When people make the difference
Dublin's success in establishing itself as Europe's prime centre for hedge fund servicing is ultimately down to the availability of a workforce large enough and skilled enough to accommodate the sector's remarkable growth over the past few years. Whatever complaints one might hear from administrators today about capacity constraints, skill shortages and rising salary costs, Ireland is in a position that almost any jurisdiction in the market would envy.
The great advantage for Dublin over competitors that are or are looking to become centres for hedge fund administration is its continuing output of graduates and other skilled young people.
The contrast is particularly striking with a number of island hedge fund servicing jurisdictions that encounter continuing problems with lack of capacity.
Some of these smaller centres run the risk of losing hedge fund business because, despite having some extremely capable staff, they find it difficult to attract sufficient experienced staff from overseas to complement a local pool of talent that is limited in size. By comparison, there are some 17,000 people working in Dublin's International Financial Services Centre alone, not only in hedge fund servicing but in fields ranging from asset management to life assurance.
For instance, Citco now has more than 700 employees in Ireland, including 250 in Dublin in the hedge fund servicing and outsourced middle office business and another 100 in banking and custody services for fund clients. It also employs 300 people carrying out data processing in Cork for Citco Bank's European business, while a new office also in Cork officially opened at the end of March and will employ as many as 150 people carrying out hedge fund administration and data processing in parallel with the other Citco facilities.
Ireland plays a key role in Citco's global hedge fund services network, which encompasses 11 operational centres worldwide and administers assets totalling more than $330bn. The group's strategy is based on providing services in the same time zone as its clients, and its Irish operations - comprising hedge fund administration and outsourced middle-office services - have grown in response to soaring demand for both these offerings from European, mainly London-based, hedge fund managers.
Dublin is already one of Citco's largest offices worldwide, but the opening of the office in Cork will facilitate staff who might be currently working in the capital but eventually want to return to the south of Ireland. The advantage of Cork and other regional centre that have attracted hedge fund administrators is their ready availability of skilled people, although in truth Citco seems to have suffered less than most from the muchdiscusse tightness of the the capital's labour market. Dublin may be expensive, but it is certainly not as expensive as London, and while labour costs have certainly risen, there is a large base of talent from which to attract staff, boosted by a large number of new entrants every year.
While the opening of the Cork office demonstrates Citco's commitment to Ireland as a place to do business, one advantage of a global office network is the ability to leverage offices in other time zones - for instance carrying out reconciliations in Dublin for New York ahead of the start of the US working day, or Sydney performing the same for Dublin - the important aspect being consistency of standards, technology and reporting, no matter which of Citco's offices in 14 worldwide locations is delivering the report.
Declan Quilligan - managing director of Citco Fund Service (Dublin)
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