The Bubble in Tech, The Statistics & The Need For Questions in Ireland

This article was originally published in the print edition of the Sunday Business Post, June 2, 2013. Please find additional details on UK employment statistics at the bottom of this piece.

Until this week, I fully believed that rapid action needed to be taken to fill the glut of tech vacancies. Newspapers, radio experts and opinion columns all seemed to be in agreement: we have a tech skills shortage in Ireland, and we need to address it immediately.

However, I’m no longer satisfied with this argument.

I say that despite the fact that a record number of attendees from all over the world will descend on Dublin this October for the Web Summit, some 7,000 business people. They include the CEOs of many of the world’s fastest growing tech companies. Many of those companies are opening new or expanding existing operations in Ireland, including Dropbox, LinkedIn, Twitter, Airbnb, Facebook and more.

My new found caution, stems from an academic statistician, who lives in my house. He’s not interested in opinions or headlines. He’s interested in facts and statistics. He’s largely removed from the fog of quixotic patriotism that sometimes blurs policy debate.

Over tea last week, he posed two simple questions, the answers to which raise serious questions for anyone with strongly held opinions on what we are to do about the job shortages in the tech sector.

His first question was: Does Ireland currently have above or below the average number of people employed in the high tech sector as compared to the rest of Europe?

The answer: According to Eurostat, the statistics show that Ireland is not only above average, it’s already employing more people per capita than anywhere else in Europe in the high tech sector. In fact, as of 2011, Ireland was the number one high tech employer per capita in Europe.

Eurostat is the European Commissions’ office for statistics. It’s a credible source, but we should always be careful in considering the composition or methodology behind any set of numbers. Disraeli once cautioned “there are lies, damn lies – and statistics”. Nevertheless, the numbers in this instance, if not certain, are certainly revealing as to the likely composition of the workforce in Ireland as compared to the rest of Europe. And worth serious consideration.

My statistician friend’s second question was equally revealing.

He asked: Does Ireland currently have above or below the average number of students in courses related to IT as compared to the rest of Europe?

The answer: Again according to Eurostat, Ireland is towards the very top of the league table in computing, maths and science. Germany is the only significant country ahead of us, and only by a fraction. We are light years ahead of the United States, home to Silicon Valley, and most of the rest of Europe. 

Those answers lead to a third question, and a slightly uncomfortable one given our recent past. If we already employ more people per capita in the tech sector than anywhere else in Europe, and are already towards the very top in terms those currently studying to work in the sector, just how much more of the house do we want to bet on this one sector?

We’ve a history of betting big on singular sectors, from the potato to the house.

Not so long ago, many of us were sure we’d outsmarted the rest of the world, and we collectively doubled down on property. We heeded the headlines that demanded more architects and auctioneers. As experts called for more courses to be introduced, and for incentives to be increased, our politicians duly obliged and we remained largely silent. There was no significant debate.

Then the property bubble burst.

I watched a documentary about food a few weeks ago. The chief nutritionist from one of the world’s leading manufacturers of yoghurts predicted people would be consuming a lot more yoghurts in the near future. I laughed out loud at the time, shouting at the TV: “What a ridiculous conflict of interest”.

It was so obvious, yet if I’m honest I never found myself shouting at the TV in 2005 when yet another Irish bank economist predicted live on national television that more people would be seeking mortgages in the near future.

In the world of technology, something similar is happening right now. Rewind just just over a decade ago, and the talking heads in tech, the CEO’s and the experts, assured us we needed to double down. They were wrong.

Today, however, our experts assure us that “this time it’s different”. And yes, in some respects they are completely right – “this time it is different”.

Today, as compared to 1999, the cost of starting a technology company has plummeted. Distribution has multiplied tenfold, not just because more people are online, but because hundreds of millions of people now have smart phones. And that will soon be billions of people.

Yet something’s niggling at me. Facts and statistics. Those facts and statistics show that Ireland, for its incredibly small size, is already heavily invested in tech. If we are to use the above statistics, we already employ more people per capita in the sector than almost anywhere else, and are currently training far more than almost anywhere else. So, if we’re to increase our investment in the sector, training more people and increasing sector incentives, perhaps we first need a more serious debate. Let’s tread with a little more caution.

I’m a huge advocate of the sector. I wouldn’t have spent the last three years building the Web Summit, if I didn’t believe there was a huge opportunity.

That said, if we were to have a balanced national debate about betting big on the yoghurt sector, would we allow ourselves to be swayed by yoghurt manufacturers or even their chief nutritionists.

I think the same applies in tech. Let’s learn from our recent history. Unless we begin examining the underlying statistics, trends and facts in a more frank and objective manner, we risk running head first into the bright lights of another bubble.


UPDATE: The latest unemployment statistics for graduates in the UK show that unemployment is highest amongst computer science graduates. Far more than any other degree. Don’t believe me? Download what’s traditional referred to as Table 3 from the latest DESTINATIONS OF LEAVERS FROM HIGHER EDUCATION IN THE UNITED KINGDOM published by the Higher Education Statistics Agency in the UK.

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