Harnessing Ireland's growth potential
Ireland's hedge fund servicing marketplace is known for its high level of expertise. Yet it is no secret that the marketplace is also characterised by an intense competition for resources - a result of the industry's success applying constant pressure on administrators to attract talent. More than any other firm in the market, State Street has made efforts to ease this pressure by looking beyond the confines of Dublin to the city's outskirts and beyond.
When State Street acquired International Fund Services (IFS) in Dublin, the combined business employed around 250 people in Ireland alone. Over the past five years, while the jurisdiction has consolidated its position in the hedge fund servicing market, there has also been unprecedented expansion in the global alternative investment industry, taking State Street's assets under administration in Ireland from around USD35bn to more than USD250bn.
This expansion has led to a dramatic increase in Dublin's administration sector workforce and has made it more challenging for firms to attract and retain the skills they need to serve their growing client base. In a country famed for the quality of its education system, the logical solution has been to look further afield.
With the acquisition of Deutsche Bank's global securities services business in 2003, State Street in Ireland gained a regional centre in Kilkenny that currently employs more than 300 professionals. Meanwhile, in addition to its 450 staff in Dublin, IFS has also moved into the surrounding areas by establishing operations in Naas in 2005 and Drogheda last year, increasing its combined employee base to approximately 300 in those locations. IFS now has one of the largest hedge fund administration operations outside of the capital.
Soaring housing prices as well as the rising cost of salaries in Dublin are further pushing the development of suburban centres where it's easier to attract the talent required for business development. State Street's operations in Naas and Drogheda were originally seeded with existing members of staff keen to leave the city centre to take advantage of easier commuting and more reasonable property prices. Today, local residents are increasingly being hired. These suburban centres handle the same work as the Dublin office, just for different customers. This is an effective alternative to outsourcing certain functions, because it helps ensure that the quality of service provided is consistent, while still being easily accessible to the customer.
With the recent addition of the IFS business to State Street in Ireland, there are currently almost 2,000 employees in the country. The size of its business there reflects both Ireland's advantages as an offshore jurisdiction and its expertise as a service centre. As a global organisation, State Street seeks to create timezone- friendly service models, making it important to be able to offer the same capabilities across its network of regional and offices and for customers to be able to leverage its capabilities internationally. In today's increasingly complex hedge fund industry, there is more emphasis on valuation and risk reporting services as a result of funds investing in exotic derivatives and the convergence of hedge funds with private equity. As a result, administrators require a broader range of skills than in the past, ones often more closely aligned with those of a chartered financial analyst than an accountant. In this environment, the wealth of talent available throughout Ireland is the cornerstone of its enduring dominance in the global market.
Gary Enos is executive vicepresident and head of alternative investment servicing business at State Street
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