Today, technology is one way insurance companies compete, according to Gordon Bell. “That’s why they continue to spend capital on their applications,” he says.
Bell is the Chief Executive of Liberty Information Technology Limited, a wholly owned subsidiary of Liberty Mutual. The Boston-based company operates offices in a number of locales (the main offices are located in New Hampshire, Indiana, Wisconsin, and Northern Ireland) to develop software to produce policies, handle claims, and cover all aspects of its insurance business. “Eight hundred people write the applications to keep the business going and 160 of them are in Belfast,” says Bell.
Bell says “cost was not the major issue” in management’s decision to set up the captive. Instead, it was “availability of labor.” In 1996 during the dot com boom it was difficult for Liberty Mutual to hire programmers in the US. “Talented people were in short supply back then. There has never been full employment in Ireland, so the company opened a software development center in Belfast,” the executive explains.
Bell says his operation “has been growing ever since” because Liberty Mutual continues to improve its service and product offerings.
Ireland Offshores to India
Today the Irish operation actually offshores part of its applications development to an Indian supplier “to maximize the benefits.” Bell says that the company utilizes different skill sets at their Indian supplier. Tasks like re-engineering projects are best shipped to India. That’s when, for example, software designed for one computer must be modified so that it runs on a different computer or database. “We like the cost savings as well as the availability of the relevant skills,” he says of his Indian outsourcer. The subject matter and expertise tends to stay in Ireland.
Bell says his programmers are trained to specialize in particular aspects of the insurance business, such as claims. Software engineers typically work as part of larger teams based mainly in the US. The multinational workforce forces members on both sides of the pond to be articulate about the specs and requirements. There are well-documented methodologies and lots of video and audio conferences.
However, Bell says “the need to travel never goes away” because the work requires face-to-face meetings with the business units. Bell likens applications development to a couple working with an architect for the first time. At first, the home buyers don’t know everything they need to tell the architect. As time goes on, they are able to articulate all the details. But this takes many meetings.
Why Northern Ireland Is a Good Fit
Northern Ireland is just six hours from the East Coast of the US, points out Fabian Monds, Chairman of Invest Northern Ireland, an economic development organization. It is only five hours ahead of Boston. “The time zone is quite convenient. We can call New York at 9 a.m. and it’s in the middle of the day for us,” he points out.
Monds maintains Northern Ireland is a viable nearshore location for US firms for many reasons. “We have a cultural affinity with the US,” he says. The education and legal systems are comparable, so US companies don’t have to worry about intellectual property theft. Human resources practices are similar.
The country is known for its leadership in telecommunications infrastructure. Monds says Northern Ireland will be the first region in Europe to have 100 percent broadband access by the end of this year. “This was a significant investment for our government,” he adds.
While salaries are more expensive than India, Monds says Belfast software salaries are up to 20 percent lower than other European locations and 28 percent lower than other US locations.
Irish employees are traditionally loyal; Monds says the attrition rate at nearshoring firms ranges from 7-10 percent. “Our employees don’t go across the street to earn $10,000 more,” he says. “They remember when the unemployment rate was in the teens. They are thankful to have a job.” Loyalty translates into lower hiring, training, and recruiting costs. Northern Ireland also has a seasoned management sector, Monds adds.
Northern Ireland has 13,000 university graduates a year; 2,500 have computer degrees. That’s a significant number for a country with just 1.6 million people. “Our value proposition is not quantity, it’s quality,” says Monds.
Why Northern Ireland Wants to Be Known as a Nearshore Location
Monds says the government has decided to “pursue the knowledge-based sector” for national economic growth. The executive says 60 percent of the population in Northern Ireland is under 40. “We have a whole slew of educated young people who need jobs. We have to create them,” he explains.
For that reason, the government provides “selective financial assistance” for training, support, and research and development to firms nearshoring to a local provider or those setting up a captive.
Call centers are flourishing because global companies with customers in the UK want a presence there. In addition, US companies are turning to Northern Ireland for software development and IT outsourcing. “The projects are small in number but are very sophisticated,” he says. They have included grid computing, new platforms, and cell phone software projects.
Microsoft has a European support office in the Titanic Quarter (where the ship was built). The country is beginning to specialize in the insurance industry, he notes. In addition to Liberty Mutual, Allstate Corporation has over 500 people in Belfast and Londonderry.
Monds says some of the companies setting up shop in Northern Ireland already have a presence in India. “They look to us to solve problems in other areas,” he observes.
Nearshoring to Northern Ireland seems to be paying off. Monds reports 80 percent of the 30 offshore projects grew larger through reinvestment during the last three years. That’s remarkable for a country that has been living under a ceasefire for just 10 years and a peace agreement since 1998.
About the Author: Ben Trowbridge is an accomplished Outsourcing Consultant with extensive experience in outsourcing and managed services. As a former EY Partner and CEO of Alsbridge, he built successful practices in Transformational Outsourcing, Managed services provider, strategic sourcing, BPO, Cybersecurity Managed Services, and IT Outsourcing. Throughout his career, Ben has advised a broad range of clients on outsourcing and global business services strategy and transactions. As the current CEO of the Outsourcing Center, he provides invaluable insights and guidance to buyers and managed services executives. Contact him at [email protected].