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"The future of the Irish ICT industry depends on our ability to invest in research and development to allow the Irish based ICT sector to be seen as a world leader in this critical area," said Joe Cunningham of Logica, chairman of the ICT Ireland Research and Technology group.
ICT Ireland, the division of IBEC that represents the high-tech sector in Ireland, launched a new report on Wednesday which claimed that the country's EUR31 billion ICT sector, which employs almost 100,000 people, is critically dependent on a "best in class" research and development environment.
Citing a series of what it considers to be problems with Ireland's R&D atmosphere, ICT Ireland said that the government here ranks 22 out of 24 countries for R&D spend as a portion of GDP. In terms of increases in such spending over the last few years, Ireland ranked 21 out of 25 countries. The amount of money that businesses in the Republic spend on research and development fared slightly better, ranking 13 among 27 surveyed nations.
The countries in the survey included most European nations, as well as North America and Japan. Within Europe, Finland and the Nordic countries consistently scored highest on these metrics, with France and the Netherlands scoring high in terms of government funding of R&D.
"You have to look at it on the basis of the overall cost base and the output you get for what you invest," explained Brendan Butler, Director ICT Ireland, referring to how potential investors view Ireland as a base for new operations. "Ireland probably is no longer a low-cost location and therefore your more traditional kinds of high-value low-cost manufacturers aren't going to invest here."
"Places like China, Mexico and Russia now have a huge advantage in terms of the cost of labour, so we need to find other ways to move up the value-chain, like investing in research and development...if we were to stand still that would actually be a step backwards," Butler added.
The ICT Ireland report said that strategic research is critical to attracting new inward investment, as well as maintaining the country's long-term competitive advantage in the ICT sector. And to overcome the Republic's seemingly low expenditure on the development of new technologies and processes ICT Ireland offered three recommendations.
First, Ireland must develop a National Policy on Research and Development through a national co-ordinating policy body, the report said. ICT Ireland proposed to establish such a forum.
Additionally, the IBEC body said that 'enhanced fiscal incentives' are needed if more commercially useful strategic research is to be carried out in Ireland. Specifically, it called for a 35 percent tax credit for qualifying R&D activities in Ireland. Its final recommendation was to improve the national research and development infrastructure, both physical and intellectual, "in order to arrest Ireland's decline in competitiveness."
"The cyclical nature of the ICT industry should not be forgotten. It is an absolute certainty that demand will recover worldwide, as changes in technology and the external environment bring an end to the current downturn," the organisation said. The report recommended more research in areas such as wireless software applications, which will become increasingly important as the world continues to adopt mobile technology to a greater degree.
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