Tánaiste Mary Harney today (Tuesday 11 May 1999) announced total investments of £68 million, supported by Enterprise Ireland, in 120 Irish owned internationally traded service companies during 1998. This will result in the creation of 1,762 new jobs over the next three years.

At the announcement today attended by 30 of the companies the Tánaiste said "the services sector continues to make a very significant contribution to the overall economy in terms of wealth creation, new business establishments and increased employment."

She continued " The growth dynamic of this sector is reflected in this years sales and export figures and an almost doubling of new jobs created during 1998 with total investment in the sector up 60% on the previous year. Employment in these companies is expected to rise to 5,700 by the year 2001 on foot of projected increase in sales from £130 million in 1998 to £416 million in 2001. Exports in this sector now represent 73%, or £95 million, of sales."

The services companies which included 32 new enterprise start-ups and 38 expansions are drawn mainly from areas of software development, financial services, education and training, media and publishing. " Its strength as an industry is reflected in increased investment in R&D and the steady flow of start ups every year," according to the Tánaiste.

" The marketplace for these products is truly global. The acceleration of trade liberalisation together with quantum leaps in information and communication technologies together have created an environment of revolutionary change in international business. These rapid changes present huge opportunities particularly for the smaller firm with specialist technical and market knowledge."

" Small firms are pioneering these new growth sectors. Their competitive advantage often lies in their greater adaptability, flexibility and responsiveness and these key attributes have assumed a greater importance in the global marketplace. In many cases the ability to specialise in selected niche technologies has enabled these firms to gain and sustain a competitive edge over their larger counterparts," the Tánaiste said.

According to Dan Flinter, Chief Executive Officer, Enterprise Ireland " The technology intensive nature and short product life cycles in many of these businesses demand a far higher commitment to research and development. Last year alone Enterprise Ireland total investment in R&D in these companies amounted to over £10 million nearly double that of 1997. This is significantly higher than in other sectors.

He continued "today's figures copperfasten the international services sector as the key growth area over the last number of years. This is the fastest growth sector of the economy and the companies are competing internationally and generating significant export earnings."

"However" he said " There is no room for complacency. Today's announcement points to a concentration of activity in the Dublin/East Region. This is a matter that needs to be addressed urgently. We are currently engaged in a major review of the sector in order to identify appropriate areas for development throughout the country and to identify industry segments which can be clustered and developed in specific regions. The success of these companies is not location or size dependant but a commitment to continuous innovation, export orientation, high commitment to R&D, and highly skilled personnel are key features of those who perform well in the sector.

"We are also witnessing the emergence of entirely new services sectors such as multimedia, films and TV, franchising and electronic information services. Enterprise Ireland with support from the Small Business Operational Programme which provides for research into potential new service areas has commissioned a number of studies which include studies in the Design Service Sector and Direct Mail Marketing."

The Tánaiste commended the role the financial community has played in developing this sector. Since 1996, £70 million has been committed in venture capital funds for small and start up companies with the potential to grow rapidly and create significant jobs and become international players in global markets. To date, £6.5 million was invested in 1996/1997 and £11.3 million was invested in 1998. Over 60% of the funds have been invested in the software and internationally traded services sector.