Could investment in digital skills reap €9.5bn for Irish economy?

Majority of Irish SMEs are ‘less than half way’ on their digital journey, Google study finds.

A report launched today by Google confirms a substantial economic opportunity for Ireland exists if a meaningful investment in digital skills is made.

The comprehensive study developed in partnership with Amárach provides detailed insights into the digital capability needs, ambitions, and plans of 1,000 SME leaders throughout Ireland. The research proposes that a significant investment into digital skills could contribute an extra €9.5bn to Ireland’s GDP by 2025.

“The decisions that business leaders and policy stakeholders make about digital capabilities in the coming months and years will have profound implications for the long-term productivity and profitability of the SME sector”

Most Irish SMEs are in the process of adopting, developing, and evolving their use of digital technologies. But some are further ahead in the process than others.

Can the digital skills gap be closed?

When asked to rate their own progress, the majority (62%) of Irish SMEs are ‘less than halfway’ on their digital journey. Recruiting people with the necessary digital skillset is also a challenge for Irish SMEs with 41% of respondents agreeing that they do not have a person within the organisation who is tasked with developing digital skills. Only 26% of SMEs say their employees have all the skills needed in terms of basic digital capabilities.

Faced with multiple demands on their time and energy, the report indicates that business leaders believe that the digital skills gap can be closed, but the challenge is prioritising it over other short and medium-term tasks.

The report finds that only 11% of Ireland’s SMEs feel their employees have the skills needed to successfully adopt and use new technology, a statistic borne out in the data where only 53% of SMEs have (or use) social media and video platforms and just 18% make use of customer insights tools. When measuring the number of SMEs that have their own business website, Ireland at 55% ranks comparably lower than the EU average of 77%.

The report finds that only 11% of Ireland’s SMEs feel their employees have the skills needed to successfully adopt and use new technology, a statistic borne out in the data where only 53% of SMEs have (or use) social media and video platforms and just 18% make use of customer insights tools. When measuring the number of SMEs that have their own business website, Ireland at 55% ranks comparably lower than the EU average of 77%.

What skills should be prioritised?

Google infographic on digital skills.

The research shows that Irish SMEs are ambitious when it comes to investing in digital capabilities but 50% say they lack basic knowledge about which skills to prioritise. The report indicates that policy makers, advisors, and suppliers to the SME sector need to help address the priority gaps that will deliver quick wins, spurring decision makers to go further.

Irish SMEs are very confident (56%) that meeting their digital skills objectives could make a big difference to business performance, and not just on one or two metrics. SME leaders believe that improving digital capabilities would allow them to increase wages and salaries (28%) and over half of those surveyed (57%) say that meeting their objectives [in digital capabilities] would help them to grow faster and become more profitable.

The economic opportunity

Fiscally, the study proposes that an increased investment in digital skills could grow Ireland’s GDP significantly, calculating an increase of €9.5 billion (to €544.2 billion) by 2025.

“Two things are constant to almost all SMEs; first that they believe investing in digital capabilities will enhance their business and second that they are ready to do that now – but they need the right supports”

“The timing of this report could not be more important, the decisions that business leaders and policy stakeholders make about digital capabilities in the coming months and years will have profound implications for the long-term productivity and profitability of the SME sector, and for sustainable economic growth over the rest of the decade,” said Alice Mansergh, director of Small Business at Google.

“For its part, Google will use these findings to help shape the courses we provide via the Grow with Google initiative helping to train people in key digital skills that will empower them to embrace new business and commercial opportunities.”

The report identifies several gender differences highlighted in the areas of digital content and social media. Female decision makers in SMEs are more likely to use social media platforms (55% vs 51% of men). Women are more likely than men to see the creation of digital content as a top priority for digital skills development (35% vs 28% of men), as well as using digital tools and channels for marketing (21% vs 17%).

Even though more female leaders than male are likely to adopt and leverage digital tools, female leaders and decision makers in Irish SMEs are less likely to say their organisation is over halfway in its digital journey (58%) than men (65%).

In order for Ireland to achieve its digital ambitions, it is vitally important that female entrepreneurs and SME business leaders are enabled to play their part.

Regional spotlight

Comparing SMEs across the regions there are several differences. 45% of firms in Dublin are likely to think they are more than halfway along their ‘digital journey’ significantly higher than regional firms based in the midlands (32%).

“Small and medium enterprises remain the backbone of the Irish economy; accounting for 99% of active enterprises and 70% of employment”

When it comes to the adoption of digital tools, Dublin again maintains a distinct advantage with 62% of firms using a business website compared to only 47% in the border region. Firms in Dublin demonstrate a stronger appetite to upskill with nearly 70% of business leaders in the capital likely to undertake a course in the next 12 months vs 59% of Border firms.

“This research is unique in that it provides information and insight directly from SME leaders themselves,” said Gerard O’Neill, chair of Amárach Research.

“While we see some subtle differences in the findings, two things are constant to almost all SMEs; first that they believe investing in digital capabilities will enhance their business and second that they are ready to do that now – but they need the right supports. This research allows decision makers, policy makers and industry personnel to have meaningful and informed dialogue that can affect real and positive change to Ireland’s digital landscape.”

The Covid-19 crisis has amplified the power of digital in building business resilience. During the first few weeks of lockdown, Google saw a 300% increase in the number of people taking digital training courses.

Research has shown that 80% of European SMEs increased their use of digital tools during the pandemic and those SMEs that embraced digital tools had 60% better revenue results and hired 3 times more employees during the pandemic.

The report finds that 64% of SMEs in Ireland say their experience of the Covid-19 pandemic has incentivised them to invest more in digital skills with 76% saying digital tools are more helpful to their business now than before the Covid-19 pandemic.

The report has shown how Irish SMEs are ready to invest in the digital capabilities that will propel their success in the post-Covid era.

“Small and medium enterprises remain the backbone of the Irish economy; accounting for 99% of active enterprises and 70% of employment,” said Enterprise Ireland CEO Leo Clancy.

“Enterprise Ireland and the Local Enterprise Offices are committed to supporting these businesses with their digitalisation journeys, investing in the capabilities that will help lead them to international success.

“For successful businesses, digitalisation isn’t an option, it is a crucial advantage that allows them to compete and win. The report launched today provides invaluable insight and guidance that will inform debate and enhance decision making as we further invest in digital capabilities across Ireland.”

John Kennedy
Award-winning ThinkBusiness.ie editor John Kennedy is one of Ireland's most experienced business and technology journalists.

Recommended