A leading Irish-run banking software company plans to move much of its development work from Dublin to Bangalore, India, in a shift partly driven by the higher cost of engineers here.
Kindle, the company involved, has stressed that its establishment of a new software and support centre in southern India was "an expansion", but conceded that some of its 100 Irish software developers would be diverted to other duties.
Industry observers are likely to interpret the decision as further evidence of the Republic's IT skills gap.
Some employees at Kindle were annoyed at companies decision, which they believe could see a substantial portion of the entire development activity based in Asia. They said the firm was making the move to save money, pointing to the lower cost of hiring a software graduate in India.
Kindle said it was finding it harder than before to hire software graduates in Ireland, but insisted this was not the main reason for the move.
"We're expanding our resources, growing our development capacity, and we're growing that capacity in India as opposed to Dublin," said Mr Frans Van Cauwelaert, a spokesman for the company. "We plan to grow that office to about 100 or 150 people - it will be one of our largest overseas offices."
Kindle was acutely aware of the growing cost of high-tech labour in Ireland, he said. "It's no secret that there is a skills shortage in Ireland, and a lot of the big multinational companies are struggling to find people, or if they are taking them, they are taking them from other companies. What's happening is that the price to get those people is increasing, so Ireland is becoming more and more expensive."
Mr Van Cauwelaert said the company would continue to perform some development in Dublin but would focus on a new business unit formed to manage Kindle's top clients, which would itself grow over time.
Some software developers would continue their current work, some would be diverted from their current roles into customer consultancy work and project management, and others would leave through natural wastage, he added. There would be no redundancies, Mr Van Cauwelaert stressed.
The move appears to run against the thrust of IDA Ireland's strategy of keeping as many as possible the number-higher-value research and development business units in the Republic.
Kindle, originally an Irish company, began developing banking software in 1978. Its staff quickly earned a reputation for being efficient and flexible, installing the firm's systems in financial institutions across the world. In 1991, Kindle was acquired by ACT for £37.1 million, which was itself bought by Mysis in 1995. Kindle now employs 450 people.
In another, unrelated, example of the growing demand for IT specialists, The Irish Times has seen documents released under the Freedom of Information Act revealing problems within the Department of Finance.
"Losses of skilled staff over the past 12 to 18 months have significantly impaired [one key section's] technical support and systems development services, some of which have had to be discontinued," the document says. "Of the 101/2 losses at HEO and EO level since early 1997, only 2 have been replaced."
IDA Ireland sources said there was a global shortage of software specialists, adding that the decision by the Government to train an extra 1,000 graduates in the field would maintain Ireland's advantage after the mass of work created by the Year 2000 problem and the introduction of the euro had been cleared.
