Offshoring offers greater IT flexibility, says Norwich Union

Norwich Union is outsourcing 500 IT jobs in an effort to build greater flexibility into its IT base to better deal with peaks and troughs in demand, the company has said.

Norwich Union is outsourcing 500 IT jobs in an effort to build greater flexibility into its IT base to better deal with peaks and troughs in demand, the company has said.

More than two-thirds of the outsourced jobs will go to Norwich Union’s existing Indian IT outsourcing suppliers, Tata Consultancy Services (TCS) and Wipro. The move will dramatically change the structure of the insurer’s IT function.

Norwich Union’s IT headcount is set to fall from 2,800 retained in-house staff to 2,300, and its outsourced offshore complement will increase from 1,400 to more than 2,000 staff, with some UK contractor roles also going offshore.

Alex Robinson, Norwich Union’s chief information officer, who manages an annual IT budget of £500m, said the plans marked the biggest single shift in the make-up of the insurer’s IT function since it began offshoring in earnest in 2004.

“We have worked with offshore partners since 1998, but for many years it was a low-key arrangement. Since the beginning of 2004, when we signed up TCS and Wipro, we have been increasing our outsourced component, and most of those roles are offshore,” he said.

“This latest move will see us extending the range of roles beyond application development and maintenance to include systems architecture and design, as well as strategy and design and more IT management roles.”

Robinson said the IT department had done a lot of work to understand the minimum levels of in-house capability that needed to be retained, and the business now had a better understanding of what was essential and what could be offshored.

“With application development, the first phase analysing and designing systems that fully take account of our business needs will always be in-house work, but when you reach the build and development phases, the need for retained knowledge is much less,” said Robinson.

Leslie Willcocks, professor of technology, work and globalisation at the London School of Economics, said Norwich Union’s decision to use two Indian outsourcing suppliers would maintain competition and keep standards high and was
a proven multi-sourcing strategy that appeared to be working effectively.

The decision to move roles offshore is part of a wider revamp by the insurer that will involve the loss of 4,000 UK jobs by 2008 to generate an annual saving of £250m. Norwich Union has not disclosed how much of the saving will come from IT.

 

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