Innovation Index Pulse shows cost still the primary barrier Irish businesses face in adopting AI
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.
The survey of 500 Irish companies by IRDG and KPMG aimed to capture the latest trends, challenges, and opportunities faced by companies in Ireland active in RDI.
The research found that nearly two-thirds (65%) 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% continuing to drive growth. However, this is down 12% from 78% in comparison to a similar question asked in the main Ireland’s Innovation Index 2024 survey released in May 2024.
At the same time, it found that over six in 10 cited a lack of funding as the primary barrier to increasing innovation, while 43% of businesses identify time constraints and one third (34%) 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% of respondents reporting that the administrative burden has remained the same, and 14% reporting that had worsened, while only 6% saw an improvement over the past six months.
Just over half (51%) are currently involved in the R&D of green and sustainable technologies. Most of these companies (95%) are already involved in the R&D of green and sustainable technologies plan to further invest in the coming year. Only 2% not currently investing in developing these technologies plan to do so in the future.
Some 39% of organisations claim to have adopted or are currently adopting AI with a clear strategy, nearly one third (32%) plan to integrate AI within the next 6-12 months, and three 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% 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%. 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, said: “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.”
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