Vince Neicho has written an article on the Integreon blog called Should a law firm invest in creating a captive or low-cost centre? 3 top considerations before making the commitment.
As is widely known, A&O was one of the first big London firms to move part of its operation to Belfast, benefiting from reduced establishment costs, a sympathetic environment for incoming businesses, and a skilled local workforce.
Vince begins his article by explaining the difference between a “captive” and a “low-cost centre”. Either involves substantial investment, and his article looks at the factors to consider before investing in either of these courses.
However much “cost saving” there is, there are still substantial expenses to cover, both in starting up and year by year. The costs may be lower, but fluctuating workloads – the ability to start up a big new project from scratch whilst managing the costs of slack periods – remain an issue.
It is important, as Vince Neicho points out, to be sure that the clients are happy with this – the apparently simple proposition that clients will back anything which reduces their costs may conflict with a client imperative to work closely with other businesses, as increasingly they do. You can’t walk round the corner for a meeting if your office is hours away.
Not least of the problems is the need to find and retain good staff. The first few players into an area may be able to take their pick of local talent. As others follow, the pool of local skills dries up, and other costs, from office rents to house prices, increase. One big employer more or less in a region can swallow up or release a substantial proportion of the working population. Staff want promotion, better pay and more interesting work, undermining the premises on which the original decision was made.
As Vince Neicho points out at the end of his article, a partnership with a company like Integreon, can either be an alternative to your own captive / low-cost centre or can support it. Whatever decision you end up taking, Vince’s article is a good reminder of the factors to be weighed.