Masterstrokes or luck? Here’s how vendors and service providers helped turn Ireland's FDI fate around.

Over the last decade, Ireland has firmly established itself as a favorite of tech giants like Microsoft, Facebook (Now Meta), Paypal, and many more for foreign investments. What exactly makes Ireland the hot new spot to be in for businesses?  What role do professional service providers play in helping companies while setting up in a new country? We would argue that the relationship between economic developers and the vendors on the ground can help create a very strong ecosystem.       

In an increasingly globalized world, businesses, organizations, conglomerates are constantly looking to expand their base and set up operations in countries across the globe. Whether in search of a skilled workforce, the right geography, or logistical solutions, these companies are on a constant lookout for the perfect place to set up shop, making it an extremely competitive market of countries pitching themselves as the “greatest place to do business” on Earth. 

While IBM set the ball rolling by being the first tech giant to set foot in Ireland in 1956, Microsoft, Intel, and more recent names like Apple, Facebook and Google kept the trend going. Today the country hosts over 1000 tech companies as investors ranging from conglomerates to dynamic and ever-evolving startups. With the country having attracted 189 billion dollars worth of investment (more than Brazil, Russia, India, and China combined) since 1990, it has of course piqued a global interest and gained the spotlight from investors and analysts alike. Currently, Ireland hosts 1,600 overseas company operations that in turn employ 250,000 people in the country. The direct investment outflows of Ireland were recorded at €36.8bn in the first quarter of 2021.

So, how did Ireland end up becoming a global favorite for FDI? 

Getting the fundamentals right 

Some aspects that make the country the right fit, especially for tech and data-based companies are no-brainers. Ireland’s predictable climate and low temperatures ensure a minimal cost for cooling down large-scale equipment and data centers. The arrival of companies like Google, Ericsson, and Intel early on is often attributed to this factor. But an upward graph across decades could not just be credited to ideal weather conditions or chance. There is a lot more at play here than incidental advantages. 

For starters, Ireland got the fundamentals just right. Both the IDA, Ireland’s foreign investment agency, and the government ensure that the bureaucratic bumps are minimized as far as possible. The business-friendly approach and stable policy decisions are something that the companies have come to rely on. The fact that a new foreign investor does not need to jump through bureaucratic hoops has been one of the most promising aspects of the country.

Eliminating roadblocks is only one of the parts of Ireland’s strategy.  The government also attracts investment by maintaining competitive taxation policies. As giants like Google, Intel, and Facebook kept setting an example, others followed suit soon enough. And this trend led to the country exceeding 1 trillion in foreign investments, in 2019. 

Financial ease aside, the companies are also aided in research and development through several programs and initiatives. In 2016, the country created the Knowledge Development Box to encourage the development of intellectual property assets. A very favorable tax rate of 6.25% is applied to profits arising from this type of activity. 

With one of the best foreign investment support channels in place, Ireland is able to provide the new entrants with the assistance that not only saves them time and money but a great amount of effort. In addition, the government provides a 25% tax credit to companies carrying out research and development activities that the country deems qualifying. This makes both new and established tech companies who are always in search of newer finding and advancements, the perfect fit for Ireland. 

While the country has continued to keep a focused approach towards being business-friendly with taxation and bureaucratic policies, another advantage it gained post-Brexit was being a member of the European Union. With the lack of free-trade opportunities that now came with the UK, Ireland smoothly transitioned into the spot of the EU’s most attractive investment destination. With the availability of an English-speaking skilled workforce and access to 500 million potential customers across the EU, you could not second guess Ireland. For John Dillon, CEO EngineYard and Ex-CEO Salesforce, the fact that Ireland had the advantage of Euro as well as a young workforce is what made it a clear winner over Londen. John has since moved on to EngineYard as the CEO and has invested again in the country and acquired a small tech company in Dublin.

Another essential factor that contributes to Ireland's ease of doing business is the skilled workforce of the country. The country has put a great deal of effort into ensuring that the young population continues to acquire the right education and skills. For starters, approximately 52% of Irish 25-34-year olds have a college or university qualification. According to the IMD Competitive Yearbook 2017, Ireland ranks as one of the top 10 countries globally for its quality of higher education. 30% of the students in third-level institutions are opting for courses in science, technology, engineering, and maths (STEM). 

In addition to the right push towards technical skillsets, the country also focuses on helping the young population develop a linguistic advantage with foreign languages. As one of the only countries with native English speakers that trade in the Euro, it becomes the perfect solution for global companies to set base here. Louise Phelan, VP Global Operations, Paypal, points out that while the ease of doing business and bureaucratic stability are attractive factors, it is the large talent pool of skilled people that brought them to Ireland. Soon enough after setting foot in the country, PayPal was able to employ 2500 people across their Dublin and Dundalk offices by 2015. 

While the country focuses on pushing the young population towards the right skills, it also further ensures that these skilled people are employed at the right places. The government makes it a point to ensure that the curriculum in the universities and colleges aligns with the demands of jobs in tech companies that are looking to find a place in Ireland. 

All these consistent efforts and strategies by the government and the population’s positive response to them drive a great deal of confidence among new investors who’re looking to build a reliable workforce. As Brendon Cannon, Corporate Affairs Director at Intel, a company now veteran as a foreign investor in Ireland, puts it, “These people have the company’s and the country’s best interest at heart. They constantly preach the message about what a great place Ireland is to invest in.”

Digging deeper

It’s rather simple to say that the credit for the country’s FDI success story goes to the business-friendly atmosphere they’ve created, but what does it really take for a country to be business-friendly? What really goes behind the creation of anecdotes like the one about Bono playing an instrumental role in convincing Facebook’s public policy director, Sonia Flynn, to choose Ireland over Switzerland, the initial choice. 

This ease of doing business that Ireland has been able to provide, in fact, goes beyond just being passively welcoming towards foreign businesses, but aggressively ensuring a better experience. What Ireland’s focus on education, language, and creating a flexible and adaptive workforce does is not just create a workforce that’s employable by multinational companies across industries, but also become better vendors and service providers to them. What this does is make the experience an even smoother and efficient one. 

On peeling the onion further, we found another essential cog in the meticulously created machinery for Ireland’s FDI success. Alongside the relaxed taxation policies, focus on education, and a keen interest in research and development, IDA plays in creating the ease of doing business. 

IDA’s strategic approach has been to target young, fast-growing companies who are looking at branching out for the dynamic range of needs that they have. This leaves them in search of partners across the board. This is where IDA comes in as a problem solver by providing reliable, skilled, and trusted local vendors and service partners, minimizing a great deal of effort and pain for the companies alien to the domestic markets. 

A symbiosis - Vendors and service providers on the ground. 

While an adaptable and skilled workforce is crucial for these investors, another crucial requirement is local vendors and service providers. In fact, they are often the first real point of contact in terms of any real, on-ground work that happens in order to set up shop. This is why it is important that this interaction goes as swiftly as possible, making vendors the foundation that the future of the company in the country depends on. So, when the right investors meet the vendors who are compatible in terms of quality and finances, the process is simplified to a great extent.

The IDA and the domestic vendors of Ireland share a unique, symbiotic relationship that’s not just a win-win for the two parties, but also adds another win for the companies. The IDA provides assistance in finding the right vendors for every company’s unique needs and requirements. By pushing the country’s resources accurately and matching the investors with the right people, they are able to help new companies be efficient and cut short the effort and time spent on figuring out the logistics, finding the right resources, and taking account of costs and incentives. As a new entrant in the Irish landscape, a company must navigate through the markets to find qualified providers for its multiple logistical needs, analyze their compatibility with the company, compare costings and set up communication channels with them, all from scratch, on its own. 

By adding vendor recommendation and curation to their lists of services, the IDA helps promote local vendors and by operating at competitive prices and providing the right quality of services the vendors can secure business from some of the biggest global companies. Without this facility, the foreign direct investors would have to bear the additional investment of wading through the endless lists of vendors and attempting hits and trials. Whereas now the investor gets a filtered list of vendors who fit the bill, both literally and figuratively. What this equation does for the client is create a broad network of eager and competent vendors to ensure not just an efficient start but a sustainable stay in the country. 

Eliminating a vital challenge and entry barrier, this network enables the investing company to have a seamless transition or setup. It is thanks to this setup, young companies like MongoDB, Squarespace, Zendesk, Hubspot, Qualtrics, and Marketo have set up camp in the country. According to Barry O'Dowd, SVP of Emerging Business at IDA Ireland, for most of the young fast-growing companies, speed to market is crucial. This assistance provided by the vendors and IDA coming together hence solves for a major roadblock. 

Having already created a generation of flexible skilled workforce and service providers with its focus on education and skill development, all that was left for Ireland to do was help match the investors with the right people. As a vital step in a company’s journey in the country, the vendors ensure a great deal of ease for them to conduct their businesses. Which is why this symbiosis is just as important in Ireland’s success story as the education, tax policies, and its incidental leverage as the ideal replacement for UK post-Brexit. Jesse Hertzberg, COO Squarespace points out that, “The Irish are customer service people, the people there are affable, friendly and Ireland already have a track record as a customer service hub”. With a native population inclined to provide a smooth and affable experience for the investors, all that country needed was a platform to bring the IDA, investors, and vendors all together in a marketplace that’s not just easy to navigate, but creates efficacy and comes with credibility. 

What makes it possible

This is where GetProven comes into the equation. Proven the parties with this platform that brings them all together to create this network. With GetProven’s services, the IDA is able to streamline its vendors in a way that is easily accessible for investors. By reducing the time that companies will spend looking for the right vendors, comparing their best options, and the to and fro of initial conversations and pitches, GetProven helps both the investor and IDA reach their goals. And of course, it benefits the vendors who get business simply by the virtue of operating at competitive prices and quality levels. Check it out on idaireland.getproven.com