Derry company Learning Pool has just acquired New York firm True Office Learning.
This is the fifth significant purchase by Learning Pool since it obtained the backing of international equity group Carlyle and Irish asset manager Cardinal Capital in 2016, a deal that signalled the company’s global expansion ambitions.
Last year another major investment firm, Marlin Equity, bought out Carlyle and Cardinal in a deal reported to be worth £145m.
Learning Pool was based in Derry — as it still is — because the founders valued the quality of life in the city, the opportunity for a high quality work-life balance and for the city’s location close to the Donegal coast. Today the business has 260 staff around the world.
The real significance for Derry is that Learning Pool is not a one-off. A few weeks ago E&I Engineering, a switchgear and power systems business, was sold for a reported $2bn to US-based infrastructure group Vertiv.
E&I has over 2,000 employees, with subsidiary operations in the United States and the United Arab Emirates.
E&I is a Donegal business, but its location of Burnfoot is so close to the Derry border that it is essentially a suburb of the city. However, it benefits from the Republic’s lower corporation tax rate. Many of its workers commute daily from Derry.
The company’s founder, Philip O’Doherty is not just a Derry man, but is chairman of Derry City Football Club.
Alchemy Technology Services is another expanding Derry business. It was founded in 2019 by John Harkin, who originates from the city and returned home to start his business after a successful commercial career in London. Just over two years later the company employs 145 staff.
Back in 1994, another independent software business, Singularity, was founded in Derry by Padraig Canavan. It was sold for $48m in 2011 to global technology company Kofax, when it had operations in Belfast, London and India as well as Derry, employing 215 staff in total.
Other Derry technology businesses include MetaCompliance and Foods Connected, while there are several outside firms such as Kainos, Fujitsu and, of course, Seagate, with operations in the city.
And Catalyst intends to build a second incubator facility to help develop another generation of indigenous technology firms.
These stories of technology success help to explain the improvement in Derry’s employment figures over recent years. These show over 11,500 jobs created in the city during the period 2013 to 2020.
Despite this, Derry continues to have the worst unemployment rate in NI and the rate of job creation in the city has lagged the rest of the north.
Claimant count unemployment is 5.5% in the Derry and Strabane council area, compared to an average of 3.7%.
And economic inactivity is also one of the worst, with an employment rate of 68% against an NI average of 71.9%. Pay rates in the city are also below average.
Some of the technology businesses have struggled to expand because of the mismatch of skills they need, compared to those within the local labour market. Alchemy has addressed this by developing a particularly successful partnership with the North West Regional College, which provides bespoke training courses for the company via a series of academies.
But there is long-stand frustration with Invest NI, which is criticised for not doing more to encourage inward investment into Derry and other areas with the highest unemployment.
(Invest NI says its role is to support employers and it is their choice where to locate.)
But it is important to recognise that while economic development in Belfast grabs the headlines, Derry is home to some of Ireland’s most dynamic and successful technology businesses.
Paul Gosling is an economic commentator based in the north west