IS IT time for some blue sky thinking when it comes to the North’s economy? If the latest multimillion-pound investment by one of the veteran inward investors is anything to go by now may be the time to aim high – at least as far as the clouds.
US technology giant Hewlett Packard (HP), which celebrates 30 years in the North this year, has just made one of its key Belfast facilities its new global centre of software engineering excellence.
The appointment gives HP’s StorageWorks facility in the North the opportunity to play a lead role in developing next generation products. It is also likely to deliver a substantial jobs boost although HP has been coy on the subject.
The new centre will be the first in Europe and will focus on what is much touted as the future of information technology – cloud computing. HP claims cloud computing and connectivity are “redefining the way people live, business operates and the world works”.
Cloud computing delivers IT services over the internet. Earlier this month, in San Francisco, HP chief executive Léo Apotheker said it intended to develop a “portfolio of cloud services”.
HP says its new centre in Northern Ireland will specifically provide “cutting-edge storage solutions such as data protection and recovery technologies”.
The US firm employs more than 4,000 people in Ireland – at Belfast, Galway and at its Irish headquarters in Leixlip.
Martin Murphy, managing director of HP Ireland, says the reasons it chose Belfast as its new global centre of software engineering excellence are not complicated.
“First there is the mix of skills available that we are looking for; so far, we have had a terrific experience when it comes to finding talent in Northern Ireland. Secondly the overall competitive equation is a very good proposition,” Murphy says.
In the last three decades, HP has continually reinvested in both its Northern Ireland operations and its workforce, he says.
“We have very strong research and development capabilities and we have a proud tradition of delivery across software, hardware and services.
“The fact that the Belfast HP StorageWorks operation has been designated as the global centre of software engineering is very significant because it means Northern Ireland is now at the forefront of research and development into one the mega trends of our time.”
Murphy insists that a lower rate of corporation tax would not have swayed it to invest in the North. Chiefly, it came down to the “experience and skills” that HP can take advantage of in the North, he said.
But perhaps that is easier to say when HP Northern Ireland is part of the all-Ireland operation – HP Ireland – and therefore able to take advantage of the Republic’s rate of 12.5 per cent.
Eamonn Donaghy, a tax partner with KPMG in Belfast, has a wealth of experience when it come to cross-Border tax issues. He is firmly of the belief that Ireland has attracted a large amount of foreign direct investment based on its low corporation tax rate.
Those who claim lowering the rate of corporation tax could prove too costly should consider taking a leaf out of the Republic’s book, he says. He suggests a reduced tax rate need only apply to a company’s trading profits and not to investment income or capital gains.
“This would target the relief at trading activities and would also significantly reduce the cost of lowering the corporation tax rate,” Donaghy says.
Maybe the pointers to the future do lie in the cloud after all.
