the evolution of irish based technology subsidiaries within global networks
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The evolution of Irish based technology subsidiaries within global networks. Seamus Grimes Department of Geography/ Centre for Innovation and Structural Change National University of Ireland, Galway [email protected] http://www.nuigalway.ie/cisc/. Introduction. - PowerPoint PPT PresentationTRANSCRIPT
The evolution of Irish based technology subsidiaries within global networks
Seamus Grimes Department of Geography/ Centre for Innovation and
Structural ChangeNational University of Ireland, Galway
[email protected]://www.nuigalway.ie/cisc/
Introduction ITS FDI in Ireland – EME(I)A Technology TNCs Conceptualising
internationalisation of services ‘holistic’ approach – ‘end-to-end’
solutions
Introduction TNC organisational experimentation –
integrating service activities in GPNs Shift from manufacturing to services Outsouring/offshoring FDI from 1990s – software, financial
services, shared services Ireland: a niche in supply chain
management
Conceptualising internationally traded
services Production-oriented models Statistics – software and internet Technology sector: hardware –
software – consultancy – ‘end-to-end solutions’
complex GPNs – sophisticated tasks being decentralised
internationalisation Globalising processes, ICTs and
TNC organisational strategies Centralised control or
decentralised decision making and autonomy
Affiliates generating knowledge Global mandates
Shared services 2002: services 75% of OECD FDI TNCs affiliates servicing corporate
networks A TNC market – intra-firm flows Shared services – financial
management, administration, supply chain management
Outsourcing and offshoring
Response to increased competitiveness and technology downturn in 1990s
Outsourcing manufacturing but also services
Eastern Europe, Bangalore, etc Outsourced services: $235bn by
2005
The internationally traded services sector
in Ireland 1990s manufacturing increasing until
peak of 250, 000 in 20001 By 2010: employment in market services
to increase by 125,000 Foreign-owned sector: 73% of
employment and 75% of sales in manufacturing
2002: Irish services exports grew faster than any of top 30 exporters in world
0
10000
20000
30000
40000
50000
60000
70000
80000
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Year
Empl
oym
ent
Electronics/EngineeringPharmaceuticals/HealthcareMisc. IndustryInternational/Financial Services
Source: IDA Annual Report, various years
Fig. 2 Trends in Permanent Full-Time Employment in Financial and other International Services 1993-2003
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
ForeignIrishIFSC Component
The Future?Industrial Developmentin Ireland: 2000-Present
MNC Exports toEuropean Union
Centralisationof European
Shared Services
US FDIto Ireland
Manufacturing and LowValue-Added Services to Asia
Consolidating Controlfor US Headquarters;Indigenous SoftwareSales to the US
US FDI to Ireland
MNC Exportsto European Union
Centralisation of EuropeanShared Services and Pan-EuropeanCall Centres in Ireland
Consolidating Controlfor US Headquarters
Industrial Developmentin Ireland: 1993-2000
US FDI to Ireland
MNC Exportsto European Union
Industrial Development inIreland: Mid-1980s to Early 1990s
Dublin
RepeatInvestments
Dublin Dublin
Dublin
Company Turnover €m
Employment 2004
Rank
Dell 8500 4300 2 Microsoft European Operations
6918.62 1216 3
IBM Ireland 2500 3700 9 Oracle Europe 2019 1067 14 Apple Computer 1909.50 1200 17 Hewlett Packard (Manufacturing)
600 2500 63
Hewlett Packard (Galway) 400 306 83 Hewlett Packard Ireland 59.18 397 450
(a) Evolution of Dell in Ireland Year Employment Activity 1988 2600 Manufacturing plant in Limerick – single biggest job boost
JIT model – 25 suppliers 1992 All sales and support from Britain to Bray 1993 300 Sales operation opens in Bray 2000 Cherrywood and Bray an integrated operation 2001 4300 Limerick and Bray/Cherrywood 2001 -200 Limerick 2001 -125 Cherrywood/Bray 2001 $20m upgrade to Limerick plant 2001 European Expert Centre, Bray, focused on server business 2002 1148
3400 Dell Direct, Bray/Cherrywood Limerick
2003 1300 3200
Dell Direct Limerick
2003 Some call centre tech support relocated to India 2004 4300 6 subsidiaries
(b) Evolution of Microsoft in Ireland 1985 European Production & Development Centre: Manufacturing, distribution,
Localisation, Logistics and Services for 32 European subsidiaries and Africa, Mediterranean and Middle East (MENA)
1991 European Operations Centre 1994 E-commerce activities 1995 All European warehouses closed as Dublin becomes a single point of source
Next step: centralisation of order taking and processing under one roof 2000 $165m investment in Sandyford 2000 $75m Internet Data Centre in CityWest Business Park: all EMEA transactions
Offering software as a service 2002 +100 28 jobs in sales and marketing for Irish market 2002 Disaster Recovery Site at Corporate Data Centre 2003 1200 ft + 500 employed indirectly by vendors on site 2004 -164
+54 Localisation Software engineering
2004 1216 4 subsidiaries
(c) Evolution of IBM in Ireland
1956 Sales and Service – mainly Irish market
1990s Impressed HQ with software project
1995 300
1995 +400 Acquired Lotus (operation in Ireland since 1986)
1996 650 $350m Mulhuddart campus – manufacturing servers and electronic products for EMEA – chosen against China, Mexico, Eastern EuropeCustomer support for 29 countries including US
1997 Microelectronics division added
1999 Centralised EMEA operations 29 countries 12 languagesDirect sales and marketingInternational Solutions UnitIBM Corporate Treasury EMEA at IFSC (now Ballsbridge)Sales and Services operation, Cork
1999 Staff redeployed
Relocation of laptop maintenanceRelocation of call centre to low cost location
2001 $100m expansion at Mulhuddart – worldwide management of chip business – expansion of server and micorelectronics
2001 Lotus integrated – one of 4 main pillars of IBM software groupLocalisation, software engineeringConsolidation of customer support for UK, France, Germany to Dublin
2001 No redundancies
Relocation of hard disk drive operation to Germany
Evolution of IBM in Ireland
2002 +100 Acquired PWC consultancy operation
2002 To shut telesales centre (sold PCs, etc to UK, France and Germany)
2002 Global Services – fastest growing division (800 in Dublin and Belfast)
2002 4000 7 separate divisions
2003 Geodis logistics €50m contract investment in IBM campus
2003 Several new missions, including E-commerce suppler portal40% of IBM global web-based procurement
2003 +200 Sales and Marketing – less emphasis on support – more on sales
2003 Mulhuddart €301.9m campus manages all internal and external websites + technical support for international clients
2003 Dublin Software Lab designated as one of 7 Centres of Advanced Studies R&D investment
2004 3700 7 divisions: software development, manufacturing, business and technology services
(d) Evolution of Apple in Ireland 1984 European manufacturing and distribution Mid-1990s
1500 Shift from manufacturing to software and R&D
1998 1900 (900 temp)
Strategic assessment: Manufacturing to Indonesia, Taiwan and the Czech Republic
1998 All European financial 1999 -450 Production of iMac to Wales 2000 Sales and Marketing from Dublin to Cork 2000 European call centre – tech support (previously outsourced) 2001 All European telesales, order management
European Data Centre European HQ designated
2004 1200 Workforce: 85% in value added, 15% in manufacturing
(e) Evolution of Oracle in Ireland 1989 200 Development Centre – converting Oracle products for Unix
Also looked at Scotland, Switzerland an the Netherlands – the calibre of employees swung it for the Republic Software manufacturing and localisation for EMEA
1996 European Business Centre – centralised sales and tech support 1990 400 1998 International E-Business Centre – Shared Services – 30 countries
Accountancy, purchasing, licensing 1999 500 ASP Centre – manages all European computer systems
Telemarketing Centre East Point 2000 European HQ of Salesforce.Com – targeting SME market 2002 +440 East point Internet Sales – 30% of EMEA sales 2003 975 2003 -105 Shared Services 2003 Global Development Centre 2004 1067
(f) Evolution of HP in Ireland 1974 Offices in Dublin, Belfast, Cork and Limerick 1976 Sales and Services division 1995 ROI chosen over Puerto Rico, Spain, San Diego and Oregon 1996 Availability of large site near airport and port
Manufacturing of inkjet cartridges 1999 2000 2002
2100 $19bn merger with Compaq Compaq call centres in Dublin and Galway and European Software Centre, Galway (formerly Digital)
2002 120 Sales and Services 2002 -80 Merger result (-15,000 in Europe) – strong results in all five units 2002 HP Global Services Multi-million contract to support 61,000 MS employees
and clients – call centres in Dublin and US 2002 HP Financial Services – centralised business model
Regional HQs Dublin and Sydney 2003 HP International Banking functions to Ireland 2003 $600m outsourcing contract – 350 Bank of Ireland staff to transfer 2003 5 units: sales and service; inkjet manufacturing; international banking;
European software centre; technical support – several locations 2003 +30 Baltimore sold authorisation business to HP 2004 306 HP Galway 2004 2500 HP Manufacturing 2004 397 HP Ireland Source: Irish Times, 1984-2004
Evolution of technology affiliates
From manufacturing to services On-going restructuring – changing
competitiveness and low cost regions Considerable expansion – IBM, MS Additional divisions for EMEA Movement up value chain Supply chain management
Conclusion Conceptualising shift towards services
in technology TNCs – holistic solutions Evolution of technology TNCs Restructuring – relocation – an
ongoing evolution towards value added activities
How Ireland has evolved an intermediary niche in supply chain management