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With a recovery under way in Iceland and capital controls on foreign investment dissipating, demand for IT has skyrocketed and enrolment in IT and computer science courses has jumped by 122% in the past five years.
This is a trend that Reykjavik University academics Páll Ríkharðsson, director of masters programmes in finance, accounting and information management, and Yngvi Bjornsson, dean at the school of computer science, are charged with nurturing, growing and sustaining in the years to come, not just for the good of their university, but for the future of the country.
CW Nordics asked the academics about IT and IT education in Iceland, which has a population of 320,000.
Give an overview of Iceland's IT landscape
Ríkharðsson: Iceland is a very dynamic, flexible market, but it's not a mature market, and that makes it lack a bit of structure. It's not big and there are not many companies, so there is not a lot of competition. Our small companies don't always have the resources or the know-how expected of other countries where there are large companies that can innovate and lead the way.
Compared to other nations, Iceland has low wages. For example, a good Axe 2012 programmer costs two-thirds of what they would in Denmark. Rates are typically lower than in Scandinavia which, with our good education system, makes us a good place for research and development.
What international IT players are there in Iceland?
Ríkharðsson: The big brands are all here: Apple, Dell, Microsoft, SAP, Oracle, JD Edwards. Then there are EY and KPMG, which all have their own IT consulting companies.
Iceland is also one of the few countries in the world that has a free trade agreement with China, so now, more and more, websites are appearing offering Chinese products here.
And domestic players?
Ríkharðsson: We have high-profile gaming companies like CCP and Plain Vanilla, some smaller, more niche IT companies, and Advania, Iceland's largest IT company, which employs 900 or so people and has offices in Sweden and Norway.
We also have Marel, one of Iceland's biggest companies, a producer of high-tech weights, scales and equipment for the fishing industry. Then there is Össur, which produces artificial limbs. It has just developed an artificial limb you can control with your brain.
How appealing is IT education for the next generation?
Ríkharðsson: In Iceland, we have always had fisheries, tourism and energy – but these are now knowledge-intensive industries, and people need to know what they are doing. So there is much focus on getting more education to better oneself.
A lot of students in my programmes – maybe 50-60% – are older, maybe in their 30s, and they are trying to add a degree, learn a new skill, and either advance within their companies or do something else entirely.
Bjornsson: There are over 1,000 people studying IT and computer science in Iceland's two universities (Reykjavik University and the University of Iceland). For a country of 320,000 people, that is pretty good. The current generation sees the future in IT, and in recent years, success stories such as gaming companies CCP and Advania have had an effect.
What demand is there for IT graduates and what industries do they move into?
Bjornsson: Almost all our students already have a job when they graduate – unemployment in the professional IT sector is less than 1%. So conditions are such that graduates all enter the workforce directly after getting their BA.
They still go to work in banks, tourism, government offices, insurance companies – but of course IT is becoming part of every industry and there is huge potential in Iceland in areas such as renewable energy and datacentres. For me, these are the strongest potential industries we have.
We also now see a lot of students starting their own companies. The Global Entrepreneurship Monitor has described Iceland as very entrepreneurially-minded. More than 10% of our people now do some kind of entrepreneurial work, which is high compared to other nations.
How are universities encouraging and optimising the ICT trend?
Ríkharðsson: Reykjavik University programmes are structured so that people can work alongside their studies. There is no day teaching – we teach in evenings and weekends. Only 320,000 people speak Icelandic, so 50% of our courses are in English – and that is helping us attract the best academics and foreign students as well.
Maybe 25% of our students now come from abroad and we would like to increase that number, especially as new markets, China for example, open up. We need qualified brains here – the students who like Iceland will stay on and contribute.
Our intention is basically to produce a new breed of CIO, people who are not just mechanics who know how to run the machine, but also have knowledge and understanding of how to gain a competitive advantage and the service side.
Bjornsson: We have advanced research and development units and labs that are reaping fantastic results. But IT and computer science skills are in such high demand that BA students tend to go straight into the workforce without considering an MA.
So our universities are working hard to get more graduates into Masters and research programmes. Now that we see a more global jobs market, students here need an MA to stay competitive with their peers in other markets, such as mainland Europe, the US and UK.
Is the government helping to drive ICT growth?
Ríkharðsson: I would give them five or six marks out of 10. There are initiatives and there is some support, but I am not entirely sure the political system and politicians actually understand the value of the ICT sector and what will be possible.
Our capital controls will gradually be lifted, so foreign investment in innovation will come – and I am sure IT companies in Iceland will develop as more capital comes in.
But there is an interesting development on the political landscape: the Pirate Party is now the largest political party. It is leading in the polls, with 37% support – and the election is next year. The party's agenda has a focus on IT and supporting startups within the industry. If it returns even half of what the polls say, then the IT climate will change immeasurably.
So, how long until the new dawn in Iceland's ICT sector?
Ríkharðsson: Our problems will be solved quickly. Iceland is a small ship and it is easier to turn 300,000 people around than it is to turn a larger unit around. The Icelandic industry learns quickly and we are always looking to better ourselves by looking abroad, and by learning.
Things are moving and the investment channels are opening. I think some of the IT companies – the likes of Advania, CCP and Plain Vanilla – will look to establish themselves abroad, but I think that is a natural evolution, and I hope they would keep at least some of their core business here.
Bjornsson: The startup trend is not a coincidence – many factors are making it happen. For 10 years now, we've had more interest in IT and CS – so the landscape has totally changed.
For example, our students must now take a mandatory course in entrepreneurship, so there has been a lot more activity from the ground up and there is more collaboration and accelerators just as venture funds are increasing.
For me, Iceland has always had the right mindset for entrepreneurship, but things are coming together now that the right mechanisms and conditions are in place. We are moving fast, and our development is only going to quicken.