While announcements of layoffs may be disheartening, the evidence suggests that Ireland’s technology industry is preparing itself for further growth, says Phil Codd, managing director of Expleo in Ireland.
For a country that has gained a reputation as a global technology hub, the news that some of the world’s largest tech companies are laying off significant numbers of people came as a shock to many in Ireland.
In a flurry of announcements, most recently from Salesforce and Amazon, thousands of highly skilled workers in Ireland are likely to lose their jobs.
“It is important to keep these layoffs in context. The announcements follow almost three years of unprecedented growth in the technology industry, which was fuelled by the pandemic”
And, with those announcements, comes the inevitable question: could we, the second-largest exporter of computer and IT services in the world, be staring down the barrel of a tech slowdown?
It is important to keep these layoffs in context. The announcements follow almost three years of unprecedented growth in the technology industry, which was fuelled by the pandemic. They are therefore not reflective of Ireland’s overall technology industry, or even the challenges that businesses are continuing to experience in hiring skilled IT staff.
Rather than lay off staff, and buoyed by tentative optimism in Ireland’s business community, companies seeking technology talent are more likely to continue hiring throughout 2023 and beyond.
Peaks and troughs
At the start of November, when Stripe announced that it would lay off 14 per cent of its workforce, the company’s CEO, Patrick Collison, sent an email to employees, admitting that they had ‘overhired for the world we’re in’. Three days later, Meta announced that it would lay off 11,000 people – 13% of its workforce – a move that Mark Zuckerberg blamed on growing too quickly during the pandemic, after a surge in online commerce led to outsized revenue growth. Many more have announced cuts or hiring freezes as they adjust to the post-pandemic world.
These companies were responding to an unprecedented crisis and in the technology sector, that often resulted in human capital inflation as they went on hiring sprees to meet spikes in demand and customer activity.
Today – and despite the ongoing war in Ukraine, accompanied by an energy crisis – businesses are planning for more ‘normal’ times ahead. The employers’ body, Ibec, is predicting a modest two per cent expansion of the Irish economy in 2023. This is helped by last year’s high tax revenues – up 25% on 2021 – which have enabled the Government to increase spending and run a significant budget surplus.
While there will undoubtedly be challenges aplenty, this is good news for Irish businesses. Recent research from Hays Ireland has found that the vast majority, 90%, of employers plan to hire over the next 12 months, up 6% on the previous year. Unemployment, says Ibec, will remain very low.
Clearly, businesses are feeling optimistic. And in the wake of Covid, their reliance on technology remains, well beyond the point of no return. They must continue to adopt and use technology intelligently to stay ahead and emerge from what may be a challenging year, unscathed.
The people and businesses providing those technology services will therefore continue to be in huge demand. Many technology companies, including our own, anticipate growth far greater than the two per cent mark. In Expleo, we are expecting 10 per cent growth in revenues in Ireland as we prepare for a 2023 pipeline of large projects and programmes from domestic companies, Government departments and multinationals who are servicing a market that remains relatively optimistic.
Large public tenders are continuing to be fought for and won by technology companies who have the skills and knowledge that many organisations lack themselves and we will continue to see businesses suffering from IT skills shortages throughout 2023. Roles relating to software development (Java in particular), project management and business analysis are proving difficult to fill as businesses seek experts who will drive and manage the digital transformations which have become so central to their success.
Tech companies providing cybersecurity services, meanwhile, are likely to perform well regardless of whether there is a recession or not. Expleo’s Business Transformation Index 2022 found that 46% of businesses struggle to attract and retain cybersecurity talent. As businesses plan for further growth and their operations become increasingly digitalised, it is not unreasonable to expect that this problem will grow in tandem.
Increasingly, the technology industry is becoming intertwined with the life sciences sector – and particularly medtech and digital health – which once again saw huge investment in 2022 and was responsible for exports of more than €62bn in 2021. The industry has become hugely reliant on advanced technologies including AI and automation and as this sector continues to grow, so too will the technology companies servicing it.
Since the 1950s, when IBM and Ericsson opened offices here, Ireland has enjoyed an international reputation as a technology hub. History cannot protect us from the future, but we have seen time and again how the technology sector has been instrumental in economic recovery, as well as ensuring the economy continued to expand despite the pandemic.
And while announcements of layoffs may be disheartening, the evidence suggests that Ireland’s technology industry is preparing itself for further growth, buoyed by an optimistic business community whose revenues have become faithfully wedded to digital innovation.