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Software industry continues to grow in Ireland
By: Damien
19 Nov, 2021
Ireland has long been an international hub for software companies and despite the pandemic the sector continues to attract investment and business growth.
SaaS – software as a service – is a growing market across the world and when San Francisco-based provider Medallia was looking for a headquarters to expand its reach in Europe, the Middle East and Asia, it was only natural that it chose Ireland to put down roots.
Medallia [www.businessworld.ie/technology-news/Medallia-to-create-100-Irish-jobs-575040.html] has more than 1,000 clients around the world that rely on its personalised and predictive insights into their businesses. The company will initially create 100 jobs in Ireland, which will all be remote – due to the Covid-19 pandemic restrictions – and will include multilingual sales roles for the French, Spanish, Nordic and Middle Eastern regions, among others.
Rory Cameron, Executive Vice President, mid-market and corporate development at Medallia, said the mid-market in EMEA has been underserved when it comes to management technology that fits with his business: “Ireland was a smart choice for us as it offers the largest concentration of multilingual sales and service talent to support our customers and our expansion plans.”
The sector continues to attract big deals too. In March 2020, long-established HR and payroll software developer Core HR, based in Cork, was sold by JMI Equity to London-based software developer The Access Group for €176 million. This was the third largest private equity deal involving an Irish business in the first half of 2020. Dean Forbes, then-CEO and now president of Core HR, said the deal will allow the company to progress to the next stage of growth.
This deal also demonstrates how the software sector is not just centred on Dublin – there are plenty of companies based around the country. Another recently-announced development saw cloud solutions provider Genesys [www.businessworld.ie/technology-news/Global-tech-company-creates-100-jobs-in-Galway-575029.html] announce that it is planning to create 100 software engineering jobs primarily at its Galway offices – although some will also be remote positions – over the course of the year. In addition, the move will see Genesys relocate to larger offices in the Bonham Quay development before the end of 2021.
Further examples of this came in October 2020 when IDA Ireland and Leo Varadkar TD, the Tánaiste and Minister for Enterprise, Trade and Employment, announced the creation of 206 jobs in Dublin, Kildare, Sligo and Cork across seven high growth companies from Europe and the US [www.idaireland.com/newsroom/an-tanaiste-announces-206-jobs-in-7-ida-ireland-hi].
The companies involved were:
• Eliatra, an IT services and solutions company focused on big data, cloud services and security that has chosen Sligo to locate its new product development and European HQ • Hellios, a UK-based supplier of information and risk management solutions, which is creating a software development centre in Dublin • Moz, Inc, which develops search engine optimisation technology, has established a customer success team in Cork • National Technologies, an American provider of fibre optic and data centre installation services, has its EMEA HQ in Dublin • Nulia, based in Oregon, has located its EMEA headquarters in Dublin to service its existing customers and grow its presence in the region • ProSearch, which provides discovery solutions to law firms, expanded its office in Dublin to cope with increasing demand for US-EU cross-border discovery solutions • Simple But Needed, a San Francisco-based safety and risk management software systems developer, has set up its European headquarters in Co Kildare.
Overseas companies setting up their operations in Ireland is nothing new, however. Ireland can trace its beginnings as a hub for the software sector way back to 1956 when IBM opened an office in Dublin. Other major players followed IBM’s lead over the years, such as Hewlett-Packard, which arrived in the 1970s; Microsoft, Oracle and Dell in the 1980s; Fidelity and SAP in the 1990s. Since the turn of the millennium, companies such as Cisco and Aon have also chosen Ireland as a base and remain active in the country.
Furthermore, as well as the giants of the software industry, many smaller businesses have set up or moved to Ireland down the years.
It means that today there are more than 900 software companies based in Ireland, employing more than 24,000 people. Ireland is the second biggest exporter of software in the world, accounting for €16 billion worth each year, according to IDA Ireland (www.idaireland.ie).
And despite the pandemic, software businesses continue to turn up in Ireland. For instance, on January 26, HR software provider Personio announced plans to increase its workforce in Dublin five-fold before the end of this year; the company sees this office as the base for its international business and software engineering hub. Personio only opened its Dublin office in April last year and has already grown the team there to 40 people.
Hanno Renner, co-founder and CEO of Personio, said Dublin is an ideal city to have a base to serve the needs of European SMEs: “The city’s business-friendly environment and status, as a well-established international talent hub – one that’s already helped many successful tech companies better serve the European market – made the decision to set up our fourth office here an easy one.”
Renner neatly summed up many of the reasons why companies still choose Ireland for a European base. As he said, the government is business-friendly, with corporate tax rates at 12.5% and a 25% research and development tax credit for certain projects. Ireland also has preferential tax rate of 6.25% on income from intellectual property.
There is also a depth of highly qualified talent in Ireland: for example, it is estimated that more than 10% of workers in Dublin are software developers. The pool of potential employees is also growing each year mainly due to the many related courses on offer at Irish Universities – Ireland has the third highest number of graduates in computing, maths and science aged 20-29 in the EU.
The Irish government has also strongly backed the sector over the years and continues to do so. For example, there has been sustained investment – worth hundreds of millions of euros per year – in research and development in industrial and academic settings, which has led to the growth of world-renowned research centres such as LERO, the Irish Software Engineering Research Centre, based at the University of Limerick.
Of course, an added attraction of Ireland these days is that it is now the only country in the EU that has English as a first language, which is a pull for multinational businesses from English-speaking countries. Ireland is also part of the single market, giving it frictionless access to the other 26 countries in the EU. In addition, Ireland is also part of the euro, which is a stable currency and not prone to major fluctuations in value.
Going forward, prospects for the software sector in Ireland continue to look very positive. The sector has managed to largely weather the pandemic, as businesses still need software solutions and have in some cases looked for new solutions to enhance their online presence.
With numerous companies planning to expand their operations this year, there are plenty of investment opportunities for savvy investors in the software sector. Should the pandemic ease there are also likely to be more M&A opportunities.
To establish a software business in Ireland is relatively straightforward. There is no specific regulatory structure for them, but a business must follow the standard registration procedure as set out in the Companies Act.
What will be required is a software licence, which helps to protect the owner’s intellectual property rights. All software products are required to have a licence to establish the rights and obligations from the use of the product for the licensor and licensee.
For those looking to set up a software business in Ireland, relocate an existing business to the country or invest in a business, then it is advisable to seek specialist advice to help do this.
With such a cluster of software businesses in Ireland, it is critical to choose the right advisor with specialist knowledge of the software sector in the country. Malone & Co Accountants https://www.maloneaccountants.ie/ can assist on all the relevant aspects from setting up a company to providing diligence services as part of an M&A deal or funding round in the tech sector. We can also provide in-depth information to ensure any deal achieves the value hoped for at the outset.
SaaS – software as a service – is a growing market across the world and when San Francisco-based provider Medallia was looking for a headquarters to expand its reach in Europe, the Middle East and Asia, it was only natural that it chose Ireland to put down roots.
Medallia [www.businessworld.ie/technology-news/Medallia-to-create-100-Irish-jobs-575040.html] has more than 1,000 clients around the world that rely on its personalised and predictive insights into their businesses. The company will initially create 100 jobs in Ireland, which will all be remote – due to the Covid-19 pandemic restrictions – and will include multilingual sales roles for the French, Spanish, Nordic and Middle Eastern regions, among others.
Rory Cameron, Executive Vice President, mid-market and corporate development at Medallia, said the mid-market in EMEA has been underserved when it comes to management technology that fits with his business: “Ireland was a smart choice for us as it offers the largest concentration of multilingual sales and service talent to support our customers and our expansion plans.”
The sector continues to attract big deals too. In March 2020, long-established HR and payroll software developer Core HR, based in Cork, was sold by JMI Equity to London-based software developer The Access Group for €176 million. This was the third largest private equity deal involving an Irish business in the first half of 2020. Dean Forbes, then-CEO and now president of Core HR, said the deal will allow the company to progress to the next stage of growth.
Setting up business cross Ireland
This deal also demonstrates how the software sector is not just centred on Dublin – there are plenty of companies based around the country. Another recently-announced development saw cloud solutions provider Genesys [www.businessworld.ie/technology-news/Global-tech-company-creates-100-jobs-in-Galway-575029.html] announce that it is planning to create 100 software engineering jobs primarily at its Galway offices – although some will also be remote positions – over the course of the year. In addition, the move will see Genesys relocate to larger offices in the Bonham Quay development before the end of 2021.
Further examples of this came in October 2020 when IDA Ireland and Leo Varadkar TD, the Tánaiste and Minister for Enterprise, Trade and Employment, announced the creation of 206 jobs in Dublin, Kildare, Sligo and Cork across seven high growth companies from Europe and the US [www.idaireland.com/newsroom/an-tanaiste-announces-206-jobs-in-7-ida-ireland-hi].
The companies involved were:
• Eliatra, an IT services and solutions company focused on big data, cloud services and security that has chosen Sligo to locate its new product development and European HQ • Hellios, a UK-based supplier of information and risk management solutions, which is creating a software development centre in Dublin • Moz, Inc, which develops search engine optimisation technology, has established a customer success team in Cork • National Technologies, an American provider of fibre optic and data centre installation services, has its EMEA HQ in Dublin • Nulia, based in Oregon, has located its EMEA headquarters in Dublin to service its existing customers and grow its presence in the region • ProSearch, which provides discovery solutions to law firms, expanded its office in Dublin to cope with increasing demand for US-EU cross-border discovery solutions • Simple But Needed, a San Francisco-based safety and risk management software systems developer, has set up its European headquarters in Co Kildare.
Ireland – a long-standing tech hub
Overseas companies setting up their operations in Ireland is nothing new, however. Ireland can trace its beginnings as a hub for the software sector way back to 1956 when IBM opened an office in Dublin. Other major players followed IBM’s lead over the years, such as Hewlett-Packard, which arrived in the 1970s; Microsoft, Oracle and Dell in the 1980s; Fidelity and SAP in the 1990s. Since the turn of the millennium, companies such as Cisco and Aon have also chosen Ireland as a base and remain active in the country.
Furthermore, as well as the giants of the software industry, many smaller businesses have set up or moved to Ireland down the years.
It means that today there are more than 900 software companies based in Ireland, employing more than 24,000 people. Ireland is the second biggest exporter of software in the world, accounting for €16 billion worth each year, according to IDA Ireland (www.idaireland.ie).
Expansion plans
And despite the pandemic, software businesses continue to turn up in Ireland. For instance, on January 26, HR software provider Personio announced plans to increase its workforce in Dublin five-fold before the end of this year; the company sees this office as the base for its international business and software engineering hub. Personio only opened its Dublin office in April last year and has already grown the team there to 40 people.
Hanno Renner, co-founder and CEO of Personio, said Dublin is an ideal city to have a base to serve the needs of European SMEs: “The city’s business-friendly environment and status, as a well-established international talent hub – one that’s already helped many successful tech companies better serve the European market – made the decision to set up our fourth office here an easy one.”
Why set up in Ireland?
Renner neatly summed up many of the reasons why companies still choose Ireland for a European base. As he said, the government is business-friendly, with corporate tax rates at 12.5% and a 25% research and development tax credit for certain projects. Ireland also has preferential tax rate of 6.25% on income from intellectual property.
There is also a depth of highly qualified talent in Ireland: for example, it is estimated that more than 10% of workers in Dublin are software developers. The pool of potential employees is also growing each year mainly due to the many related courses on offer at Irish Universities – Ireland has the third highest number of graduates in computing, maths and science aged 20-29 in the EU.
The Irish government has also strongly backed the sector over the years and continues to do so. For example, there has been sustained investment – worth hundreds of millions of euros per year – in research and development in industrial and academic settings, which has led to the growth of world-renowned research centres such as LERO, the Irish Software Engineering Research Centre, based at the University of Limerick.
Of course, an added attraction of Ireland these days is that it is now the only country in the EU that has English as a first language, which is a pull for multinational businesses from English-speaking countries. Ireland is also part of the single market, giving it frictionless access to the other 26 countries in the EU. In addition, Ireland is also part of the euro, which is a stable currency and not prone to major fluctuations in value.
Future prospects
Going forward, prospects for the software sector in Ireland continue to look very positive. The sector has managed to largely weather the pandemic, as businesses still need software solutions and have in some cases looked for new solutions to enhance their online presence.
With numerous companies planning to expand their operations this year, there are plenty of investment opportunities for savvy investors in the software sector. Should the pandemic ease there are also likely to be more M&A opportunities.
Setting up a software business in Ireland
To establish a software business in Ireland is relatively straightforward. There is no specific regulatory structure for them, but a business must follow the standard registration procedure as set out in the Companies Act.
What will be required is a software licence, which helps to protect the owner’s intellectual property rights. All software products are required to have a licence to establish the rights and obligations from the use of the product for the licensor and licensee.
Specialist advice
For those looking to set up a software business in Ireland, relocate an existing business to the country or invest in a business, then it is advisable to seek specialist advice to help do this.
With such a cluster of software businesses in Ireland, it is critical to choose the right advisor with specialist knowledge of the software sector in the country. Malone & Co Accountants https://www.maloneaccountants.ie/ can assist on all the relevant aspects from setting up a company to providing diligence services as part of an M&A deal or funding round in the tech sector. We can also provide in-depth information to ensure any deal achieves the value hoped for at the outset.
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