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Sums add up for regional operations

In response to the pressures being experienced by many hedge fund service providers in Dublin in terms of operating costs and staff retention issues, IDA Ireland has drawn up a strategy based on regionalisation of the hedge fund business in Ireland. IDA has identified a number of centres around Ireland where we believe that hedge fund administrators can find what they  need to run their businesses successfully. These centres are either main cities or gateway towns designated in Ireland's National Spatial Strategy in which the government is investing to ensure the infrastructure is suitable to promote economic development. The centres all have a tertiary-level educational institutions, suitable telecommunications infrastructure,
reasonable accessibility to Dublin, where most companies will continue to operate a site, along with the long-term ability to sustain an operation employing between 200 and 300 people.

The pioneers in this initiative have been State Street, which in addition to its Dublin operation has developed a site in Kilkenny, and PFPC, which after launching a secondary operation in Wexford has now announced a further regional office in Navan. How have companies benefited from moving outside Dublin? They have benefited from lower overall staff costs, largely driven by the fact that their staff turnover rate is reduced by at least 50 per cent. Most companies have built mirror sites, so instead of transferring certain functions outside Dublin, they provide entire whole  customer service in the new location. This means that staff are not placed at a career development disadvantage if they move from Dublin to the regional site. In addition, companies enjoy a substantial reduction in property costs.

In their new base companies find themselves very much part of a community and enjoy a direct relationship with the tertiary-level institutions, which are often institutes of technology that offer full degree courses. PFPC has a built up very close relationship with the institute of technology in Carlow and in Waterford, where the firm is providing course content and in some cases lecturers to provide direct input into courses. This ensures a steady stream of graduates who are familiar with the business as soon as they walk in the door.

However, an important source of experienced personnel for these new operations consists of staff employed in hedge fund administration in Dublin who may be originally from the region in  uestion and have always planned to return there eventually. Some firms have canvassed staff interest in a move when making a decision on where to set up their second operation. When AIB-Bank of New York last January announced plans to set up an operation in Cork, it received a number of applications from its own Dublin-based staff.

Ultimately the success of this initiative is down to the huge investment that has been made in the education system throughout the country and in the ongoing development of skills at all levels. The clear focus on those skills within Ireland's universities, where 45 per cent of all students take business-related courses, plus ongoing input from companies into the education system, have proved an important factor in attracting new business to Ireland. Although Dublin may no longer be as cost-efficient as it used to be, there is still plenty of scope for the hedge fund administration sector, which has been carefully nurtured and provided with the right environment to flourish, to develop further in the future.

Deirdre Lyons-  head of international financial services at IDA Ireland

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