Ireland's bid to rescue beaten ICT Brits

IT entrepreneurs whose companies have been raised to the ground by IR35, investigated for being independent and roped up by red tape are being targeted by the Irish Government.

With a quarter of the UK's IT contractors currently out of work by the Professional Contractor Group's reckoning, the continuing depression in the state of the contractor job market could be exactly what the Irish Government needs to prompt the transmigration of hundreds of UK contracting businesses.

More than half of those still operating in the UK reported earnings down over the past 12 months and almost the same number of people indicated little optimism for the coming 12 months, saying they expect a continued fall in earnings in Britain.

A rescue effort mounted by Irish IT representative groups and backed by the Irish Government hopes to net the country big returns over the next few years.

The Irish Business and Employer's Federation (IBEC) has outlined a strategy with the Irish Government to create an atmosphere in which entrepreneurship is fostered and IT workers in the country are doubled to 60,000 by 2010.

It's three-pronged attack is based on boosting the country's promotion of entrepreneurial activity and easing regulatory burdens on business while increasing funding.

The Irish Government pledges to further appreciate the administrative difficulties small and medium-sized companies (SMEs) experience in complying with company law and wants to increase funding for business advisory groups that assist in helping small businesses manage these burdens.

The government is also calling on multinationals to support home-based businesses and is promoting more partnerships between big business and start-up suppliers.

Rules to curb the use of offshore outsourcing in the public sector are also being tabled, including a provision that states the Irish Government must purchase 20 per cent of all its technology services solely from Irish SMEs.

Irish ICT representative groups are mounting a strong drive to keep IT revenues circulating amongst businesses that are based there.

"Entrepreneurial enterprises are the heart of the process of developing dynamic and successful high technology clusters, which create wealth for the economy," said Paul O Dea, chairman of the influential ICT Ireland working group.

"There is now an urgent need for government and the stakeholders in the ICT cluster to concentrate their policies on the development of the indigenous sector in the context of the overall ICT sector."

Strong standing

Ireland is considered one of the most entrepreneurially active countries in Europe and on a par with the United States and Canada, according to last year's Global Entrepreneurship Monitor.

The study ranked Ireland 12th across 37 participating countries.

Peter McManamon, Chairman of ICT Ireland's Taxation Working Group says although the ICT sector is currently experiencing a challenging period "it is acknowledged that the sector globally will experience an upturn in demand and it is vital that Ireland acts now to ensure we have in place a competitive environment in which to benefit from the global recovery."

His organisation is putting pressure on the Irish Government to turn its back on EU tax harmonisation, which he says would have a detrimental effect right the way down the ICT chain, from big businesses to SMEs.

"Our corporate tax regime has been one of the major contributory factors in foreign multinationals choosing Ireland as a location of choice for investment. ICT Ireland should reject any proposal at EU level towards tax harmonisation," he said.

"The government should re-state its commitment to Ireland retaining its independence in relation to taxation measures."

The Information and Communications Technology (ICT) sector is critical to the Irish economy.

The sector comprises of 980 companies across an array of diverse industries, ranging from leading IT multinationals to indigenous start-ups.

Almost 100,000 people are currently employed in the ICT sector in Ireland.

Ireland's economic progress during the 1990's was to a significant extent fuelled by the success of its ICT sector.

Peter McManamon says as well as supporting SMEs and big foreign ICT businesses through taxation measures, the Irish Government should go further and remove its one per cent Stamp Duty on share transfers and one per cent Capital Duty on share issues to make Ireland more attractive as a holding company location.

He also wants to see the development of a favourable tax regime to encourage investment in Intellectual Property.

International interest

Other countries are lining up to copy Ireland's ICT game plan.

On a recent visit, Thailand's Minister for Information and Communication Technology, said: "Thailand must strive to become the Ireland of Asia" at a Chambers of Commerce of Ireland (CCI) meeting in Dublin.

Dr Suebwonglee said: "Thailand has much to learn from Ireland and we are here to learn the secrets of your success. Thailand is poised to be at the centre of great things to come. We will learn from partners like yourselves how best to emulate the Irish success story and indeed become the Ireland of Asia."

Whatever advice CCI Chief Executive John Dunne and the country's ICT maestros gave the Thai minister during his time there, it looks to be working as Thailand - whose own IT market is expected to reach $3bn by 2007 from $1.7 dollars last year - this week announced a lucrative merger on exchanging government policies on IT, broadband Internet, e-government, e-commerce and information security with South Korea.

If only the UK was being as diligent.

One country's negligence means exciting times ahead for another's ICT businesses and those that are willing to relocate there.