Invest Northern Ireland: A smart move - Alastair Hamilton, Northern Ireland
With organisations now looking at alternative outsourcing 'hotspots', what singles out Northern Ireland as the region to take that mantle?
Alastair Hamilton: The pace of change and volatility affecting the globe is increasing - this has been particularly evident since the financial crisis of 2007. The world is more unpredictable for companies and their approach to outsourcing and offshoring is evolving as a result. In practice this means companies are becoming more sophisticated in their location evaluation with many adopting a hybrid approach combining elements of onshore, nearshore and offshore solutions to deliver the best value.
In this context we see Northern Ireland as an investment location that is not necessarily in competition with traditional outsourcing locations. In fact, a number of Indian companies have located outsourced operations in the region. We consider Northern Ireland as a cost-competitive near-shore location that is particularly suited to higher value functions, or activities which by their nature should be located culturally, legally or geographically close to the customer.
Several destinations are emerging as viable alternatives for a number of business options. How do you see this affecting global delivery?
The fact that there are more location options available is a good thing for companies because it encourages competition and stimulates regions to develop innovative solutions. Going forward I expect to see companies select a broader range of locations to make up their global footprint and that these locations will be more tailored to the particular needs of their business operations, rather than global 'hotspots'. For the locations themselves, the important element will be deciding what they offer this more sophisticated location buyer.
In Northern Ireland we focus on developing high levels of collaboration between industry, academia and government to ensure that companies have immediate access to the tools they need to establish and grow a successful business here. We have fostered innovative skills development, R&D and entrepreneurship programmes and our goal is to ensure that no matter how many geographic footprints a company has, their Northern Ireland centre is among the highest performing.
This approach has enabled us to differentiate the solution we offer on the basis of cost, service quality, productivity and overall ease of doing business. For this reason, although Northern Ireland is a relatively small location with a population of less than 1.8 million people, we have a world-leading financial technology cluster. We also have a rapidly expanding legal services cluster bolstered by recent investments from Allen & Overy, Herbert Smith and Axiom.
What concerns are you hearing expressed by organisations looking to offshore their processes?
Cost is always a critical factor and location decisions are driven by cost optimisation. However, the ongoing climate of economic and regulatory uncertainty, particularly in industries like financial services, means that companies are also driven by the need to minimise cost and maximise flexibility. In practice, companies are usually looking for a solution that combines a high degree of service quality, a well-qualified and stable labour pool, and a pro-business environment in a cost competitive location. The degree to which the activity being undertaken is more or less mission critical or customer facing often influences which of these criteria becomes more significant.
What are the main challenges with regard to being compared with other locations around the world?
One of the key challenges we face as a location is being compared in absolute numbers with regions known for their large populations. However, we are keen to point out the scalability of individual projects over time. Companies like Citi, Allstate, NYSE Euronext, Firstsource and Teleperformance have all reached significant scale over a period of 3-5 years.
How do you see the shared services market evolving in the coming years?
We believe that organisations will continue to use shared services in order to centralise, thus improving the efficiency of their back office functions. Northern Ireland is proven to be an ideal solution for organisations that wish to access a skilled talent pool as well as benefit from lower operating costs. An example is Allen & Overy, which recently opened a support services centre in Belfast. This centre provides a range of services in support of the company's global business including IT, finance, marketing, HR and legal. The company evaluated over 20 global locations before deciding on Northern Ireland and cites the high quality of the workforce as one of the many factors that influenced its decision.