Britain’s biggest insurance company sparked a fresh row today over work being lost to India when it unveiled plans to create almost 1,000 jobs in Asia.
Norwich Union said there would be 150 compulsory redundancies in York and Norwich because of a decision to offshore business to India and Sri Lanka, where pay is a fraction of wages in the UK.
But union officials said many more jobs would be lost and warned of a threat to the future of the UK financial services industry.
Aviva, which owns Norwich Union, revealed that by the end of 2007 it will have offshored 7,000 jobs servicing its UK businesses.
“Offshoring is a well-established strategy for Aviva which provides flexibility and efficiency and enables the company to maintain the quality of service which customers demand,” the company said in a statement.
Around 760 of the new jobs will be based in India servicing the life and pensions and general insurance businesses in mainly back office administrative roles, while a further 190 finance support jobs will be created in Sri Lanka.
Average pay for staff in India working for UK finance firms is around £3,000 (€4,400) a year, just 20% of salaries in the UK.
Firms say the total savings of employing staff in India, including other costs such as pensions and insurance, is 40%.
Mike Kirsch, Operations Director of Norwich Union Life, said that the decision had been made to ensure that the company remained competitive.
“We have identified areas we think can successfully operate out of India. We are doing this in a progressive way with minimal impact on our staff.”
Mr Kirsch revealed that a “small number” of Norwich Union’s eight million UK customers had complained about jobs being outsourced to India, either on principle or about service quality.
“We spend a lot of money tracking performance and we find that service quality is consistent with the UK and can be better.”
Gary Withers, Norwich Union Life’s chief executive, said: “We operate in very competitive markets where customers continually seek better value for money and quality of service.
“The experience of our existing offshore operations shows that the service levels in India continue to match those that we achieve in our UK operations.
“Expanding our offshore operations will give us the increased capacity we need.
“We expect to conclude our offshoring plans by the end of 2007, by which time we anticipate that we will have up to 7,000 roles offshore servicing our existing UK businesses.
“We recognise that this is a period of great uncertainty and will do everything we can to support staff during this time and ensure that they are kept fully informed throughout the process.”
Norwich Union has already offshored 3,700 jobs to India since last year.
David Fleming, national officer at Amicus, said: “Norwich Union have at last revealed their true intentions, which is to reduce the total UK workforce by 25% by 2007.
“This points to a bleak future for the UK financial services industry as a whole.
“We will not accept compulsory redundancies as a consequence of offshoring in any company and that will be fundamental to our negotiations with Norwich Union.
“We expect the company to ensure there is maximum opportunity for retraining, job mobility and skills development for all staff affected.
“The financial services employees across the UK will be bracing themselves as Amicus expects thousands more redundancies as companies are forced to show their offshoring hand.”
Tens of thousands of jobs have been moved to India in the past three years by scores of UK firms, including banks, airlines, telecommunications firms and even the national rail enquiries service.