The biggest threat to the State’s domestic technology sector in the current economic climate is worsening funding conditions, which could hamper short-term growth prospects for companies here, an Oireachtas committee has heard.
Leo Clancy, chief executive of Enterprise Ireland, was appearing before the Oireachtas Public Accounts Committee on Thursday, where he fielded questions from TDs about the State agency’s portfolio of investments in Irish companies and its 2021 results.
On the worsening conditions within global tech, Mr Clancy said: “If I have a concern about tech it’s about the ability of our [client] firms to raise more money for themselves as they grow. That’s probably the risk; that their growth will be suppressed.”
Mr Clancy said that there have been “very significant losses” in the sector over the past six months but “whilst demand is muted in certain areas, as a result of economic circumstances, tech hasn’t gone away”.
He said: “I think the issue will be one of funding confidence and probably around valuations as well. So if we do see a risk of the financial side it’s are the valuations that were proposed still valid?”
On the skills issue, he said that while there remains a shortage of workers in some sectors, “some [domestic] companies are seeing opportunities in the changed economic circumstance in that it’s easier to access labour” given the job losses at larger firms.
Growth was seen across all sectors of Enterprise Ireland’s portfolio in 2021, results published last year showed. Food exports were up 6 per cent, to reach €12.91 billion or almost half of exports by Enterprise Ireland-backed companies. Construction increased exports by 24 per cent to €2.89 billion, while consumer retail exports rose by 13 per cent to €1.09 billion. Digital technology firms saw exports rise by more than a fifth to a value of €1.53 billion.
Firms supported by the agency, meanwhile, created a net 11,911 new jobs added in 2021 when job losses are also taken into account, a record figure and an increase of 5 per cent from 2021. The net job creation figure declined slightly to 10,841 last year, according to Enterprise Ireland’s most recent set of results.
Still, a wave of job cuts in recent months and the collapse of Silicon Valley Bank, a key funding source for many tech start-ups here through its relationship with the Ireland Strategic Investment Fund, have cast a pall of uncertainty over Ireland’s domestic tech ecosystem.
Aside from the tech giants such as Google, Apple and Meta, all of which have shed jobs in Ireland in recent months as part of wide-ranging, global cuts, a number of high-profile domestic businesses have also moved to trim their workforces.
Earlier this week, Irish software company Workhuman said it expects to cut about 10 per cent of its global workforce as it restructures its investments in the US, Ireland and the wider Europe, Middle East and Africa. Separately, Irish-based marketing analysis and financing unicorn Wayflyer, announced plans in November to shed about 200 of 500 roles globally, with 70 jobs expected to be lost in Dublin.
Asked by Fianna Fáil TD James O’Connor if there was a particular sector of the economy he was concerned about against the backdrop of rising inflation, a tight labour market, a pullback in the global tech sector and ongoing geopolitical instability, Mr Clancy said: “Not in particular.”
He said: I think we’ve seen growth across all sectors in 2022 so we did see all our sectors grow broadly. There’s no particular sector we’re invested in that I would be worried about beyond others.”