The UK’s shock election result has thrown an unlikely spotlight on Northern Ireland. Theresa May’s poor Conservative result means her party has turned to the Democratic Unionist Party (DUP), a rightwing, pro-British group, to reach a parliamentary majority.
The country, which comprises most of the ancient Irish provinces of Ulster, has found itself in headlines all over the world. But amid the politics, and suggestions the DUP’s sudden rise to fame could destabilize its fragile peace, Northern Ireland’s future rests more firmly on the terms Britain can broker for its impending exit from the European Union. More than most, a small but striking tech scene is hoping it can continue on a path of impressive success.
Northern Ireland may only have 1.9 million inhabitants but it has long fostered a reputation for research and IT, helped in no small part by its established and forward-thinking higher education system. Graduate talent is strong, with institutions including Queen’s University Belfast, ranked a top ten British research-intensive university.
The country’s Assured Skills Programme is a project of Invest Northern Ireland and the Department for the Economy. It ensures that each investor’s workforce is equipped with the skillsets specific to that business, with financial assistance provided by Northern Ireland’s Department for the Economy: a model that has been used in areas such as data analytics, software development and testing, cyber security, 2D animation and game development.
In 2008 Queen’s created the UK’s Centre for Secure Information Technologies (CSIT) on Queen’s Island, a former wasteland at the harbor of capital city Belfast that plays host to a number of facilities including a Titanic-themed visitor center and film studios. It caters to one of Europe’s brightest cybersecurity sectors that now employs over 1,200 people.
Belfast-based cybersecurity firm Proofpoint played a big hand in preventing the spread of a May ransomware attack that wreaked havoc on hundreds of institutions including the UK’s National Health Service. Other firms, including Black Duck, Rapid 7, Whitehat and Alert Logic have been busy winning customers all over the world.
CSIT’s foundation was one of the local tech scene’s biggest catalysts, says Steve Harper, executive director for international business at Invest Northern Ireland, a regional development agency. It is “the UK’s national innovation and knowledge centre for cyber security and home to an impressive hub of security verification and authentication technology businesses. It is a place where top-level academic researchers and start-ups regularly collaborate with some the largest US firms in Northern Ireland.”
Invest Northern Ireland is a core financial supporter of a recently-announced £40m ($51m) cash injection into CSIT. “Cyber security and the tech industries are rapidly becoming to Northern Ireland what the shipbuilding, linen and rope making industries were to our region a century ago,” adds Harper.
In fact CSIT and the Northern Ireland Science Park (NISP), a cluster of over 110 tech companies bolstering Belfast’s reputation for research and innovation, are situated just yards from the building site of the city’s most infamous vessel, the Titanic.
But unlike the Titanic’s fated maiden voyage, Belfast and Northern Ireland’s tech scene can look to calmer tides. As well as security the country enjoys booming scenes in fintech, data analytics and blockchain services. Northern Ireland enjoyed 34% gross value added (GVA) between 2010 and 2014.
On the face of it Northern Ireland’s investment scene looks bright too. Groups like Techstart NI, Kernel Capital, Crescent Capital and CoFund NI are helping companies get off the ground. But dig a little deeper and there are issues. HALO, the country’s biggest angel network, recently stopped operating. Invest Northern Ireland-backed StartPlanet has also disappeared and Techstart NI is said to be on the verge of collapse.
Those funds that remain are attracted to a workforce that, while highly skilled, earns far less than counterparts elsewhere in the UK. In Greater London the top 5% of developers earn over £98,000 annually ($125,000), whereas over half of developers in Northern Ireland–along with the Midlands and Wales–make less than £35,000 (£45,000).
According to the survey, by online community Stack Overflow, 64% of respondents in Northern Ireland felt “greatly” or “somewhat underpaid”.
Marty Neill, CEO of e-commerce software vendor AirPOS, sees a mixture of positives and negatives in Northern Ireland’s wage structure. “We are often sold as a highly educated, low cost workforce but I think we’re better than that,” he says. “People in Northern Ireland are fiercely loyal, tenacious and intelligent. We deserve better than the low wage economy we have now…The low wages attract companies from outside who then come in and inflate the wages.”
The biggest challenge facing local entrepreneurs is, he argues, funding. Local VCs, when they can be found, tend to err on the side of caution, like so many in Europe. This “restricts a lot of the companies in their ability to move fast and, more importantly, grow fast,” says Neill. The scene is, he adds, “getting bigger surely, but not as quickly as it could be.”
Things are made more complicated by the close proximity of Dublin, the Republic of Ireland’s capital, whose favorable tax regimes have lured in a number of tech’s biggest players. “We end up with some,” says Neill. “But certainly not the cream.”
In response Northern Ireland has built some formidable infrastructure. The country has the highest density of fiber in Europe and its 100GB/second transatlantic and terrestrial communications link “provides the shortest and fastest international connection from North America to Europe,” says Harper.
“Unaffected by disruptions to telecoms in London and Dublin, the region provides a solution for disaster recovery and business continuity for international companies,” he adds. “It also has the highest availability of super-fast broadband in the UK.”
Outside of tech Northern Ireland’s economy has been struggling. In December Ulster University reported that its economy will grow by just 1% this year and in 2018. However consumer spending will ensure the country avoids a recession.
Most people in Northern Ireland are therefore looking tentatively to the DUP’s upcoming power-share in Westminster, as hope for more investment in the country. The DUP is “known to have considerable reservations about some aspect of Making Tax Digital [a government online tax scheme]; particularly the access problem that individuals in the rural parts of Northern Ireland have to high speed broadband,” says RSM tax consultant Andrew Hubbard.
The party’s hardline anti-abortion, anti-gay stances will do little to enthuse liberal entrepreneurs from making the country home. But the DUP’s newfound kingmaker status will ensure that Northern Ireland is not forgotten during the upcoming Brexit talks with the EU.
“Contrary to popular belief, the Brexit referendum result did not stop the flow of foreign direct investment into Northern Ireland,” says Harper. “In fact, since the referendum, Invest Northern Ireland has attracted 60 per cent more new inward investment projects than the year previous–with the vast majority from the US.”
“With or without Brexit, Northern Ireland is well placed to play a critical role in providing the industry much of the talent it needs to perform these critical duties and an opportunity to help solve global problems,” he adds. “Today Belfast is the number one global location for cyber security inward investment, and the top international location for US companies in the sector. Belfast is also the number one destination city globally for financial services technology projects.
“It is very much business as usual.”