Remarks by Tánaiste Mary Harney at the2001 National Software Conference in O’Reilly Hall, Belfield, on Thursday 31st May, 2001

The growth and success of the Irish Software Industry is something we can all be very proud of. Maintaining this success and ensuring that Ireland remains to the forefront of this industry is now a key challenge.

Over the last ten years the industry has grown from a handful to over 800 companies, almost 700 of which are Irish owned. These employ over 25,000 and total revenue for the sector is in excess of £6 billion ( €7.6 billion ), with Irish owned companies accounting for over £1 billion ( €1.26 billion ) of that total. These figures clearly show the importance of this industry to the Irish economy.

There has been much talk recently of the slowdown in the US economy and in particular its effects on the IT Sector. To date, we have seen a number of company closures and a further number of companies, both Irish and Multinational, restructuring their business to adapt to these changing circumstances.

However, I do not believe that all is gloom and doom It is important to stress some positives which will serve to see the IT industry here survive this period of crisis. Most of the Irish owned software companies are "product" focussed. This investment in the development of their own IPR (Intellectual Property) means that they have an asset. Development of company "value" is important in continuing to secure investment and in securing sufficient market share to achieve the required return on investment.

The local Irish market, while slower than in previous years, continues to grow providing opportunity locally. While for indigenous companies the USA market has grown to be the single largest export market (43% exports), the UK & EU markets account for a further 40% exports. The UK and EU markets have not been hit to the same extent as the USA and should potentially be regarded as a new export market focus for the industry here. The new emerging markets in China, India, the Pacific Rim and Latin America also present opportunities.

Many Irish software companies operate in "niche" markets which can be an advantage in terms of retaining focus in a general market downturn. Technology and software will be vital when growth recommences. In many instances, technology can be part of the solution to the downturn for customers. It is important that companies are pro-active in responding to the changed climate.

I recall our Trade mission to India last year where I was accompanied by the Irish Software Association and by 14 Irish technology companies seeking to develop closer relationships with their Indian counterparts. One of the milestones achieved during that trip was the signing of an agreement between the Irish Association and their Indian equivalent, NASSCON. This agreement copperfastened the relationships between the Irish and Indian IT and software sectors. I would like to commend the Irish Software Association on the leadership it has shown in this area.

In the Finance Act 2001, the Government introduced a new share option scheme intended to provide increased incentives for innovative and creative people to work in dynamic companies in Ireland. The Irish Software Association was particularly persuasive in arguing for this change.

While the provisions of the scheme are available to all business, it is hoped that the scheme will be particularly relevant to certain sectors of Irish business, including software and other high tech sectors, where businesses experience particular difficulty in holding on to staff members vital to the success of the enterprise.

I would like to say a few words about the forthcoming referendum on the Treaty of Nice. The main purpose of the Treaty is to prepare the Union for the significant expansion in its membership anticipated in the next few years.

Firstly, the essential interests of Ireland, as a smaller state, have been protected in the NICE Treaty and I want to stress that one area which will not move is the area of taxation, where we have insisted on the retention of unanimity. We believe that taxation is a fundamental tool of national policy-making and must remain subject to domestic control within each country.

Secondly, Ireland has benefited enormously from the single market, as exports are very important for our economic growth. The internal market will be extended to embrace over 500 million people, thereby giving us additional opportunities for increasing our exports. Eastern Europe has already provided opportunities for many of you in terms of increased exports, joint ventures and outsourcing Membership of the Union will increase these opportunities which will be good for you, your employees and this country. I urge you to help get the message across and get people to vote yes.

I want to mark the departure from the Irish Software Association of Katherine Lucy who, as Director, has been a powerhouse behind the Association for several years. As she moves to pastures new, I wish her well in the future.