Harney challenges software sector to more than double job numbers over next decade

Is 50,000 job target unrealistic? - Tánaiste

More investment in research and development needed for continued success

More closures and job losses if no increase in innovation - Harney

The software industry in Ireland has a good story to tell. It is also facing major challenges.

The success is phenomenal and is worth recounting. My colleague and predecessor as industry minister, Des O'Malley, predicted in 1992 that employment in the sector could grow to 20,000 by the end of the decade with appropriate State supports. He pointed out at the time that this target was a real challenge to the industry and to the Government as job numbers in the sector stood at only 8,000 at the time.

I am delighted to say that the O'Malley target has both been reached and surpassed ahead of time. Employment in the sector now stands at over 22,000, split evenly between Irish and foreign-owned companies.

I believe that we can reach 25,000 employed in the software sector by the end of the year 2000. Beyond that it is hard to forecast, but would an employment target of 50,000 in software be unrealistic by the end of the new millennium's first decade?

Apart from the challenge of reaching job targets, the industry has, like many others, to face up to the challenge of innovating and adapting for the future.

Clearly, industry in Ireland, whether foreign or indigenous, do not invest sufficiently in research and development. This is very worrying from a Government perspective and must also be a cause of serious concern to industry.

Let me illustrate why it is of such concern.

Firms that do not engage in R&D have a much higher chance of going to the wall than firms that are R&D-active. Research has shown that almost nine out of ten (86%) indigenous firms who are active in R&D survive, compared with seven out of every ten firms (66%) who were not active in R&D.

Moreover, the employment performance of active versus non-active R&D enterprises is telling. Non-active R&D Irish companies saw their job numbers decline by over 30%.

In international comparative terms Ireland is in the bottom quartile in manufacturing R&D as a percentage of sales, while we are only in the third quartile in terms of patents granted. No doubt Ireland has made many gains over the past decade but there is a long way to go. Improving competitive performance means moving ever faster on the treadmill; there can be no slackening off.

My message is simple - engage in more research and development. It is not a cost, it is an investment in your very survival and increases your prospects for expansion and growth.

I am very conscious that more needs to be done in this area and I intend that the national development plan that we are finalising at present will address the issue comprehensively. However the State can only provide part of the answer, the main bulk of the work must lie with industry itself. In partnership, I believe that we can achieve the quantum leap that is required to bring the innovative capacity of Irish and Irish-based firms up to the very best international norms.