Abbey pledges no job losses under offshore outsourcing deal

High street bank Abbey is negotiating with a US firm to outsource back-office work from its Scottish-based insurance business to...

High street bank Abbey is negotiating with a US firm to outsource back-office work from its Scottish-based insurance business to India, in a move that it said will cut costs but preserve jobs.

The bank is in the final stages of talks with US firm MsourcE, on a deal to transfer data entry work from Edinburgh and Glasgow to Bangalore. Abbey intends to pilot the programme with 100 staff by the end of the year, before considering whether to expand off-shore data entry to other areas.

The move will free administration staff in Scotland to focus on other areas of work, improve customer service and reduce costs, Abbey said.

Under the scheme, UK staff will scan application forms for insurance cover and forward them to India, where staff will re-key the data into Abbey's IT systems.

The bank said there would be no redundancies and no jobs lost through natural wastage as a result of the move. But trade union Amicus said it had called an immediate meeting with Abbey management to seek reassurances for its members.

Roger Lyons, Amicus' joint general secretary, said he was concerned that the UK's service industries could follow the UK's manufacturing industry offshore.

Increasing numbers of UK companies are moving their software development offshore in a bid to reduce costs by using cheap, highly skilled labour in countries such as India.

Earlier this year, for instance, Honda UK announced plans to develop a major software project in Vietnam.

The motor manufacturer's decision to develop a new staff training and personnel system overseas was driven by the low labour costs and strong IT skills of the Vietnamese workforce. The new system will help Honda to meet its target of providing 12,000 man-days of technical and commercial training for staff every year.

Honda's learning management system will be managed in the UK, with software development and testing carried out by consultancy Harvey Nash in Vietnam.

Analyst firm Gartner has predicted the European market for offshore outsourcing will grow by more than 40% this year. And analyst firm Ovum Holway predicted up to 25,000 UK IT jobs would be lost in the next four years through offshore deals. Most job losses to offshore outsourcing so far have been in call centres but UK IT leaders warn that more senior staff will be at risk.

Union leaders have warned that they will call for strikes if offshore deals result in compulsory redundancies for IT staff.

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