Philip Maguire: How we outmanoeuvred the dotcom bust

Ireland's 'Celtic Tiger' economy provided the market for Philip Maguire's start-up business IT Alliance. And never one to miss an opportunity, Maguire sees massive potential in 'cloud computing'.

Philip Maguire first realised he really wanted to be an entrepreneur while working for a large engineering company. "I had gone there straight after university and I was responsible for setting up their software division." It was good experience but Maguire, now 48, felt constrained by the bureaucracy that goes with being "a tiny part of a large company".

As the software division grew, Maguire found himself managing more people and decided he needed to broaden his skills with an MBA. In 1991 his new qualification landed him a job at the Digital Equipment Corporation. "At that time in Ireland there was a shortage of IT skills. We were providing staff and training to help companies implement new IT equipment." With Ireland's Celtic Tiger' economy beginning to roar, it proved a growing market. Yet, despite the steady demand for the service, Digital decided to "step back" from the market in 1996. "Their new strategy was to focus on core' business areas." Maguire sensed an opportunity.

He set up his own firm, IT Alliance, to take advantage of the gap in the market. "Digital agreed to outsource its work to us, which gave us a steady stream of early contracts." He was also helped by the computer revolution taking place at the time. New products such as Windows 95 were completely different to what had come before and many firms needed help installing the programs and adapting them to their business needs. The firm also helped to train clients' IT departments. Another boost came from the IT boom that was taking place in Ireland.

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Microsoft's European headquarters were in Dublin and Maguire managed to land lucrative contracts to test the firm's software. Business was booming and by 2001 IT Alliance employed 300 staff and generated annual sales of €16 million. "The company was growing fast and I had ambitious growth plans." He opened up a consulting division to expand the business.

But Maguire's plans were cut short when the dotcom bubble burst. Sales dropped by 25% as his clients cut spending. "We had grown too quickly and had to retrench completely." Maguire slashed 50% of the workforce and closed the consulting business. He also had to "reinvest significantly" to keep the business afloat.

Once costs were under control, Maguire decided it was time to "re-engineer the business". He widened the firm's services by offering to design and manage each client's entire IT facilities. He also changed his marketing tactics and began selling through partnerships with established IT vendors such as BT, HP and IBM. The tactic worked and sales had passed €15m when the financial crisis hit in 2008.

"This time we were much better prepared. Our accounting systems gave us advance warning of a slowdown in spending and we had already cut costs accordingly." Maguire also managed the backlog of new orders more efficiently so that the firm continued to receive a steady stream of income. With demand from Ireland drying up, IT Alliance found new work in Britain, which now accounts for 50% of revenues. Annual sales are now more than €20m. Maguire remains confident. "The push for cloud computing will create massive opportunities for us."

James graduated from Keele University with a BA (Hons) in English literature and history, and has a NCTJ certificate in journalism.


After working as a freelance journalist in various Latin American countries, and a spell at ITV, James wrote for Television Business International and covered the European equity markets for the London bureau. 


James has travelled extensively in emerging markets, reporting for international energy magazines such as Oil and Gas Investor, and institutional publications such as the Commonwealth Business Environment Report. 


He is currently the managing editor of LatAm INVESTOR, the UK's only Latin American finance magazine.