UB Insider #71: Why Utah Companies are Finding a Second Home in Ireland
About this episode:
When you think of Ireland, you might think of an island filled with rolling green hills and beer—practically the opposite of the dry, desertous, landlocked Utah. But almost a dozen of Utah’s fastest-growing companies, including Qualtrics, Ancestry, Overstock, Merit Medical, and most recently Pluralsight, have found it to be a perfect fit for their European expansions. They’re joined by other U.S. companies like Google, Hewlett Packard, Microsoft, Facebook, eBay and Twitter.
Deirdre Moran is vice president of Emerging Technologies, U.S West Coast, for IDA Ireland, a government agency in charge of foreign direct investment. Deirdre speaks from the Silicon Slopes Tech Summit about why tech, medical and other industries find a good fit in Ireland. Read more about this on Deirdre’s blog post about the ties between Utah and Ireland.
[The following has been edited for grammar and clarity.]
Lisa Christensen: Hello and welcome to UB Insider. I’m Lisa Christensen, online editor at Utah Business magazine. When you think of Ireland you might think of greenery, an island, beer – practically the opposite of dry, desertous, landlocked Utah. But almost a dozen of Utah’s fastest growing companies like Qualtrics, Ancestry, Overstock and now Pluralsight have found it to be a perfect fit for European expansion.
Deirdre Moran is the vice president of Emerging Technologies, U.S. West Coast, for IDA Ireland, which is the government agency in charge of the country’s foreign direct investment. We met up at the Silicon Slopes Tech Summit to talk about why tech companies are flocking to Ireland. Welcome.
Deirdre Moran: Thank you.
Lisa Christensen: So tell me a little bit about this growing tech scene in Ireland.
Deirdre Moran: I suppose if we look back, IDA has been around since the 1940s in various guises. It was one of the first investment agencies of its kind. We’ve evolved over the years and now there’s a lot more competition. But because we took a very open approach to inward investment since the 1950s we’ve built an environment and an infrastructure that supports companies that are looking to globalize and set up European operations.
One of the first U.S. tech companies that set up in Ireland was IBM back in 1956 or 1958. What they were doing then is very different than what they’re doing today. They’re still there. I suppose some of the bigger brand names that you guys would know would be HP and Apple. They set up manufacturing operations in Ireland in 1979 and 1980. HP was making inkjet printers and ink cartridges and Apple was manufacturing desktop computers in Cork. Both would have set up fairly small, lean operations and would have done that because of the infrastructures there.
Ireland has always had a well-educated workforce with a very low-cost manufacturing base. We have free trade agreements with all the main trade countries across Europe and we would have had the support and infrastructure from the government from a regulatory perspective. We would have incentivized companies with grants. That has worked very much in our favor.
Today, Apple has 6,000 people in Cork. It’s one of their only in-house manufacturing operations. There may be 300-400 of those still working on manufacturing desktops or retrofitting desktops. But really, it’s very much services oriented. It houses all of their European sales support and their supply chain. If you buy iTunes in Europe you’re buying it from the Irish entity.
So it’s a very highly skilled workforce, very multilingual, very multicultural. That was back in the 1970s and 1980s. Then we saw some microsystems like Oracle and throughout the 1990s and through the 2000s we’ve seen the likes of Amazon, Apple, Google, Facebook, LinkedIn arrive. We’ve been very successful and that’s just focusing on the tech.
We have a very strong medical device and pharmaceutical base. The international supply of Botox, for example, is made in Ireland. The international supply of Lipitor, a well known heart drug, stints and one in five sets of contact lenses that are used worldwide are manufactured in Ireland. So there’s still a very strong manufacturing base there, particularly for highly regulated, high margin industries. We attract a lot of that business. Also, Merit Medical, a local Utah company on the medical device side has a manufacturing operation in Galway. So we still continue to attract those types of companies.
Ireland has got a very strong services base which I can go into. I can talk about why they’re there, if that makes sense.
Lisa Christensen: Please.
Deirdre Moran: So as I said, the number one reason companies are setting up in Ireland, and Qualtrics and Pluralsight are great examples of that, is to find an open business environment where they can get the right talent. It’s very much a talent-driven decision. Can you find the people that speak the languages, that are tech savvy, that are educated and can sell and support European customers and help build European business?
As a U.S. company grows to a certain element of scale, they need to be closer to those European customers. There’s different regulations and languages across Europe. There’s different cultural nuances that you can deal with to a certain extent, but at scale you need to be closer to them, even from a time zone perspective.
Qualtrics is a great example. They serviced Europe from a night shift to begin with down in Provo. As their business scaled and they were doing some great stuff, and obviously they have a great product, they got great traction in Europe and they needed to be nearer to their customers. They set up a team in Dublin and some of that night shift staff relocated. We helped them with that. We helped in terms of getting work permits. Another pro-business initiative is that we’ve taken a very open approach to immigration, which is very topical at the moment.
Ireland does not have a cap on H1B equivalents for skilled workers. We recognize that we are only an island of 4.5 million people and we keep very open borders in terms of getting talent in because we want to scale and help our companies scale.
Qualtrics moved a landing team over to Ireland and they started hiring. Today they have over 300 people in Dublin and continue to grow. It’s all multilingual sales and support and it has been a great success for them. So access to talent is the number one priority from a sales and support perspective, but also from a management perspective. It’s beneficial to employ people who have worked with U.S. companies and are able to build teams that have European business knowledge. For a company like Qualtrics, that was only 150 people at the time, you don’t want to open entities in every company when you’re at that size. You want to try and scale from a centralized location.
From a software development perspective there is a lot of competition for talent globally. There’s competition in Ireland. But again, that open immigration policy helps with that. Overstock.com is another great local example of a company that doesn’t actually sell into Europe but they’ve opened a software development center in Ireland to access that talent base. They have a team of engineers – maybe 30 or 35 of them. They’re hiring from Ireland but also all across Europe because of the free movement of labor across borders.
We have had a very pro-business government consistently who create pro-business employment legislation. It’s not quite as “fire at will” as it is in the U.S., but it is easier to manage versus in continental Europe where it’s a bit more difficult in terms of flexibility and unions. We have very good regulation on the medical device side.
Ireland’s regulators are seen as some of the best in Europe in terms of engaging with companies and getting them to understand what they need to do to comply. They take a very consultative approach rather than going in and staying separate or having a more combative approach. That works very well in our favor because companies see the openness and the willingness to work with them. So the business environment, the talent, and also from a cost base, Ireland has always taken a very progressive approach. We have a low corporate tax rate of 12.5%. We offer a very good R&D tax credit. For companies that are building new products, processes and platforms, we have a 25% R&D tax credit. So for every dollar you spend on qualifying development work you get 25% back. That helps in terms of managing costs, particularly for companies in early stages when cash flow can be a challenge. So all of those things really feed into why we continue to win business and grow our base.
Lisa Christensen: So you have great talent and a great business climate. What is it that you actually do when you’re talking to companies about making the move to Ireland?
Deirdre Moran: It’s a great question. We are very much ambassadors for Ireland in a business perspective. We have almost forty people across different offices in North America. Almost 70% of our business in terms of inward investment comes from North America. It’s a well worn path for companies who have grown to a certain stage here and need a base in Europe. It makes sense that the U.S. is our biggest source of business.
So what we do here is engage with companies, I suppose, as early as we can to help them understand the opportunities in Europe and the opportunities that Ireland offers. I mainly work with high-growth emerging companies that are usually venture backed, growing fast, and it’s typically their first office in Europe. Everybody wants to know what’s worked. We help them understand the case studies, what their peers have done, what functions they’ve put in Ireland, what they’ve been able to support or do based in the U.S., and what they may need to do in Ireland. Really we try to instruct them on what they can do from a centralized office in Europe.
We help companies navigate the legal requirements, tax requirements, recruitment and all of those different things. We aim to help them understand the nuances that are different to doing business in Europe. It’s really about getting that information to them, helping them understand the business models and sales models in Europe. And then we actually host them. We tell the companies, come on over. Meet with Slack. Meet with New Relic. Meet with Zendesk. Meet with all these companies that have built their European businesses there and understand how they’ve done it. That’s hugely beneficial from a learning perspective even if they never set up an office.
If companies decide to go ahead and set up shop in Ireland then we will help them find properties. We will help them with immigration – we have a fast-tracked process with our department to help with that. We can help with PR and getting their name out there. We can help them with recruitment. The cliché that we use is that we’re the concierge service for doing business in Ireland. Whatever they need, we help them with. We’re a free service and everything that we do with companies is confidential.
As an organization, we’re funded by the Irish government and they see a lot of value in that. It’s a key part of our economy. We have over 1,400 clients and we’ve entered our fourth year of growth in terms of the employment numbers by our clients. Today, over 210,000 Irish citizens are employed by international companies in Ireland. This represents about 10% of the employment base. Those companies spent $18 billion in the Irish economy last year on payroll, services and the sub-supply. They spent over $1.5 billion on in-house R&D developing new products and processes and are responsible for 70% of our exports. So it’s a huge part of our economy. We see the value in having a team of people help these companies be successful.
Lisa Christensen: My next question was going to be about how this is a good fit for both the companies and for Ireland as a country, but it seems pretty obvious from all of that.
Deirdre Moran: It is. It’s very much about facilitating growth. The U.S. is a great and wealthy market for these guys, but as they look to globalize we are able to help them do that successfully. It’s really a win-win situation because there’s a two way flow there. There’s roughly 170,000 people employed in the U.S. by Irish companies. So it is very much a two way flow. Some of the great examples are Intercom out of San Francisco and Stripe, which is two Irish brothers. We see a very symbiotic relationship between both.
Lisa Christensen: Where are you finding most of these businesses? You mentioned that you’re based in California.
Deirdre Moran: Obviously Silicon Valley is a huge cluster of tech in itself and we have an office based there for that reason, but we’re increasingly seeing more activity here in Utah. I’m up here more and more often. As you mentioned, Pluralsight just announced that it opened its office in Ireland last December. That’s a long process that takes a couple of years. It’s a long sales cycle. But also early last year InsideSales announced its new R&D office in Ireland. So we’re seeing more and more momentum from Utah. Other clusters that we’re seeing are LA and Seattle which is the home of Amazon and Microsoft who are two of our biggest investors. We’re also seeing a cluster in Denver/Boulder, as well. But from my perspective I’m probably up here more often than in other states. We also have offices across the country and we’re seeing activity out of the East Coast and the Midwest as well.
Lisa Christensen: You mentioned as we were chatting before we started recording that as you see one success story out of an area you start to see more and more.
Deirdre Moran: Absolutely. A lot of what we do is referencing in case studies. When somebody has a good experience, that spreads amongst their business colleagues and their friends. So if somebody has a good experience, which is what we hope they do when they setup in Ireland, we see that kind of follow through with more investment.
Google set up in Ireland in 2003. They currently have about 6,000 people in Dublin. Sheryl Sandberg was very involved in that decision. And when she moved to Facebook, for her it was a non-brainer to setup Facebook’s European HQ in Ireland. Seeing those kinds of cycles is great. Ancestry.com was another fantastic win for us. They’ve been in Ireland since maybe 2008, 2009 or 2010. They had a great experience. I’ve seen executives move from that company to others and bring those new companies then to Ireland when the time is right for them. It’s great to see these executives pop up again and again and I suppose it shows success for them and it’s very positive for us as well. It’s all good.
Lisa Christensen: What is the overall vision for these partnerships, not only with the tech companies, but as you mentioned the medical manufacturing and the other industries that you find these great partnerships with?
Deirdre Moran: Our vision as an agency is to continue to be the best investment promotion agency in the world. We have, I suppose, three main functions as an agency, one of which is engaging with our existing clients to make sure that they’re successful and continue to invest. So as I said, Apple has a manufacturing plant. They’ve evolved and added services. They’ve added R&D to continue that cycle. Another great example is HubSpot. They set up a European sales and support team and then they’ve added engineers.
My job out here in the market is meeting new companies and working with them on the opportunity. One of our other functions which is more in the background is feeding into government policy. Given it is a big part of our economy, we survey our clients once a year. We ask them what’s good, what’s bad? What can we do better? And we feed into areas of importance to our clients like immigration and skills. If these companies can’t get the staff that they need, it’s just not going to work. We aim to improve taxes, infrastructure, regulation – whatever it is. We work to continue to evolve our infrastructure and our support to ensure that we continue to be ranked as one of the best places in the world to do business.
Lisa Christensen: So if someone is listening to this and they want to know more, what do they do? How do they get in touch with you or someone else at your organization?
Deirdre Moran: We’re very findable. Our website is idaireland.com. My name is Deirdre Moran. I’m based in Mountain View in California and it’s very easy to find my email address. It’s email@example.com. You can shoot me a note and we can help you out. We have offices all around North America as well as Europe and Asia. There are local connections there that can link in with you. We also have a big team back in Ireland, as well. So feel free to get in touch at any stage.
Lisa Christensen: Well great, thanks so much for speaking with me today.
Deirdre Moran: Thank you very much, I’m delighted to be here.
Lisa Christensen: You can also follow Utah Business on social media at @utahbusiness or you can drop us a line at firstname.lastname@example.org. Thanks for listening.