Evolving operating models for a changing landscape

Invwest NI logoCompanies are pursuing new streams of talent for cost-effective nearshore support in a diversifying industry, says Kerry Quinn at Invest Northern Ireland.

As the asset management industry evolves to meet changing demands, firms are focused on improving bottom line efficiency and flexibility, while maintaining service quality and exposure to risk. Offshore and outsourcing solutions are well established but many firms are choosing a hybrid approach that blends cost benefits of off-shoring with the business and cultural affinity of onshore.

Hybrid nearshore solutions have proved their value in uncertain economic times and volatile industry conditions. With reduced operating costs compared with traditional centres, they can enhance agility and reduce time to market by being physically and culturally close to the “mothership”.

One location where such solutions are flourishing is Northern Ireland. In the past ten years, several financial and legal services firms have opened centres in the region, from which they deliver services to established hubs in Europe and beyond. These firms cite the region’s high-quality and largely untapped talent pool, stable competitive cost base, low wage inflation and low staff turnover as the critical success factors enabling them to drive value for their business.

Citi established a technology centre in Belfast in 2005, and has since added middle and back-office operations and legal and compliance divisions. In 2011, they announced their fifth expansion with a target
of 1,500 staff to provide integrated financial services and support to their markets in Emea and beyond. 

In 2012, Augentius Fund Administration opened its Belfast office, following Heritage Administration Services, which had already established a fund accounting centre of excellence to support its Guernsey-based parent.

Other internationally renowned firms such as NYSE Euronext, First Derivatives, Allstate, Liberty Mutual, Mercer, and Lloyds Banking Group have significant operations in Northern Ireland, with recent arrivals to the sector including Cowen International and Chicago Mercantile Exchange. These companies are delivering specialist software development, operations, legal services, actuarial and risk analytics services to clients globally.

The legal services industry is also recognising the benefits of nearshore in their business models. In 2012, Axiom Law joined Allen & Overy, Herbert Smith Freehills and Citi as part of a growing cluster of legal firms servicing the global industry from Northern Ireland. They deliver document negotiation, dispute resolution, legal control, and compliance services to internal and external clients.

Law attracts the highest academic achievers in Northern Ireland, but with limited demand locally there is very high under-employment with around 80% of paralegals having achieved a law degree at a high grade.

Universities in Northern Ireland have a tradition of working proactively with industry. Belfast and Londonderry are the second and fourth most populous cities on the island and are home to two world-class universities – Queen’s University Belfast and the University of Ulster. Together, these universities account for almost 15,000 graduates per year – more than a quarter of which come from disciplines of direct relevance to the financial industry.

In 2012, Queen’s University launched the First Derivatives Trading Room, featuring Bloomberg terminals, financial information feeds and software to gives students the experience of trading in real-time equities, bonds, forex and derivative instruments. The university is integrating bespoke modules on financial trading into degree provision and will shortly launch a Masters of Science in Computational Finance.

As the region’s economic development agency, Invest Northern Ireland delivers flexible and tailored support to business. We connect industry, government and academia to ensure Northern Ireland continues to offer the right mix of high-quality talent and infrastructure in a cost-effective and pro-business environment.

Kerry Quinn is sector lead of financial services at Invest Northern Ireland

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