New Economy – for better or for worse?

The ‘delivery centre’ is a uniquely 21st century project and another manifestation of how technology has radically changed the global economy. Delivery centres have been set up in nearly every industry, as I am part of the legal services industry, I have experienced most of them there. In his book ‘Tommorrow’s Lawyers,’ Susskind describes nearshoring as being:

“…[s]imilar to off-shoring but the work is carried out in a neighbouring, low-cost jurisdiction that is in a closer time zone to the law firm or in-house department that is parcelling out legal tasks.”

Susskind’s approach is somewhat London centric. Delivery centres in Belfast have moved beyond ‘parcelled out tasks’ and now often lead projects for clients who they can interface with via technology. There is of course still travelling that occurs to London to meet clients and colleagues who may interface more frequently with them in person, but the bulk of communication in this model depends on thousands of emails, calls and video conferencing.

This description may make many think of the traditional ‘call centre’ with hundreds of people glued to rows of desks reading scripts to bemused customers. However, this is only one small area of a larger story. In its infancy, the model did have a faceless ‘back office’ culture which was fostered largely by snobbery from some within established professions in NI. But it has allowed many to achieve salaries and work for global brands that nobody in Belfast a generation ago could have aspired to.

Many of the firms that took the biggest gambles in moving here run by the mantra that ‘we came for the low price but stayed for the quality.’ Northern Ireland does have two world-class universities, filling mostly Greater Belfast with thousands of students and our regional colleges who focus courses on economic need.

The Department of Economy has also harnessed the potential of this by funding placements mostly in the tech sector as part of Computer Science courses at QUB and Ulster. Notably, at UU Magee there is a large Computing and Engineering school which feeds the growing nearshoring scene in the West of NI.

The new model does present challenges, salaries are still not in line with other regions of the UK. NI has never led the way in this statistic. However, the tech sector here has bucked this trend and demonstrates that with a little joined-up planning and skills investment we can achieve parity with other regions (we have achieved it in the quality of output!). According to reports, NI has some of the highest tech salaries outside London of any UK region.

The stumbling block to higher salaries in other industries (particularly Law or Accounting) may be attributed to the billing model. Billable hours that are charged at London rates garner the most profit when lower NI wages are exchanged for the same quality of work. This combined with some practices such as short-term fixed contracts and other ‘casual’ hour commitments (such as only paying workers for chargeable hours) keep conditions spurious for a great many.

The transactions made in such institutions are largely taxed through the London entity, so again it is difficult to calculate actual total value add to the local economy. But they’re ensuring that thousands of typically younger people pay income tax, national insurance and business rates for office premises here. One-third of young graduates still leave NI to find opportunity but these delivery centres provide a second option for many, especially those with no familial connections in smaller NI professional services firms.

Photo by StartupStockPhotos is licensed under CC BY-NC-SA

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