Fear for jobs as Pitman talks of outsourcing to India

The head one of the country's biggest banks will spark fresh fears of a massive new wave of job losses in the new year after warning that the industry still employs too many people and should consider "outsourcing" services to countries like India.

Sir Brian Pitman, chief executive of Lloyds TSB, told a group of business leaders that companies could benefit from "much lower costs" by contracting out many of their activities.

"I don't think we have fully confronted the opportunities in outsourcing and what the consequences will mean for our business as we really grab the opportunities of much lower costs ... by getting business done elsewhere," he said.

Addressing a conference to launch "Leading People", a study of leadership in financial and business service sector, Sir Brian said that increasing competition would lead senior management to consider "much more outsourcing than we have at the moment".

In a reference to the whole of British industry, he said: "It is not a question of producing quality products at a high price, it is producing top quality products at the lowest price possible."

Companies in widely different sectors such as British Airways and North West Water are already taking advantage of the low salaries earned by proficient and English-speaking Indians. Data-processing staff in the sub-continent generally earn around a tenth of the salaries received by British colleagues and so the burgeoning software industry in India can comfortably undercut in-house services in Britain.

A report by the Delhi-based National Association of Software and Service Companies pointed out that the sub-continent had "the second-largest English- speaking scientific and trainable manpower pool in the world".

While it started from a low base, the association calculated that the Indian software sector had grown 46 per cent annually between 1990 and 1995 - almost twice as fast as the business in the United States.

The author of the leadership report, Amin Rajan of the research consultancy Create, believes the resurgent interest in "outsourcing" could mean banks farming out cheque processing, insurance companies contracting out the payment of claims and securities dealers outsourcing settlements. Tens of thousands of jobs are involved in such activities. One chief executive of a banking group told Mr Rajan that 15 per cent of the company's costs could be saved by contracting out money transmission.

In the 1980s companies began by outsourcing in-house services such as catering and cleaning, then proceeded to farm out information technology systems. Next an increasing number of "core" activities will be contracted out, he believes.

However, Mr Rajan argues in the report that the first "outsourcing" wave would benefit companies in the UK.

Countries like India would begin to benefit later as the cost advantages became clearer and knowledge of their expertise spread.

Ed Sweeney, general secretary of the Banking Insurance and Finance Union, expressed concern about the trend. "There is nothing that can't be outsourced if they put their minds to it, but they can sacrifice quality and they can also lose control."

He said that the cost savings could often be illusory. He detected that some companies were already taking back some activities which they had previously "outsourced".

Suggested Topics
Start your day with The Independent, sign up for daily news emails
News
i100
Arts and Entertainment
Billie Piper as Brona in Penny Dreadful
tvReview: It’s business as usual in Victorian London. Let’s hope that changes as we get further into the new series spoiler alert
Arts and Entertainment
Sarah Lucas, I SCREAM DADDIO, Installation View, British Pavilion 2015
artWhy Sarah Lucas is the perfect choice to represent British art at the Venice Biennale
News
science
Arts and Entertainment
No Offence
tvReview: No Offence has characters who are larger than life and yet somehow completely true to life at the same time spoiler alert
News
Chuck Norris pictured in 1996
people
ebooks
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant - Swiss Banking and Finance

£20000 - £25000 per annum + Uncapped commission: SThree: Can you speak German,...

Ashdown Group: Marketing Executive - 6 month FTC - Central London

£25000 - £30000 per annum + benefits: Ashdown Group: An exciting opportunity f...

Ashdown Group: Junior Project Manager (website, web application) - Agile

£215 per day: Ashdown Group: Junior Project Manager (website, web application ...

Guru Careers: Software Engineer / Software Developer

£40-50K: Guru Careers: We are seeking an experienced Software Engineer / Softw...

Day In a Page

General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

Miliband's unlikely journey from hapless geek to heart-throb

He was meant to be Labour's biggest handicap - but has become almost an asset
General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

On the margins

From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

'This is the battle of young Egypt for the future of our country'

Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

Why patients must rely less on doctors

Improving our own health is the 'blockbuster drug of the century'
Sarah Lucas is the perfect artist to represent Britain at the Venice Biennale

Flesh in Venice

Sarah Lucas has filled the British pavilion at the Venice Biennale with slinky cats and casts of her female friends' private parts. It makes you proud to be a woman, says Karen Wright
11 best anti-ageing day creams

11 best anti-ageing day creams

Slow down the ageing process with one of these high-performance, hardworking anti-agers
Juventus 2 Real Madrid 1: Five things we learnt, including Iker Casillas is past it and Carlos Tevez remains effective

Juventus vs Real Madrid

Five things we learnt from the Italian's Champions League first leg win over the Spanish giants
Ashes 2015: Test series looks a lost cause for England... whoever takes over as ECB director of cricket

Ashes series looks a lost cause for England...

Whoever takes over as ECB director of cricket, says Stephen Brenkley
Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power