Rebalancing our economy: how a top software firm is banking on it
First Derivatives is one of three publicly owned Northerh Ireland firms quoted on the London AIM. COO Adrian Toner spoke to BDO's Peter Burnside about the importance of a cut in corporation tax here
First Derivatives' software products and services are exported to investment banks, hedge funds, data vendors, exchanges and other financial institutions. Our staff work with clients as close as Dublin and as far away as Australia and this gives us a unique insight into the different tax and regulatory regimes facing any company which does business across multiple markets," said Adrian.
It also allows the company to understand how other governments set and regulate their corporation tax rates.
"Our company is committed to its HQ in Newry and committed to building our operations both at home in Northern Ireland and abroad. Like any business we face regular investment decisions - how can we make the most of our financial and human resources to improve our R&D, increase product development and ultimately expand our markets?
"Any reduction in corporation tax means we have more resources at our disposal to invest in the company and develop and create new markets. And of course this has a direct impact on our ability to create employment," he added.
First Derivatives was founded by CEO Brian Conlon who was named Ernst & Young Entrepreneur of the Year for 2010.
He recently represented Ireland at the World Entrepreneur of the Year gala event at Monte Carlo where he articulated the company's message that continued growth depends upon an ability to grow and maintain a strong pool of talent. "A reduction in corporation tax gives Northern Ireland a key bargaining tool to attract multinationals that are looking for a premium investment location. However, in order to build a solid private sector here, there must remain a continued focus on education and training for young people," said Adrian.
"Schools and universities must focus on the teaching of STEM subjects and creating a culture of entrepreneurship. Northern Ireland is well known for producing top graduates, it is important we generate enough of these graduates to meet the demand of companies like First Derivatives and others in the sector," he added.
Adrian believes that support for all businesses should play a key part of any strategy to reduce reliance on the public sector.
He said: "Lower corporation tax will have no direct benefits for a large number of companies in Northern Ireland although there will be a significant number of indirect benefits in terms of increased spend locally by firms and individuals. Improving access to export markets, providing support for training, ensuring that companies of all sizes can grow their workforces, expand their markets and have better access to finance, these are the principle ways the Northern Ireland economy can become sustainable in the medium to long-term," he adds.
And what about the outlook for the Northern Ireland economy in the years ahead with a reduced rate of corporation tax?
"The volatility in global markets and the subsequent economic crisis created both threats and opportunities for First Derivatives. And this can be true for almost any company. As banks have sought to improve their trading, risk and data management capabilities, our company has been able to provide client solutions that address these issues. As a consequence we have thus benefited from a period of growth and expansion in recent years," said Adrian.
"The same could happen across Northern Ireland. Our high standards of education, talent and productivity combined with low labour costs and turnover means that we have already become a choice location for foreign companies compared to our neighbours across the border.
"So far this has only been a trickle and not enough to tackle the imbalances in the NI economy - a reduction in corporation tax could open the door significantly further to growth in indigenous companies and investment from foreign firms," he concluded. "If this happens, the region has a bright future."