This article by Andrew Bibby, in a slightly different form, was first published in Flexible Working, March 1997

Outsourcing to the Western Isles

Donnie Morrison has the sort of view from his office window which city- based workers will dream about only in their most delicious fantasies. From his desk he looks down over the waters of Loch Erisort, a long finger of sparkling water which cuts into the Lewis coastline a few miles south of Stornoway. Across the loch are a few clusters of houses whilst, beyond, lies the distinctive green and grey Hebridean landscape.

Donnie Morrison works from home, and since journalistic reporting of teleworking is so often coloured by the romantic image of the home-based individual who escapes from urban life to work in a remote corner of the countryside it is probably necessary to issue an immediate caveat. Whilst Donnie Morrison knows all about teleworking, and whilst he undoubtedly appreciates the beauty of the island where he grew up, he is much more likely to want to talk about the business opportunities of outsourcing work to the Western Isles and the quality of the local workforce.

For the past three years, Donnie Morrison has headed the Western Isles Information, Communication and Technology Advisory Service (or, simply, the ICT Advisory Service), a pioneering initiative which is now being taken as a model by a number of other rural areas of Britain. Effectively, his job is to put the central tenet of the teleworking principle to the test: the idea that, by making use of IT and telecommunications, work really can migrate to geographically remote areas.

The theory has been expounded for many years. In the Scottish context, it is now almost ten years since what was then the Highlands and Islands Development Board first identified the potential: as an HIDB former Chairman Sir Robert Cowan put it, "Information technology will unlock a huge field of commercial opportunities for the north of Scotland and render distance from markets irrelevant."

Wanted: Ten million teleworkers in three years

Elsewhere in Europe, the same idea has had powerful adherents. The influential Bangemann Report, produced for the European Union's 1994 summit by a panel of leading industrialists chaired by European Commissioner Martin Bangemann, predicted that telework would play a major role in the revitalisation of the economies of EU member states with '10 million teleworking jobs by the year 2000'.

It is easy to see how telework could bring both economic and social benefits to the Western Isles, providing a new source of wealth to replace the declining offshore fishing and Harris tweed industries, supplementing crofters' incomes, offering work for skilled young people who would otherwise have to leave the islands, helping indeed to defend the whole fabric of the Gaelic speaking communities of this region of Britain. Few people would not want to support the aims of the ICT initiative.

However, business decisions are not made simply on sentiment. Turning telework theory into actual real jobs is not necessarily a straightforward task, as has been demonstrated by the energetic, but generally abortive, efforts made by several of the community-based telecottages across the rest of Britain. The ICT Advisory Service in the Western Isles, therefore, has a lot riding on its success.

Oxford moves to the Hebrides

Donnie Morrison himself spent many years on the mainland, most recently as the sales and marketing director of a computer sales company based in Dundee, before returning to the Western Isles to take up his new post. His business background gives him a useful advantage when looking for new partnerships. "I never go to a client and say 'I've got a whole bunch of teleworkers in the Western Isles'," he says. "If you want to call them teleworkers, that's up to you. I'm there to provide a quality service."

Morrison's most recent catch is the Oxford University Press, who announced in January this year that the publisher would be outsourcing copy editing, SGML markup and technical pre-production work for its scientific and specialist journals and publications to the Western Isles. The contract is expected initially to provide work for up to twenty home-based teleworkers, with an ultimate target of around 50 jobs within two years. The OUP contract is the latest of a number of similar arrangements negotiated by Donnie Morrison and the ICT Advisory Service over the past two years. The most important has been an on-going relationship with the Californian on-line database publisher Information Access Company (IAC), who outsource abstracting work for database entries to home teleworkers based in the Hebridean islands of North Uist, South Uist, Benbecula and Berneray. The work initially came to the Western Isles via Crossaig Ltd (part of the international Thomson Corporation), which is based in the Scottish lowlands and which specialises in providing abstracting and editing services for on-line databases (often itself using home-based staff). Crossaig continues to act as the intermediary in the IAC contract. Interestingly, workers in the Hebrides undertake only a small proportion of the total work outsourced by IAC for the business database PROMT: the bulk of the work is undertaken in the Philippines.

The Philippines has developed considerable expertise in offshore data entry and data processing work, as have several other countries (including in particular Barbados, Jamaica, the Dominican Republic and more recently mainland China). Inevitably, developed countries find it difficult to compete on costs with these countries: one 1995 study suggested that data entry workers were being paid between $0.80-$1.00 an hour in Jamaica and $2.00- $2.88 in Barbados, for example.

Donnie Morrison is aware of the international competition for low value- added work, and is aiming hard to attract the sort of high added-value work which will ensure reasonable levels of pay. "We go for the really difficult jobs - complex journals, difficult typesetting requirements," he says, illustrating this with a reference to the Bulletin of the Chemical Society of Japan, one of the OUP titles which will be partly prepared for publication in the Western Isles. In fact, two earlier contracts obtained by the ICT Advisory Service were for more straightforward data entry work and neither turned out to be unproblematic. A data processing office which was opened in an old school in the settlement of Achmore in Lewis to undertake work for the Scottish Health Service proved uneconomic and had to be closed after a few months.

Where are the wellies?

The IAC contract currently provides work for about twenty full-time home teleworkers, with a similar number working on a more casual, part-time basis. The teleworkers are all self-employed, paid on a piece work basis of 1.60 for each abstract completed. Since perhaps five abstracts can be done in an hour, this converts to an equivalent hourly rate of around 8.

Anne Macaulay is one of these teleworkers. She lives in a large bungalow in a small settlement on North Uist, working typically four days a week during the hours when her two children are attending the local Gaelic-language school. She describes with amusement the arrival of an American journalist from the National Geographic magazine recently looking for a teleworking 'crofter in wellies'. In fact, whilst she and her husband do keep a few sheep, Anne Macaulay quickly shatters any stereotypes which may be held of remote islanders still stuck in a past century. She has a background in management accounting, having worked previously as an executive for the South of Scotland Electricity Board before beginning a family and moving with her husband to his home island of Uist. Her husband is deputy director of social services for the Western Isles. Their house would not be out of place in the Home Counties - apart, that is, from the landscape outside.

Her sort of background is typical of many in the Hebridean islands. Donnie Morrison, who as part of the ICT Advisory Service maintains a comprehensive database holding the CVs of about 400 local people, says that the Western Isles has the highest number of graduates per head of population in Britain. Or as Anne Macaulay herself puts it, "The place is littered with very highly qualified people."

Anne Macaulay and the other self-employed teleworkers contract with Lasair Ltd, a small company based on the island of Benbecula which holds the contract with Crossaig for the IAC work, a second much smaller contract from the Forensic Science Service in London as well as the forthcoming OUP arrangement. Lasair (the word is Gaelic for flame) was initially created with help from both the Western Isles Council and Western Isles Enterprise (the equivalent of an English TEC) and was, in effect, a necessary vehicle if the ICT Advisory Service's development work was to be carried forward successfully into commercial exploitation. Both founding bodies remain minority shareholders and appoint directors. However the company is managed on a day-to-day basis by its two working directors, Seonag MacVicar and Kathleen Turner. Lasair follows up leads produced by Donnie Morrison, negotiates contract terms with its clients and also undertakes quality control on work undertaken by teleworkers.

Calling in to Stornoway

If most of the work of Donnie Morrison and the Western Isles ICT Advisory Service to date has been channelled towards home-based teleworkers through Lasair Ltd, this is not the only alternative. The initiative has also been responsible for the erection of an 8000 sq ft unit on the outskirts of Stornoway, planned as a call centre or data processing centre and equipped with sophisticated telecommunications links. Currently, a Scottish telecoms company is negotiating to move into the building.

"If a company wants to outsource a business process, we are interested in providing that service. There are two scenarios, either office based or using teleworking, and through mutual discussion we would move forward together to package the best solution," says Donnie Morrison. "Alternatively, the clients themselves can come in and manage an office- based facility."

He remains upbeat about the possibilities, claiming that eventually 'hundreds of jobs' will be obtained for the Western Isles. And whilst he is keen to focus the conversation on issues of quality, he knows that there is a range of grants on offer to help tempt inward investors. Grants typically may be found for capital equipment, building costs and training expenses. "We can even look at areas like cashflow, provided there's a good reason that stacks up," he says. "Generally, the further you go from the centre the better the grants are, and you can't get much further from the centre than here."

Comprehensive details of the Western Isles ICT Advisory Service, including copies of the Hebridean Teleworker newsletter, can be found on the Internet: http://www.hebrides.com/itp/

Kite flying in Fermanagh

The Western Isles initiative has been publicly funded, operating in conjunction with the local council and local enterprise company. A rather different model for attracting outsourced work to a remote rural area can been found in Ireland, in the small settlement of Kinawley south of Enniskillen in Co Fermanagh. Tucked away in farmland only a mile or so from the border is the headquarters of Kinawley Integrated Teleworking Enterprise Ltd, KITE. The KITE telecottage, which now provides employment for 17 people, is a bottom-up initiative driven into being by the persistence and enthusiasm of two local people Sheila and Michael McCaffrey.

The McCaffreys were determined to exploit the possibilities of teleworking to create employment in their isolated agricultural area. KITE Telecottage opened in 1993 as an IT training centre, running courses for women funded by the European Social Fund, but converted a year later into a commercial venture offering employment to the former trainees. To survive, the McCaffreys had to find suitable outsourced work, and their search quickly took them to the USA. In the early years, KITE got by on relatively simple database entry work undertaken for American clients. More recently, the company has diversified, and now among other things offers remote conference administration services as well as call centre facilities. The US market remains important, however, with Sheila McCaffrey estimating that 60% of KITE's business originates there.

In their different ways, both the Western Isles ICT Advisory Service and KITE demonstrate that outsourced work can be teleworked successfully from geographically isolated areas. But both also demonstrate that a lot of hard work combined with business acumen is needed to actually find the contracts - and even then the numbers of jobs created can be relatively small. There may be plenty of fish out there; landing the catch is the difficult bit.

Contact details: Western Isles ICT Advisory Service, Pairc House, Habost, Isle of Lewis, HS2 9QB.
Tel: 01851-880225. Fax: 01851-880386. E-mail: itproject@sol.co.uk

Lasair Ltd, O Uachdar, Benbecula, Western Isles HS7 5LY.
Tel: 01870 602757. Fax: 01870- 602758.
E-mail: 100702.2073@compuserve.com

KITE, Cornagun, Kinawley, Co Fermanagh, BT92 4FR
Tel: 01365-348943. Fax: 01365-348944
E-mail: 100073.1111@compuserve.com