Ireland, a Highly Attractive Location for Hosting Digital Assets - 451 Advisors Special Report
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Ireland, a Highly Attractive Location for Hosting Digital Assets - 451 Advisors Special Report
- 1. Ireland – Special Report A Highly Attractive Location for Hosting Digital AssetsA Highly Attractive Location for Hosting Digital Assets Csilla Zsigri – Director of Consulting Services EMEA 451 Advisors – The 451 Group
- 2. THE 451 GROUP – SYNDICATED RESEARCH, DATA, PROFESSIONAL SERVICES, EVENTS • • • We provide consulting services to enterprises, service providers and IT vendors. We address the gap between traditional research and management consulting. We help our clients overcome strategic, planning and research challenges associated with digital infrastructure evolution.
- 3. SPECIAL REPORT ON IRELAND: TARGET AUDIENCE & METHODOLOGY International digital-content and IP-centric businesses that are planning to expand their operations into the European market…
- 4. A Highly Attractive Location for Hosting Digital Assets
- 5. Economic & Political Stability GDP Growth 500+ million Source: GconnTec Source: Eurostat
- 6. Tax & Financial Benefits RATE REPUTATION REGIME • R&D Tax Credit (up to 25%) • Accelerated Capital Allowances - incentives for investing in energy-efficient equipment • Tax advantages for relocating key staff • 3-year corporate tax relief for startups • Transparent corporate tax regime • 69 double-taxation treaties in place The ability to offer a full package of tax benefits has already attracted many multinationals looking to launch into Europe. Source: IDA Ireland
- 7. Energy & Electricity Mix • Ireland has committed to securing 40% of its energy from renewable sources by 2020, while the overall EU target is 20%. • Mainly wind, but also exploring how to harness wave power • Exporting wind-generated power to the UK • Dublin has become a favored location for free fresh-air cooling • Fresh-air cooling drives down electricity costs and is good for low PUE • Multinationals considering investing in on-site energy generation • Business electricity prices for large consumption bands (20,000-70,000 MWh) were below EU-27 and EU-17 average in Ireland (2012 2H) • Irish Government committed to significantly lower electricity costs • Irish power grid currently accepts up to 50% wind energy; 75% by 2017
- 8. Legislative Environment • • • Ireland has a pro-business legislative environment that complies with EU standards Irish regulations are strict enough to be effective, but more pragmatic and flexible than the local laws in some other EU countries Most regulators in Ireland have experience dealing with US multinationals and are open to listening to what they have to say, due to the significant presence of these companies in the country data protection intellectual property e-commerce
- 9. Infrastructure Competitiveness - Connectivity • Companies have a broadening array of choices for transatlantic connectivity; access to diverse cable routes to the UK and continental Europe • Hibernia Atlantic, Project Express, Emerald Express • 11 subsea cables connecting Ireland to the UK • FastnetConnect (high-fiber-count cable system) will link Ireland to France, connecting to multiple international cables • Dublin T50, a 44km multi-duct fiber-optic cable system surrounding the city • Broadband speeds of 150Mbps (cable) and 70Mbps (VDSL) • A number of global carriers -AT&T, BT, Cogent, euNetworks, Geo, Level3, Verizon, Vodafone- offering multiple diverse routes on and off the island
- 10. Infrastructure Competitiveness – Datacenter Footprint • 15 multi-tenant datacenters in Dublin; total net floor space of 60,000 m2 • Providers include Dataplex, Digital Realty, Eircom, Interxion, SunGard and TelecityGroup • Dublin is a major world financial center and European base for many multinationals that contribute to datacenter demand in the city • Cloud computing and hosting is driving market expansion • Highest-growth vertical markets are those of digital media and content, online gaming and gambling • About 90% of customers are international (US- and EU-based) companies Source: Dataplex
- 11. Hosting & Cloud Computing (IaaS) Growth Hosting (million USD) 15% 15% UK France 12% Nordics & Iceland Infrastructure-as-a-service (million USD) 14% 18% 42% 42% Benelux DACH UK France 22% Nordics & Iceland 41% 47% Benelux DACH
- 12. Local Workforce • • • • • • • International, technology-savvy and multi-skilled workforce 48% of 25-34-year-olds hold a third-level qualification (OECD average is 38%) Irish education more focused on developing broader, higher-value skills applicable to real-world business situations, than on specific technical proficiency Top universities engage in research collaboration with industry and government Median age of population in Ireland is 35 years (lowest in Europe) Hourly labor costs fell below the EU-17 average in 2011 Social contributions represent 5% of GDP (second lowest in the EU; EU-27 average is 12.7%)
- 13. Government Support Ireland has a welcoming, pro-business government culture. There are plenty of government agencies working on creatively attracting and supporting foreign companies doing business in Ireland.
- 14. Case Studies & Success Stories local workforce local workforce energy infrastructure, local workforce local workforce IT infrastructure, local workforce data protection IT infrastructure, local workforce, data protection, tax
- 15. Thank you!
Notes de l'éditeur
- This report is intended to provide an objective assessment of the attractiveness of Ireland as a hosting destination for digital assets – which include data, media, databases, applications and infrastructure services.The main target audience includes international digital-content and IP-centric business with plans to expand operations into Europe.Initially we relied on our proprietary data sets and knowledge of subject-matter analysts, then we interviewed a wealth of local experts about topics ranging from energy through datacenters to data protection (the list of contributors can be found in the appendix at the end of the report)We started by identifying the key factors that drive destination selection decisions and mapped those against Ireland’s capabilities. According to our experience, executives, to varying degrees, take some mix of these 9 factors into account.Then we scored Ireland, on a scale of 1 to 4 (from weak to strong), on each factor, and totaled the individual scores to assess its overall attractiveness.
- This table summarizes the results of our market assessment. Ireland is rapidly becoming one of the most attractive European destinations for organizations that need to host digital assets to support their plans to service the EMEA region. The analyzed capabilities collectively provide enterprises with a relatively low-risk and cost-effective location to host their digital assets.
- Ireland’s geographic location, as well as its EU and Eurozone membership, provide a gateway to a European market of more than 500 million people. It’s the only English-speaking country within the Euro-zone.Ireland has a modern, knowledge-based economy that focuses on services and high tech industries. It has a proven track record in attracting foreign direct investment dating back to the 60s. Many high-growth, next-gen businesses have set up operations in Ireland.By some measures, Ireland has successfully emerged from the financial crisis of 2008. Standard&Poor’s revised upward its outlook for Ireland from “stable” to “positive”. Also, the Irish economy is expanding.Despite the recent global financial crisis, unlike some other EU countries, Ireland has no tradition of industrial, social and political unrest.
- Ireland’s favorable industry and tax policy has strongly focused on attracting and retaining foreign direct investment (FDI) for the past 50 years. Ireland’s corporate tax strategy has three key pillars: rate, regime & reputation.The ability to offer a full package of tax benefits has attracted many multinationals looking to launch into Europe.
- The use of renewable energy sources not only helps drive down the cost of electricity, but it also contributes to the fight against climate change and enhances the security of the energy supply. Ireland has committed to securing 40% of its energy from renewable sources by 2020, while the overall EU target is 20%. The main renewable energy source in Ireland is wind. Ireland is also exploring how it can harness the wave power of the Atlantic Ocean. Ireland has the potential to become an energy exporter. It plans to export significant amounts of wind-generated power to the UK in order to help the country meet its green-energy targets. To facilitate this energy trade, EirGrid, the national grid operator in Ireland, has installed a new east-west interconnector cable linking the electricity grids of Ireland and the UK. Its high-temperature average of 20°C and low-temperature average of 6°Cmakes Irelandan ideal location for fresh-air cooling. Free fresh-air coolingis helpful in attaining low Power Usage Effectiveness (PUE) scores. PUE is a key metric for measuring the energy efficiency of facilities. Also, investing in on-site energy generation -by setting up wind turbines on their factory and datacenter sites- can significantly bring down the cost of power.Datacenters are typically large consumers of electricity. Business electricity prices in Ireland for large consumption bands (20k-70kMWh, all taxes included) were below the EU-27 and Euro-zone average. Over time, the increasing significance of wind power generationand the fact that no further capital investment is needed will bring the costs of electricity generation down. Also, the Irish Government committed to significantly lower electricity costs.
- Ireland has a pro-business legislative environment that complies with all EU standards. Anecdotal evidence shows that in general, Irish regulations are strict enough to be effective, but more pragmatic and flexible than the local laws in some other EU countries. Legislation requiring the hosting of EU customer data within Europe has been a driver for US-based content companies to choose to open up a European hosting location. Ireland is a good candidate for that.Ireland is a favored location for the development, exploitation and management of intellectual property. Key drivers for this are the 12.5% corporate tax rate on trading income, the 25% tax credit on the cost of eligible R&D activities, capital allowances on the cost of acquiring certain intangible assets, and the double-tax treaties to facilitate the flow of funds between Ireland and other countries.
- In the past 10 years, Ireland has made notable progress in broadband connectivity – international connectivity, metropolitan-area networks and local access networks. Hibernia Atlantic is a high-capacitysubsea cable linking Ireland directly to North America. Hibernia Networks is laying a new transatlantic cable system, dubbed ‘Project Express’ linking New York to London and including a branching unit to connect with Ireland. Emerald Networks’ new-build submarine cable system, ‘Emerald Express’ will connect North America and Northern Europe. The route links Long Island/New York to Ireland. The cable system is scheduled to be ready for service by mid-2014. It will be the largest low-latency network across the Atlantic. Sea Fibre Networks is currently building FastnetConnect. Completion is expected in 2014.
- Those looking to place their digital assets in Ireland have a plethora of datacenter choices. Dublin has become a favored datacenter location for its international connectivity and ‘green’ approach, and we believe it will continue to see growing interest from datacenter providers. More recently it is cloud computing and hosting that have been driving market expansion.
- Ireland has one of the most dynamic hosting and infrastructure-as-a-service markets in Europe. 451 Research estimates that the growth of these markets in Ireland will outpace the expected growth in other EU countries.
- Ireland is strong in the ICT space, with respect to having a skilled workforce. Its pragmatic education system and its language, as well as the presence of global top-tier companies in the country, attract talent from all over the world. Supporting stats:competitiveness yearbook 2012 gives Ireland the 1st place for adaptability and flexibility of its workforceOECD ranks Ireland among the 10 best-educated countries in the worldIreland is the youngest in the oldest continent.Ireland is one of the three countries in the EU where nominal labor costs have fallen. Social charges allocated to employers are generally high in Europe. In Ireland these are significantly lower compared to other EU countries.
- Ireland’s business-friendly government culture is receptive to companies looking to internationalize or expand their existing geographical footprint. IDA – attracting and developing foreign investmentEnterprise Ireland - helping Irish businesses succeed in international markets Connect Ireland – offers financial rewards for connectorsDigital Hub - helping local and international companies grow and find a ‘permanent home’ IDSC - facilitating companies expanding their international presence out from Ireland IC4 - fostering innovation and accelerating adoption of cloud computing
- Ireland’s reputation as a technology hub has attracted some of the world’s most prominent digital brands to host critical IT infrastructure in Dublin. Many high-growth, ‘next generation’ businesses are setting up operations in Ireland for different reasons, a mix of the factors that we have analyzed in this report.