At the Touchdown Europe intermediaries networking event aboard HMS Belfast on the river Thames in London in June, Invest Northern Ireland’s London representatives were in a celebratory mood. They had good reason: ICICI One Source, an Indian business process outsourcing company, had just announced it would open outsourcing centres in Northern Ireland, creating about 1000 jobs over the next two years.

The Mumbai-based company’s first outsourcing centre in Belfast opened in July, with a second centre in Londonderry, in the north-west of Northern Ireland, planned for later this year.

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“When we were looking to set up facilities in the UK, we looked at several different locations and concluded that Northern Ireland offered us the best options,” explains marketing director Fraida Silver. “Northern Ireland has a developing contact centre industry, as several companies have already set up centres in the region.

“A recent report from OMIS Research showed that Belfast is the best place in the British Isles to run a call centre and there is a still a large potential pool of well-educated, enthusiastic workforce that ICICI One Source can tap into.”

UK growth

The move is part of ICICI One Source’s strategy to offer a wider choice of outsourcing facilities to its UK clients. The UK business has grown organically over the past six years as ICICI One Source has expanded its client base in the country.

“About half the revenue for ICICI One Source group comes from the UK so it is a very important market for us, and the expansion into Northern Ireland is reflective of the maturing of our business model,” says Matthew Vallance, CEO of ICICI One Source UK.

Until now, delivery on UK contracts was carried out offshore in India, mainly in Mumbai and Bangalore, where more than 5000 staff worked on these projects. (The headcount of ICICI One Source Group is roughly 8000, excluding its banking operations, with about 7500 in India and another 500 in the US.)

“As we expand in the market and bid for larger contracts and broader contracts from our client base, we recognise the importance of having what we might call multicountry delivery capability, so we can deliver services from locations other than India,” says Mr Vallance.

“India will always be a very important part of our delivery operation but we recognise it is not the answer to everything, so we are very deliberately creating a global network of delivery operations.”

Some UK media reports insinuated that the decision by an India company to expand on such a scale in the UK hints at a trend of ‘reverse’ outsourcing, with projects shifting from India back to western Europe. But ICICI One Source says it is more accurately described as a ‘second wave’ of outsourcing: having recognised the expertise of the best Indian outsourcing companies, organisations are asking them to use that capability to manage outsourced services in the UK.

“It’s not really a reverse of anything because our India business is growing and continues to grow,” says Mr Vallance. “We’re not displacing work in India and putting it in Northern Ireland.”

Win-win situation

In fact, there is scope for growth in both locations. A December 2005 report from consultanting firm McKinsey and the National Association of Software and Services Companies, the Indian chamber of commerce that serves as an interface to the Indian software industry, showed that India has a 46% market share of the global business process outsourcing industry, with potential to increase by more than 25% by 2010.

The UK market is also seeing strong growth: a February 2006 report from ContactBabel showed that the UK call-centre industry expanded by 5.5% in 2005, and is expected to exceed one million jobs by the end of 2007.

“We have already had interest from several companies for our Northern Ireland-based outsourcing services and expect to announce the next phase of our expansion in the region in the next few months,” says Mr Vallance. Invest Northern Ireland had better get ready to pop some more corks.