Liberty has freedom of $15bn company

April 08, 2002

Established in 1997, Liberty IT is a wholly owned subsidiary of US insurance giant Liberty Mutual. All of its business is concentrated on providing bespoke software for the $14 billion revenue company which is ranked 120th in the Fortune 500. In its five years' existence, it has grown to over 120 developers.

"The original business plan was that the company would grow to 125 people by the end of the first five years," said Gordon Bell, managing director, Liberty IT. "The first five years end this summer, so we will exceed that number."

Given the size of the company, has it not considered servicing other customers?

"The business plan had a stipulation that perhaps we would provide services to the outside market," Bell said. "This was tested on one or two occasions but both times Liberty Mutual said it required all the capacity from the Belfast operation."

Others might consider this type of arrangement to be unrewarding and unchallenging, but not Bell.
"We aren't having to go up to doors and hunt for business," he said. "We've got the warmth, the comfort and the guarantee of as much regular business as we can handle at the moment."

The company came about when Liberty Mutual was finding it difficult and expensive to hire IT staff. The idea of seeking a "base offshore" was considered a better idea than outsourcing a significant chunk of the software development.

The company considered locations in Israel, India and Ireland. It was mainly time-zone issues that led to Ireland being chosen. Company representatives visited Dublin, Belfast and Derry. According to Bell, the offers from both the IDB and IDA were both very satisfactory and almost equal in value.

The deciding factor was that there was much higher demand for IT staff in the Republic than there was in the North, meaning it would be easier to get staff in Belfast.

The insurance industry was badly hit by the September 11 attacks. Liberty Mutual insured a big chunk of the World Trade Center. However, Bell insisted that this caution did not have a direct bearing on Liberty IT, which expects to employ 140 people by the end of the year.

There is no longer an IT staff shortage in the US but the Belfast operation is still more cost-effective.
"On a cost basis, we can deliver projects at 70 per cent of what they can deliver in the US, primarily because of the lower salaries here," he said.

In addition, the company has grown to a good critical mass and is coming to be recognised as a valuable asset to Liberty. "We can now stand up and be counted alongisde IT staff that they've had for over ten years and show them that we know what it's all about," according to Bell.

As a company, Liberty Mutual is very acquisitive. In 1996, it had 22,000 employees but it now has 35,000. It has bought a company in Spain, started one in Chinaa and bought another in Singapore. Bell said the company was looking more to Asia which it viewed more favourably than Europe. "We would be ideally placed between the US and Asia to help them move forward in the new markets."

Overall, the future looks secure for Liberty IT, according to Bell. "We are in a privileged position and protected position because our parent company isn't asking us to bring in new business," Bell said.
"But we have done everything we said we woould do. The IDB has delivered everything it said it would. We delivered projects at low cost. We have proved the Irish offshore thing can work."