Glasgow doesn't get a lot of daylight this time of year. But it's getting brighter and brighter underground due to the telecom traffic on the fiber-optic cables used by financial services firms.
British Telecom has invested approximately British Sterling 50 million to create an international financial services district in Scotland's largest city. Built to serve banks, brokerages and asset managers, the Glasgow site is the latest of 50 BTeLocations-joint ventures with U.K. real estate developers that offer advanced telecom availability at premium sites.
Until recently, BTeLocations were situated in office parks across the U.K., where off-site systems development and similar tasks can be easily conducted. However, call centers are best "located where the multilingual labor cost is low, unemployment high and real estate cheap," said Ian Baines, vice consul, Invest-UK, at the British Consulate-General in New York. "That's a typical situation for a call center."
Glasgow was chosen because of its favorable economic conditions and its suitability for advanced telecom development. "Glasgow used to be shipyards and steel," said Baines. "Over the last 10 years, it has repositioned itself."
That's not to say that Wall Street or High Street will necessarily pick up and move to Scotland. "Certain types of activity will remain in 'Tier 1' locations," said Baines.
But for software development, back-office processing and call centers, BTeLocations make sense. "Why house that in really expensive real estate?" added Baines.
Each BTeLocation offers separate routing to telecom switching centers, or central offices, thus protecting against outages at any single location or damage to a building access point caused by rogue backhoes.
"Unauthorized, unplanned roadwork causes more telecom disasters than anything else," said Baines.
Financial services firms using BTeLocations include JP Morgan Chase, Capital One, Barclaycard and Charles Schwab. JP Morgan Chase slashed operating costs for one of its facilities by 40 percent by relocating it to Glasgow, according to Christophe Hioco, managing director at JP Morgan Chase.
Advantages for employers include 13 nearby universities and the ability for multilingual European Union (EU) workers to relocate to Scotland without having to endure problems with work visas.
The expansion of the EU and the growth of private pensions makes Europe a tempting target for U.S.-based financial institutions. "Companies established there have a huge new resource pool to attack," said Baines.
With its VentureSmart initiative, BT makes European expansion even easier. "If you want to test the market without making a real estate investment, we will for example set up a 50-person call center facility," said Baines. "You don't have to worry about who manages the outsourcers, who are the key players-we've already done it."
Furthermore, VentureSmart permits experimentation with new customer contact technology. Barclays Bank, for example, relied upon BT employees to roll out Web chat and click-to-call functionality for its online mortgage origination site.
"We wanted to learn how a customer would perceive buying over the Internet with online assistance, and about the technology involved and the financial implications of implementing such a service," said Dominic Woodall, project manager at Barclays. "The results were favorable for all areas."