Archive for December, 2013

December 15, 2013

Northern Ireland’s Tech Bubble

When I moved to Northern Ireland in 2009 I was told by many people, both within the industry and outside, how fortunate I had been to find a job in NI within days of starting to look. The job market that I have known, across all industries and verticals, has always been fairly depressed in NI, but in the last number of years, probably starting around, or a little before, the time that I moved to Belfast, “tech” has started to be seen as the saviour of Northern Ireland’s ailing economy.

I’m assuming you know a little about the economy here. It has been well documented elsewhere, from the reliance on the “block grant” to our disproportionately large public sector, many have put their two cents in.

My fear comes in that, in recent years, the public sector body that provides inward investment into NI with the goal of building a more vibrant and sustainable private sector, has stumbled upon “tech” as a quick win to lift the ailing economy. The rationale goes that if we incentivise foreign companies to open offices in Belfast, the jobs they will create will start to relieve unemployment rates and provide much needed tax revenue. This certainly would be ideal, were the jobs distributed evenly across many verticals. However, what I believe is happening is that, due to the ease with which tangible savings are being represented to “tech” companies, is that there is a disproportionate number of  “tech” jobs being created in the economy.

The ease with which these jobs are being brought to NI are built on two fundamental pillars:
1) government support – through its agencies the government supports organisations both foreign and domestic to grow in NI. This usually comes in the form of a “per job” lump sum, but can also be bolstered through a variety of grants and awards. That these are often nebulous and hard to access or understand for local SMEs is a topic for another time.
2) resource cost – be under no illusion the foundation on which the pitch to the companies moving in is heavily based on the low cost of working from NI, that is, salaries are cheaper.
I’m sure, like me, you can see the issues with basing the growth of an entire economy on two such factors. Both of these are things that can easily change.

Since moving here I have observed an, albeit anecdotal, 100-150% salary base increase in “tech” jobs, especially at the more skilled end of the market. You may wonder why I persist in parenthesising “tech”, the reason is this, although the term is bandied about euphemistically, it doesn’t relate to a rounded sell of “tech” professions. Sure, there are hangers on, but, where “tech” jobs are announced, read “programmers”. That’s where the majority of these jobs are, and where there isn’t proportional growth across the market there is the risk of further damage. You see, what is happening is that skilled developers are highly in demand, so highly, in fact, that salary negotiations have become heavily weighted in the developers favor.  Not only that, but there has been a dramatic rise in interim resourcing. When I dipped my toe in the contract market in 2011, prior to starting a business, there were no full time contract recruiters in Belfast, there are now 7 that I know of, and, no doubt, many more coming onto the scene soon. Now, I have no problems with interim resourcing, in fact, it’s a great way to scale up and de risk small businesses, however, the market has become one of opportunism rather than permanence, and it will be hit hard if the bubble bursts. Not only that, but, due to the supply and demand based salary growth in the programmer’s market, other related markets naturally rise, whether or not there is a supply issue.

Opportunistic agents have an economic incentive to place people in jobs they won’t be happy in, or in a place they know they can encourage a move on from shortly. After all, churn, rather than permanence in the market is what pays their bills. Who can blame them?

So my fundamental fear then, comes down to this; as the cost base rises, and once subsidies run dry, and they will run dry, who will stay? Add into that equation a politically volatile landscape that certainly worries outside investors, and I believe we may be on the precipice of seeing that bubble burst.

To me the bubble bursting may not look significant at first. A small closure, a branch of an SI, or a division of a financial player, but, as the market floods with candidates, even if a small flood, the rates will lower and any economy that has built around the artificial inflation in this market will start to falter. The “tech” world is small and failure carries faster and farther than (moderate) success. A lowering in rates doesn’t mean we will get another chance at this.

In some ways I feel this is inevitable now, and that I’m observing from the outside. No way to touch the inner core that is driving this machine towards this end, however I feel there are certainly things that can be done individually and collectively, to try to mitigate some of this:

1) productize / find your niche – find what you are good at and build expertise around it, whether that is product or an exceptional service offering, don’t aim to be the best in NI, aim to be the best in the world. It’s only with an attitude of wanting to be the best that we will keep business in NI. If we become an interchangeable part, able to be outsourced to the next cheap location, we lose.

2) work together / support local – collaborate, help each other out. Back scratching doesn’t only help yourself, but helps entire communities. This can be a differentiation of the tech community in NI. I’m talking to myself, in the main, here. There are many people doing excellent things, from user groups, to dojos, to collectives. Get involved, and if there’s no one championing your niche, start something.

3) upskill the young – from the junior developer in the office, to the 13 year old who wants to learn to code, try to help. The more skill we have in this are, the less likely we are to see a saturated market. This is a market that, regardless of outside interest, can grow and grow. But it will only grow while the skills are there to make it grow.

The more ways we differentiate our “tech” community, the more value there will be for those from the outside. But lastly, I think the answer to an ailing economy can only come from within, so I hope that there is a shift, and that there is more done to support local people who want to start something, but equally that people who don’t necessarily want to be the starters, and the entrepreneurs, can gather around them and cheer them on, because, at the end of the day, that is what will save the economy that they are in.