Ireland’s Research, Development & Innovation (RDI) sector continues to drive growth and employment, but without funding it risks dependence on foreign technology and diminishing competitiveness, according to the Ireland’s Innovation Index Pulse Survey, which surveyed more than 500 Irish firms.
IRDG and KPMG conducted Ireland’s Innovation Index pulse survey in October and November and this pulse survey aimed to “capture the latest trends, challenges, and opportunities faced by companies in Ireland active in Research Development and Innovation.”
The research found that nearly two-thirds (65 percent) of businesses plan to increase RDI spending in response to “challenges like AI and talent shortages, with the recent R&D tax credit rate increase to 30 percent continuing to drive growth.”
However, this is down 12 percent from 78 percent in comparison to a similar question that was asked in the main Ireland‘s Innovation Index 2024 survey in May 2024.
This may be a sign of “decreasing confidence” in Ireland’s RDI environment.
Key findings
- 70% have either adopted or plan to integrate a clear AI strategy within the next 6-12 months
- 62% perceive lack of budget/high costs to be a primary barrier to innovation
- Over 50% are currently involved in R&D of green technologies
- Nearly 2/3 plan to increase RDI activities or employment
Barriers to innovation
At the same time, it found that over 6 in 10 cited a “lack of funding as the primary barrier to increasing innovation, while 43 percent of businesses identify time constraints and one third (34 percent) said difficultly recruiting talent as significant challenges.”
The administrative burden related to the R&D Tax Credit claims and grant applications remain an issue “with 80 percent of respondents reporting that the administrative burden has remained the same, and 14 percent reporting that it has worsened, while only 6 percent saw an improvement over the past six months.”
R&D of green and sustainable technologies
Over half (51 percent) are currently involved in the R&D of “green and sustainable technologies.”
Many of those companies (95 percent) already “involved in the R&D of green and sustainable technologies plan to further invest in the coming year.”
Only 2 percent of companies which are “not currently investing in developing these technologies plan to do so in the future.”
Investment in RDI is critical for long-term economic growth and job creation across the country.
Adoption of AI
Some 39 percent of organizations claim to have “adopted or are currently adopting AI with a clear strategy, nearly one third (32 percent) plan to integrate AI within the next 6-12 months, and 3 in 10 have little or no AI strategy and no current plans to adopt AI.”
Ken Hardy, Head of KPMG’s RDI Incentives Practice noted:
“Investment in RDI is critical for long-term economic growth and job creation across the country. Notably, 65 percent of businesses plan to increase RDI spending, driven by many factors including recent increase in the rate of the R&D tax credit to 30 percent. Issues such as the high cost of innovation have led to concerns about decreasing confidence in the RDI environment. We need to continue to improve the attractiveness of investing in RDI to maintain Ireland’s competitive position.”
Dermot Casey, CEO of IRDG, remarked:
“Ireland is at a critical juncture. Business is eager to embrace AI and green technologies, but high costs and funding gaps are holding us back. Innovation is the lifeblood of our economy and the key to tackling global challenges like climate change. We need immediate action to break down these barriers. It’s time to radically improve Ireland’s RDI environment and claim our position as a global innovation leader.”