Wednesday, February 2, 2011

Allen & Overy - Support Function Savings (Belfast Move)

In addition to the firm announcing a multi-million pound deal with Savvis (where the management of the European and UK networks and data has been outsourced) aimed at saving in excess of 10% on the firm's IT costs (see story here), further details were publicly provided overnight on magic circle firm Allen & Overy's move to shift professional support personnel from the firm's London headquarters to a central hub in Belfast.

An initial setup up of 180 staff will move across, with as many as 250 support personnel (and the possibility also of 50 fee earning personnel) being based in the Irish city by 2014.

The Allen & Overy Belfast hub will see teams from the Human Resources, Information Technology, Finance/Accounts, Business Services and Library departments all located in a single site aimed at generating a cost saving to the partnership of up to £10 million over the initial five years.

If this approach of Allen & Overy follows the offshoring "regional hub" approach that was led by global giant Baker & McKenzie a number of years ago, Allen & Overy's Belfast hub will look to provide support to both the UK and EU located offices of the firm in the future.

The differences here between the Allen & Overy approach and other recent press items around legal support outsourcing and/or offshoring, is that the firm's partnership specifically refer to the fact that this move is "onshoring" (e.g. the hub site is within the UK), and that the Belfast office is an Allen & Overy office - a clear indication that the provision of a quality support service is the leading driver - rather than an overly aggressive cost reduction position being the driver.

Allen & Overy are not alone in reaching across to Belfast - Herbert Smith also announced a similar deal at the height of the PIGS financial concerns late last year, and are currently in implementation mode. What is unique about the Herbert Smith move is that their Belfast move is being led by the dispute resolution/litigation support practice. Will we see this as an area where low cost "staff attorneys" undertake low cost first level reviews?

We expect to see Asia based equivalent hubs grow in popularity over the coming 3-5 years to complete the "follow the sun" 24/7 support jigsaw for truly global firms, which may well see the support functions in areas such as Australia lose out to cheaper cost bases (particularly given the unattractive high rate of the Australian dollar) in other regions such as Singapore, Manila (where Baker & McKenzie already have one of their global hubs), and even New Zealand.

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