A backlash against offshore outsourcing has led one firm to offer services from Northern Ireland, writes Carissa Casey
If American IT companies helped create the Celtic Tiger, their Indian counterparts might kick-start the Northern Ireland economy. Last year Firstsource, an Indian-owned outsourcing company arrived in Northern Ireland promising to create 1,000 jobs in the next two years. Less than six months later the headcount at the company's business outsourcing operations in Belfast and Derry has topped 700.
Firstsource is a new breed of company, created in 2001 by one of India's leading banks, ICICI, to capitalise on the growing trend towards offshore outsourcing by US and British companies. It now employs 10,000 people and has revenues of $123 million (€94 million).
Until recently all its services were delivered from India. According to Mathew Vallance, the company's European regional director, it made sense to develop other locations as the company became larger and the business matured.
A growing backlash against offshore outsourcing no doubt also played a part in the decision. "We'll provide some services from Northern Ireland and some from India," he explains. "It depends on the nature of the work and the client's view of sending work offshore.
"Some companies have categorically stated that they will not send call centre work to India."
Vallance makes a distinction between voice and non-voice operations. Non-voice covers administration work while voice can include both technical support and telemarketing. The latter, Vallance points out, can be difficult to do offshore.
"Anything that requires an unscripted dialogue and a high degree of empathy is relatively hard to do offshore.
"If what you're doing is simply processing a piece of paper or providing support that's very rules based, then that's easier. We wanted to be able to target 100 per cent of the market."
Firstsource derives half its revenues from the UK and required an English-speaking base close to its clients. It followed two other Indian companies - software developers HCL and Polaris - to Northern Ireland.
"We felt Northern Ireland was overlooked by many companies. There's good potential here over the medium- to long-term to create a workforce with low levels of staff attrition and a manageable cost base," says Vallance.
"Politically the environment is very stable. You walk around Belfast and you can see it's a place you can do business."
Staff attrition was a key issue. The company spends seven weeks training employees before they begin work - a significant investment on its part. "Clearly in Dublin and the surrounding area, there are a lot of job opportunities for people. If we were to set up there it wouldn't make sense economically because of the cost of hiring staff, the cost of employing them and the attrition you'd face."
As befits such a rapidly growing company, Firstsource decided on Northern Ireland within just a few months of its first visit in January last year.
Intense lobbying by job creation agency Invest NI clearly played a role. Firstsource is the first business processing outsourcing company from India to establish here and, according to Invest NI, this "is a key target growth sector".
Invest NI is not alone in spotting the potential of Indian inward investors. The country is one of the world's leading producers of technical graduates. According to the British think tank Demos, India has 14 million graduates - more than double the US - and produces 2.5 million graduates in science, engineering and IT every year.
Indian software giants such as Infosys had sales in 2006 of more than $3 billion. While old-style IT companies such as IBM and Accenture rush to create bases in India - IBM has said it will employ close to 100,000 there by 2010 - new Indian-owned companies like Firstsource can already offer clients the lower cost base of a highly educated, relatively cheap labour force.
However, Vallance is keen to point out that Indian companies offer more than just a cheap source of labour. "Companies like us do not want to be seen as just benefiting from labour cost arbitrage - looking at something and doing it cheaper elsewhere. It's about providing value added services to companies," he said.
The rise of this new breed of companies is not something that took him by surprise.
A veteran of the technology industry, Vallance worked for two years in Bangalore in IT sales and marketing. "We're living in a very global world. Our business is indicative of that. It's probably not visible to many people that this is happening. There are strong parallels between our industry and what happened in manufacturing when it shifted to China and the Far East.
The same is happening in services. It's not easy to predict exactly what the consequences will be but my view is - and I believe in free trade - the economies will make adjustments if you let them," says Vallance.
He also believes that Northern Ireland is likely to top the list of many Indian companies requiring a UK base. They are less likely to be swayed by previous negative perceptions. "We just looked at it in black and white. In some ways you could say we looked at it without any legacy thinking and took a very objective view. We thought the place had a great feel to it and financially it made sense," he says.
"We're finding it working really well. The workforce is great and motivated and we're able to attract people into the company quite easily." Both the general manager and finance manager at the Belfast operation came from India.
Trainers were also bought over from the company's headquarters in Mumbai. The mix of nationalities has worked out well, says Vallance.
"Indian people have a tremendous work ethic and are very well educated. It's something we found in Northern Ireland too - there are very high levels of achievement."
