The financial services company is negotiating with a range of suppliers and expects to finalise the deal next year, it announced last week.
Staff affected are split equally between the company's Horsham and Liverpool offices.
"We do not think it will involve offshore outsourcing," a spokesman for the company told Computer Weekly.
But Anthony Miller, research manager at analyst firm Ovum Holway, said that even if Royal & Sun Alliance chose a UK-based outsourcer, some of the work would inevitably be done offshore.
"For application development and maintenance suppliers, it is given that some element will be done offshore to be competitive," he said.
In February Royal &Sun Alliance signed a £300m, 10-year outsourcing deal with Unisys to cover the processing and administration of the 2.4 million life and pensions policies from its closed UK life operation. About 1,700 staff were transferred to Unisys at that time.
In December 2001 Royal & Sun Alliance outsourced the bulk of its IT infrastructure in the UK to IBM in a bid to cut 10% a year from its £50m annual IT budget.
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