Overview
Ireland’s $50 billion digital sector represents an integral part of Ireland’s economy with Technology Ireland estimating that the sector accounts for 13 percent of Ireland’s GDP. Major U.S. multinationals like Apple, AWS, Cisco, Google, HPE, IBM, Intel, Meta and Microsoft are prominent among 1,000 digital companies operating in Ireland. There is also a large group of American SME digital firms with a growing Irish presence. As home to the EMEA headquarters of many of the leading global tech firms, Ireland plays a central role in ensuring that EU digital regulations are implemented coherently and effectively.
Launched in 2022, Ireland’s national digital strategy, “Harnessing Digital - The Digital Ireland Framework” prioritizes four pillars - the digital transformation of business; investment in digital infrastructure; digital skills development; and the digitalization of public services. It outlines ambitious targets to digitize Irish businesses, including SMEs, so enterprises have strong engagement around cloud computing, artificial intelligence and big data by 2030. Improved broadband infrastructure aimed at bridging the gap between rural and urban areas, as well as improving international high-speed connectivity with Ireland are essential to a commitment that almost all public services will be delivered online by 2030. Key milestones are published annually in the National Digital Strategy progress report. Aligned with EU 2030 digital transformation goals, the progress of Irish digital initiatives is recognized in the EU 2024 Digital Decade Ireland Country Report.
The $19 billion Irish digital market has experienced sustained demand growth since 2021 as digital technologies and solutions play an ever-increasing role across the economy. U.S. digital technology companies have a strong presence in this open and highly competitive market and new U.S. vendors offering emerging, innovative and leading-edge digital solutions encounter positive interest from potential Irish partners.
Ireland and the United States engage in regular dialogue on digital issues through Ireland’s active involvement in the Digital Nine Plus (D9+), an informal partnership of EU member states with likeminded views on digital and technology policy. As D9+ chair during the first six months of 2024, Ireland negotiated the April 2024 D9+ Ministerial Declaration which emphasized effective and coherent digital regulation as a foundation for innovation and growth in the EU.
Market Challenges
Transatlantic data flows are critical for all companies large and small across all sectors of the Irish economy. It is regularly cited that one-third of transatlantic data flows through Ireland given the strong presence of leading U.S. data center operators. The July 2023 EU-U.S. Data Privacy Framework re-establishing a legal mechanism for transfers of personal data from the EU to the United States has direct relevance for Ireland since many U.S. tech companies have located EMEA headquarters in Ireland. These companies have regular engagement with Ireland’s Data Protection Commission (DPC) as the Irish supervisory authority for the General Data Protection Regulation (GDPR). Since 2022, the DPC has successfully completed inquiries on data privacy compliance at Instagram, Meta, Tik-Tok, Vodafone, WhatsApp, X (formerly Twitter), and Yahoo. In July 2024, the DPC issued new guidance regarding AI Large Language Models (LLMs) and Data Protection having previously issued direction to both Meta and X regarding the usage of European user data in the development of their LLM systems.
As a Member State of the European Union (EU), Ireland enacts all relevant EU legislation governing the digital economy into the Irish statute book. This encompasses the Digital Markets Act (DMA), the Digital Services Act (DSA), the Data Governance Act (DGA), the Data Act, the Network and Information Systems (NIS) Directive, and its revision NIS2, the Artificial Intelligence (AI) Act, European Digital Identity Framework (eID), the Cyber Resilience Act (CRA), the Cybersecurity Act and the Digital Operational Resilience Act (DORA). This body of legislation is important to U.S. tech companies doing business in Ireland as it may necessitate internal compliance obligations alongside market development opportunities.
Irish government restrictions, announced in 2022, regarding electricity grid access for new data center projects until 2028 has generated significant uncertainty for future investments by leading U.S. data center operators who represent the vast majority of the 82 data center operating in Ireland. Given the threat to future data center investments now arising from the ever-increasing demands of AI solutions, government officials are finalizing new policy actions to address the energy constraints while also ensuring Ireland remains within its carbon targets.
Ireland also follows the EU public procurement regulations which are governed by the WTO Government Procurement Agreement (GPA) and the EU Public Procurement Directives. The Office of Government Procurement (OGP) develops the policy framework for public procurement in Ireland. OGP endeavors to reduce procurement costs and achieve better value for money by providing Ireland’s Public Procurement Guidelines. Competitive dialogue, frameworks, and central purchasing arrangements are an emerging feature of Irish public procurement opportunities. U.S. suppliers must register on the eTenders procurement portal to pursue digital technology tenders published by Irish public sector bodies.
Most laws are set at the EU level. The Digital Economy Chapter of our Country Commercial Guide for the European Union provides a more comprehensive overview.
Digital Trade Opportunities
The medium outlook for the Irish digital market is positive. Digital transformation continues to gather momentum with the accelerated move to hybrid and multi-cloud environments. Alongside implementing a digital initiative across the public sector, the Irish government is supporting SMEs in developing their online presence and eCommerce channels. Irish enterprises have spent $1.4 million annually on data processing and storage activities in recent years. End user demand for cloud computing, (SaaS/IaaS/PaaS), is expected to underpin future market growth. Annual expenditure in enterprise software is about $258 million and is driven by document and content management solutions, business intelligence and analytics, database, web servers, and enterprise portals. Expenditure on network storage software is approximately $62 million while the security software market is estimated at $124 million. Spending on software in the healthcare sector is circa $95 million.
The $300 million cybersecurity market is extremely vibrant with U.S. vendors having a strong market share. Reported economic crime and fraud in Ireland has increased significantly in recent years. The ongoing threat of cyber-attacks is driving increased spending on security solutions. According to PWC’s 2024 Digital Trust Survey, Irish businesses continue to increase spending on risk management technology with a focus on data analytics and process automation. EU legislation around data privacy and cybersecurity plays a key role with the General Data Protection Regulation (GDPR), the Network Information Services 2 (NIS2) Directive and the Digital Operational Resilience Act (DORA) each driving market demand. Corporations, digital service providers, critical infrastructure providers, financial services firms and public-sector entities are all seeking to comply with these regulations. Organizations that suffer data breaches and cyber incidents in the future will be liable for heavy penalties that could amount to as much as 4 percent of a company’s global revenues. Solutions utilizing Artificial Intelligence (AI) and Machine Learning (ML) are also increasing market penetration.
Since the launch of Ireland’s AI strategy – “AI Here for Good”” in 2021, there has been a steady rise in AI activity in Ireland across business, government, and the research & development sectors. The strategy emphasizes using AI to benefit Ireland’s economy and society, through a people-centered, ethical approach to its development, adoption and use. Both the Irish Government and the EU Commission have published overviews of recent AI initiatives in Ireland. Several leading U.S. AI tech firms are especially active with AI initiatives in Ireland while also being supportive of development of the sector with reports from Microsoft and Google outlining the commercial and societal opportunities for Ireland arising from AI technology.
Demand for Internet-of-Things (IOT) technology and services is increasing within the healthcare, energy, transport, the public sector and manufacturing industries. Ireland’s three principal cities - Dublin, Cork, and Limerick - have led the emergence of IOT/smart city projects. Most initiatives have been built on top of legacy infrastructure and many decades of social and economic programs, rather than creating new smart city districts. Green-field initiatives are emerging in the three principal cities with strong vision-oriented smart city strategies. The All-Ireland Smart Cities Forum has developed an initiative to forge close connections with Nordic counterparts. U.S. global tech companies have also played a strong role in the evolution of Irish smart cities projects. Strong Irish interest in emerging smart cities initiatives globally, including those in the United States, underscores opportunities for emerging U.S. SMEs.
Ireland’s national quantum technologies strategy, “Quantum 2030” focuses on four key pillars namely, applied research, skills development, international collaboration, and innovation. The €10 million IrelandQCI project is part of EuroQCI, an EU-wide quantum communications infrastructure program. Jointly funded by the Department of the Environment, Climate and Communications (DECC) and the EU, IrelandQCI will trial 16 quantum security technology scenarios with key stakeholders across Ireland’s public, industry and academic sectors. The Irish Centre for High-End Computing (ICHEC) has a memorandum of understanding with Equal1 to advance the deployment of high-performance computing and quantum computing (HPC-QC) in Ireland and Europe to drive technical innovation, address complex scientific and industrial challenges and maintain global competitiveness.
In the area of telecommunications, the Irish government seeks to provide a world class communications network with high quality services, supporting connected communities and enabling citizens to embrace digital opportunities, in a safe environment. Government policies and regulations in this area are centered on achieving; universal access to high-speed broadband, better connected communities, and strengthened cyber security.
International and national digital connectivity is important to maintaining and enhancing Ireland’s competitiveness in global markets, and in the knowledge and information economy. Since the 2021 launch of the National Broadband Plan over $3.3 billion has been invested by the commercial telecommunications sector in upgrading and modernizing networks which support the provision of Gigabit broadband and mobile telecommunications services. Passive Optical Networks (PONs) used to provide fiber-to-the-home (FTTH) broadband are the technology of choice for the National Broadband Plan. In 2021, Intel partnered with CONNECT, the Science Foundation Ireland (SFI) Research Centre for future networks and communications at Trinity College Dublin. The research partnership focused on making PONs capable of supporting 5G wireless network cells and edge computing nodes in order to deliver new applications such as high-speed mobile streaming, augmented reality and autonomous driving.
As a high-tech, island economy, Ireland’s international telecommunications connectivity via subsea cables is essential. Ireland is currently connected to the global network via 14 sub-sea telecommunications cables, four of which connect to North America, one connects to Iceland, while the remainder connect to the UK. Since the UK withdrew from the European Union, Ireland has no direct telecommunication cable connection to any other EU Member State. This creates a need for investment to ensure that Irish and European policy is achieved. In May 2024, the Irish government launched an indepth public consultation focused on sub-sea cables connecting Ireland to the Global Internet backbone.