Wales pitches itself as offshore outsourcing location

South Wales is emerging as a niche outsourcing destination for UK companies lured by an abundance of technical skills, government grants and lifestyle quality - but faces increasingly stiff competition from other English-speaking 'nearshore' locations.

Admiral Insurance uses offshore locations in India and South Africa for some of its call centre work but has combined that with using south Wales - as opposed to London - as its primary corporate headquarters for sales, legal and IT work.

Andrew Probert, finance and IT director for Admiral Insurance, said: "You do it as a mix and match. We won't offshore our sales but we are happy to offshore our post sales service. Put the lighter-touch stuff offshore and heavier-touch stuff onshore."

Cost savings and a large pool of available skilled workers were the main reasons for Admiral Insurance's decision to set up in Wales back in 1993.

Probert said: "You don't go there for the grant aid. We went there because a large workforce was available. But south Wales has made a great contribution to our business in terms of cost savings.

"There's a fundamental cost difference for someone like us operating in south Wales compared to operating inside the M25."

The Welsh Development Agency has also managed to lure a host of IT services companies including the likes of EDS, IBM and LogicaCMG to Wales with the help of attractive subsidies, and LogicaCMG provides some document management and application management services for customers from its facility in Bridgend.

Grant Hawkins, chief executive of Welsh-based IT services company Target, said Wales is seen as an attractive location for many financial services companies looking for cost savings but unable to put some of their more complex products and services offshore as far away as India.

He said: "Management control and cultural understanding of the environment is an issue for India."

But Eamon Kennedy, senior analyst at Ovum Holway, warned there is a lot of competition for this kind of business among several strong native English-speaking locations both within the UK and further afield.

He said: "Wales has quite stiff competition. There are quite a few native English-speaking locations Wales has to compete with – Canada, Ireland, Northern Ireland, Scotland, the northwest and northeast of England – and even Manila."