microsoft Ireland general manager Paul Rellis admits these are confusing times. "It's really tough on people in the company because it's the first time we've had to cut back. But like everybody else we have to become more productive and change things. I personally believe that the economies of the world have been reset. The way we did business two years ago and a year ago will not be the way we'll do business two years from now."
Rellis, who hails from Limerick, believes the psychological blow to Ireland's society and economy is also an opportunity to hit the 'reset button' on the way we've been doing things here.
He believes that problems in the health and education systems, not to mention the country's green agenda, should be harnessed to get skilled people who are out of work back into employment again and also generate creative industries of scale.
"The days of debt leveraging to fuel business growth are over - completely and truly over. If you believe, like I do, that you have to have strong people focused on productivity, innovation and developing the business, then the chances for Ireland's economy, especially its small, med-ium and large businesses are really good.
"We have the EU on our doorstep with a market of 500 million people. As a nation of only four million we'll never compete on the same scale as other larger countries unless we adopt and deploy technology in such a way that allows the country to scale up."
The digital economy for which other nations, notably the US and Britain, are formulating strategies offers one route through which Ireland can scale up and compete on an even level.
"We need a national digital development plan, but what I wouldn't like to see happening is a broad plan that doesn't get implemented. If it has strong roots in jobs and economic recovery then it will be successful.
"For example, one of the biggest problems we have in society - and it is shameful - is the amount of money we are spending on the health system, and what are we getting out of it? I think there is a terrific business opportunity to get people who have lost their jobs in IT or other fields back to work. Instead of paying them the dole, create an economic model where a taskforce would be formed to digitise the Irish health system within a five-year period.
"What this would do is, in turn, develop a digital health business that could export products and solutions to the Far East and elsewhere. In one move you could have an Irish Nokia, Microsoft or Google."
He believes the same sort of strategy could be applied to digitising Ireland's education system, which is sorely lagging behind Western standards. "A government-funded scheme could take skilled people who want to go back to work and set them to building an 'internet cloud' that connects all the schools together and provides resources for teachers and students."
A digital development plan, in other words an action plan for the Government's smart economy vision, is something Rellis believes Ireland should aspire to.
"It's about having courage to take immediate steps in precise problem areas like health and education and about supporting jobs in small businesses and tech start-ups. If we don't have an action plan we will fail. Of particular urgency is ensuring skilled workers and graduates are quickly brought back to work.
"Create bodies to fix the problems in health, education and the environment that would, in turn, develop products and services that we can sell overseas. The Government and the public sector have a massive role to play. Take some of the National Pension Reserve Fund, invest very strategically and surgically in health, education and the environment and get good people back to work.
"Ignore the banks and NAMA for a moment - this country is in a fight for survival. The best time to repair your roof is when the sun is shining, but it's raining.
We need to consider that without the corporation tax what else has this country to offer for the next 20 years? We won't be selling bricks and mortar to each other. It will be intellectual property (IP); it will be the creation of healthcare, education and green products and services and a range of other industries."
Despite the large technology industry assembled here, Rellis says it is regrettable that Ireland is lagging behind on a range of fronts, from broadband to the use of ICT in education. "We have looked at Ireland and every other country in Europe in terms of technology and Ireland is a laggard. Now, I could be upset about that and say this is an awful criticism of the country but the power of being a laggard is that you can leapfrog over all the other countries if you have a digital strategy."
Rellis is passionate about the potential of Ireland's small businesses and particularly its entrepreneurs to drive change. The distraction that was the property boom is over and now's the time to give good people encouragement.
Microsoft, in particular, has been active through its Bizspark programme, which equips tech start-ups with the latest technologies and licenses its IP to them. An example of the latter is Dublin comp-any Inistech, which, through the Microsoft IP Ventures Programme and Enterprise Ireland, has relaunched Microsoft's Software Licensing and Protection (SLP) Services.
"What I've seen from Irish companies is that they're very connected to the world and feel global. They've got confidence despite the tough situation. Many of them have good business plans and a global vision - they need to be supported and encouraged," Rellis concludes.
© Silicon Republic Ltd