The digital technology sector contributes 4.4% to Ireland’s GDP, and is growing at 16% per year – that is more than 10 times the rate of growth of the economy as a whole.
With exports worth €72 billion per annum (40% of total national exports) and four of the top five exporters in Ireland being technology companies, this sector is a major employer, accounting for an estimated 105,000 employees.
While staff retention was the primary difficulty for Digital and Technology companies in 2016, this has become secondary to the fastest emerging problem in 2017 – the lack and the cost of accommodation.
The enduring reality is that the Digital and Tech sectors in Ireland cannot be sustained by the indigenous skills base. Irish Universities simply do not create nearly enough graduates to fulfil the demands of the multinational and indigenous Digital and Tech sectors in Ireland. Therefore, there is a reliance on attracting foreign talent to Ireland, and in recent years, as many as 40% of staff placed by Prosperity have originated from abroad.
This reliance of local demand on international supply is now being jeopardised by the increasing cost of living here; in particular the cost and the availability of rental accommodation.
Whereas in 2016 and preceding years, we had a rejection rate of approximately 15% on job offers to candidates living abroad, by the third quarter of 2017 that has doubled to nearer 30%. Time and again, candidates from abroad have cited an internet search on the cost and availability of accommodation in Dublin (and the many associated horror stories) as their reason for rejecting a job offer, and they instead choose to remain at home or locate to a different European city.
This crisis of supply has in part been a motivating factor in Prosperity expanding to service Digital and Tech companies based in other European markets, and we now have a presence in Paris, and are establishing offices in Berlin and Lisbon.
Salaries in the Continental European Digital and Tech Sectors often closely mirror those paid in Ireland, yet the cost of living index can be far lower. For example, a mid-weight User Experience Designer would pay 80% less for an apartment in Lisbon yet they might earn a salary of just 10 - 15% below what they could earn in Dublin. If you bundle in transport costs in Lisbon (also 80% less) and the cost of food (at 50% less), and the sunshine, the maths doesn’t exactly favour Dublin.
We tend to compare unfavourably with a few destinations in Europe. For example, the Digital / Tech jobs market in Berlin is doing well at the moment. The pay range for a Front End Developer in Berlin is €42 - 60k + per year, which pretty much tracks the pay range for an experienced Front End Developer in Dublin which comes in between €45 - 65k per year. Berlin, however, offers higher availability of rental accommodation and at 50% less than what we pay in Dublin; it also offers cheaper transportation at 30% less; and across an index of accommodation, transport, food, entertainment and clothing, it comes in at between 35 and 40% cheaper than Dublin. The top rate of tax in Germany also happens to be a few points lower than it is in Ireland.
The pay range for an experienced Search Engine Optimisation Specialist in Amsterdam is €30 - 55k + per year. Dublin comes in a little lower at €28 - 50k; but Dublin also falls short on a cost of living index with Amsterdam, with accommodation approximately 10% more expensive in Dublin, and a general cost of living that is approximately 15% higher.
It can be argued that Ireland often compares favourably on income tax, but we find that candidates in job seeking mode tend to look at the headline comparisons – i.e. cost of rent; gross salary – and give little consideration to how actual take home pay compares between one country and another.
Anecdotally, we are hearing from clients that foreign nationals are quitting good jobs in Dublin to move to cheaper rental markets. At time of writing, we talked to a client who is losing a key analyst who is returning to Spain due to his inability to move his family here in light of the typical cost of €2k per month for a family sized apartment within reasonable proximity of his workplace. We had been hearing these stories occasionally, maybe on a monthly basis. We seem to now be hearing them on a weekly basis.
There is also a shortage of User Experience Design candidates with experience of having managed design teams, and there are not nearly enough UI Designers with strong portfolios and experience working on software and across a variety of devices
The growth in Programmatic Advertising is seeing a shortage of qualified candidates, and we have been meeting much of the demand with candidates from The UK and Continental Europe. Also, we find that as Irish companies continue to develop and expand their in house digital teams, there is a high demand for Performance Marketing candidates, especially PPC and SEO specialists. Otherwise, we are seeing a huge demand for Brand Managers, Marketing & Communication Specialists and Content Specialists. The continued growth of EMEA sales hubs in Dublin has driven demand for Sales Specialists with a European language.
On the Agency side there is strong demand for Strategic Planners, Web Usability experts, Analytics Specialists and Digital Account Managers. Analytics and Measurement is currently a very high growth area. Account Managers and Account Directors are being actively recruited from the Agencies by Multinationals who often pay 20-25% more in salary. That said, we are seeing staff who have left Agencies to go client side returning to Agencies as they miss the value of working in a smaller business where their input is influential and management opportunities are easier to access. Furthermore, we see that agencies are increasingly developing creative and innovative staff retention programmes.
While there are headwinds, there does remain considerable hiring activity in the Irish Digital and Tech Sectors. The recessionary pressures of former years have eased, if not evaporated, and companies here are generally underpinned by sound financials and projections, or indeed, International profiles. To that effect, many Irish based Digital and Technology companies are in expansion, so sourcing talent is often their primary challenge, and if that challenge cannot be addressed, many of these companies can suffer an impediment to growth, and even viability. That challenge is being met with strong salaries, benefits, sponsorship, relocation packages, and in many cases, the opportunity for candidates to align their career with strong brands or highly innovative Digital services and products. And while Prosperity has been recruiting extensively from EU countries for a number of years, we find that Irish employers are now far more willing to sponsor non-EU candidates if they have exceptional profiles.
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