BELFAST BRIEFING:AT FIRST glance, the move by Firstsource Solutions, one of India's leading contact groups, to create up to 500 new jobs in Middlesbrough might seem like a blow for Northern Ireland, writes FRANCESS McDONNELL

Firstsource currently employs more than 1,800 people across two centres in Northern Ireland and has been unfailingly enthusiastic about its experiences in the North. So it would not seem unreasonable to question why the Indian group would not once again consider Northern Ireland over Middlesbrough as the location for another investment project.

Why would it choose a new greenfield site over a region which, according to Ananda Mukerjee, Firstsource managing director, has a “proven track record in providing a large pool of talented people and an extremely conducive business environment”?

Was it perhaps because the UK regional development agency One North East provided a grant of £1.9 million towards the cost of the new investment project? Or perhaps Firstsource believes the pool of talent it can recruit from in Northern Ireland is drying up?

According to Fraida Silver from the Mumbai-headquartered group it is neither of the above.

Silver says the new Middlesbrough centre will complement its existing Northern Ireland operations. She says the group is committed to expanding again in the North in a move that could create several hundred new jobs.

That new centre is likely to open this year.

“We looked at a number of locations across the UK and the Republic before choosing Middlesbrough. We chose Middlesbrough for a number of reasons, including the potential good workforce it offers, the good infrastructure it has and the practical support that One North East offered us. The new contact centre can also be up and running within the timeframe we want,” Silver added.

She said the financial grant available to the group in respect of its new investment “was not an over-riding factor” in its decision to locate in Middlesbrough.

The fact the group chose the location based on the potential it can deliver rather than tax or grant incentives might be an important lesson for the North’s Executive to take on board.

It is particularly important in the light of the debate kicking off about the Conservative’s commitment to producing a paper on reducing the level of corporation tax in the North.

Companies in Northern Ireland currently pay a headline rate of 28 per cent compared to the Republic’s corporation tax rate of 12.5 per cent. As part of its election manifesto the Conservatives promised to revisit the issue of corporation tax and consider the potential of establishing Northern Ireland as a special enterprise zone.

But if global companies like Firstsource are not swayed to invest in the Republic with its 12.5 corporation tax rate and are already fans of the North, what will Northern Ireland gain and what might it have to lose in order to secure a different corporation tax rate from the UK in general?

Firstsource operates 42 contact centres worldwide, with 24,000 employees spread from India to the US. It is a group which makes hard-and-fast investment decisions on the basis of what a location can deliver for its business.

It is an issue about which the North’s Executive needs to be clear as the UK’s emergency budget looms. Northern Ireland is facing huge expenditure cuts that could spark a crisis of confidence among some of the Executive’s more naive politicians.

According to the latest economic research that will be published today by the First Trust Bank, the North is about to face some “very difficult choices”. The time for “free rides” in Northern Ireland is over, Mike Smyth, head of the school of economics at the University of Ulster, says in the First Trust Economic Outlook and Business Review.

Smyth says the prospects for “greater fiscal devolution” have been improved by the general election result but now Northern Ireland has a choice to make. He believes there are five broad options facing the North’s Executive – public sector pay freezes or pay cuts; cuts in the public capital investment programme; cuts in current expenditure programmes; asset sales or privatisation; and rasing tax revenue.

“It is time for a serious examination of Northern Ireland’s public finance options and for an equally serious debate about the ways in which Northern Ireland can do more for itself,” Smyth warns.

The question now is, would lower rates of corporation tax really assist Northern Ireland to help itself?

Perhaps Firstsource might have an answer.