The Software/IT Location Revolution (cover) Application Service Providers (ASPs) Dot.coms: Real Estate Costs, No Problem Canada, Europe Request Information |
The United States, however, is not the only country growing software/IT companies. Its northern neighbor, Canada, has won its share of investments as well. The province of Quebec seems to be the big winner in this arena, with 3,400 information technologies/multimedia enterprises located there, employing some 80,000 people. And 75 percent of the information technologies industry is concentrated in the Montreal market.
Montreal provides software/IT companies a tax break for R&D, several research centers and very scientific, technical workers qualified in the information technologies sectors. One tax break allows researchers and experts a five-year tax holiday, and companies are also granted an 80 percent tax credit for pre-competitive research. But of particular interest to high-tech companies is Montreal's Cite du Multimedia, a district near Old Montreal devoted entirely to companies active in the information and communications technology fields. As part of locating in the district, Quebec provides a refundable tax credit of up to 40 percent of labor costs incurred in production. And in the multimedia field, if the company produces multimedia titles in French, it will be allowed an additional 10 percent tax credit.
Several technology companies have taken the Cite du Multimedia bait. Motorola Canada, for example, is investing more than $100 million in the creation of a software development center in the Montreal district. And Microids, a French manufacturer of electronic games for PCs, Nintendo and Sony, opened a development studio in the area as well, creating approximately 150 new jobs. Finally, Guillemot Corp. will also open a new R&D subsidiary in Montreal's Cite du Multimedia, creating 300 new positions.
In Europe, the northern countries are enjoying the greatest boon in software and hardware expansion. In the Netherlands, e-business companies are taking advantage of the tech infrastructure, customer fulfillment capabilities and pan-European orientation. Hewlett Packard, based in Palo Alto, Calif., recently expanded its HP OpenView software unit in Amsterdam, the Netherlands. IBM has just opened its second Advanced Internet Applications Center in Zoetermeer, the Netherlands (the first is in Chicago), where it will develop and market technologies for the European, Middle Eastern and African e-business markets. "Building new business models and opportunities could not happen at a more appropriate location -- the Netherlands, the heart of Europe's cutting-edge R&D activities," says Bert Dekkers, Advanced Internet Center project manager for IBM.
Fujitsu Siemens Computers BV, the European joint venture of Fujitsu and Siemens, is locating its headquarters in the Netherlands to take advantage of its central location amidst value-added resellers, distributors and retailers. Cisco Systems, Sun Microsystems, Symantec Corp., PeopleSoft and Network Associates, all marquee U.S. hardware and software companies, along with Taiwan-based Acer, have selected the Netherlands as a European base of operations.
Sweden is seeing enormous growth in IT and telecom. Stockholm, with its telecom history, is probably the most wired city in Europe, with various companies testing out ever-more advanced lines. It's also a major Internet gateway to the United States. Overall, Sweden has long been a country eager to embrace new IT technology, with significant investments in infrastructure.
Important high-tech niches in Sweden include ERP systems, mobile telephony spin-offs and digital networking. StreamServe, a Swedish provider of intelligent output management solutions, has found both strategic partners and customers in Sweden. "Five of the world's leading business systems suppliers are Swedish," says Hans Otterling, CEO and president of StreamServe. "It has been a tremendous advantage for StreamServe to be located close to them." Foreign venture capital has been eager to serve the Swedish technology cluster, offering access to a greater pool of knowledge and international contacts. "In spite of being a fairly small Sweden-based company, we have relations with one of the most prominent American high-tech banks," says Otterling.
Ireland has also garnered much of the software/IT investment in Europe. In fact, says Jodi Brichta, vice president, marketing, with Eircomm, "Ireland is often referred to as the 'Silicon Valley of Europe.' " The reason, perhaps, is the fact that 40 percent of all PC packaged software sold in Europe is produced in Ireland, and 13 of the world's top 15 independent software companies have significant operations in Ireland. And the IT/electronics industry accounts for 32 percent of Ireland's exports, making it the second-largest exporter of software in the world -- following only the United States, Brichta adds.
The reason for Ireland's success in the software/IT industries is simple to understand. First, the Republic of Ireland provides companies a low corporate income tax of only 10 percent and lower operating costs than many other European locations. But perhaps more importantly than costs is the available work force. Ireland has a productive, flexible and multilingual work force, along with one of the best education systems in the world, according to the 1999 independent IMD World Competitiveness Report.
Many companies such as IBM, Informix Software and Microsoft have located facilities in Ireland in the past, and others continue to follow suit. Last year, for example, Provo, Utah-based Novell, the world's largest networking and Internet software company, doubled its Ireland operations, adding 140 new jobs over the next three years. Novell Software Ireland will establish a new division within Novell to handle all aspects of e-business for Europe, the Middle East and Africa.
Oracle is also adding jobs to its Irish operations. It will create 400 jobs at a new international e-business center in Dublin, bringing its total jobs in Ireland to 1,000.
The qualified, available work force was key to the decisions of both Oracle and Novell. "An international center of this kind requires people with language skills, and Ireland is to be congratulated for its lead in developing these," says Pier Carlo Falotti, executive vice president with Oracle. "Several years ago we would have had difficulty in finding the right people in Ireland, but this is not the case now." He went on to add that Ireland also provides advanced telecom infrastructures and a favorable business climate for software companies.
Ireland's neighbor, Northern Ireland is also seeing a fair share of the software/IT investment in Europe. Software/IT companies that have established facilities in Northern Ireland in the past include such names as Microsoft, Raytheon, Liberty Mutual of Boston and Northbrook Technologies.
Last year, several firms joined Northern Ireland's software/IT ranks. Among Northern Ireland's top announcements in 1999 were UTA, which created 110 jobs at its advanced software development operation; Microsoft/ICL Solution Center generated 225 new positions; and Abbey National established a new facility for a call center and software development, creating 672 jobs.
Northern Ireland's appeal to such firms is similar to that of Ireland. "The compelling property opportunities, bright young people and world-class telecommunications are fuelling the rapid growth of high-technology clusters across Northern Ireland," says Ian Baines, vice consul, investment, Invest in Britain Bureau (www.investinbritain.org). "And Northern Ireland attracted most of the new software projects coming into the British Isles from North America, underlining the region's excellent reputation as a location for the fast growing software sector."
-- Laurie Joan Aron is a New York-based freelance writer
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Canada Makes a 
Europe's North Countries and 