Business outsourcing overseas set to continue

Aviva’s plan to move 1,000 jobs to India, as part of costcutting measures which will see the loss of 4,000 UK staff, makes it just the latest in a long line of companies who outsource overseas.

Tens of thousands of jobs have been moved to India alone in the past few years by scores of UK firms, including banks, airlines and telecommunications firms.

Departments including human resources, IT, finance and administration, as well as those infamous call centres, have all outsourced overseas, with India one of the most popular destinations.

The big draw is the saving on costs: average pay for staff in India working for UK finance firms is a fraction of salaries in this country.

Once other costs such as pensions and insurance are taken into account, the saving for firms has been estimated at around 40%.

Among the companies to have shipped jobs to India are NTL, Barclays, Lloyds TSB, BT and the RAC.

The National Rail Enquiries service was moved to India several years ago and bookings system Trainline has since followed suit.

In June this year, Unison said people’s lives were being put at risk, as the practice of sending medical notes abroad to be typed up as a cost-saving measure was leading to life-threatening mistakes.

Increasing numbers of hospitals are outsourcing their medical typing to India, South Africa and the Philippines.

Companies also run the risk of damaging their image by outsourcing services abroad.

A recent poll of 2,000 adults showed that more than half have switched or would consider switching their custom if their bank or insurer moved some or all of its operations out of the UK.

Four out of five of those questioned on behalf of Glasgow’s International Financial Services District said offshoring damaged the image of a financial service firm.

Several months ago energy giant Powergen announced it would be switching all its call answering back to the UK.

The move followed complaints from customers and a decision that it would be easier to train and manage staff in the UK.

However, the general trend for overseas outsourcing seems set to continue: last year, a survey of 100 senior executives in the UK showed that four out of five planned to increase outsourcing work to other countries.

However, the research found central and eastern European countries were becoming more popular locations, making up ground on India.