Prudential angers unions by outsourcing more jobs to India

Prudential, the UK's second largest insurer, put itself on a collision course with the unions yesterday, as it announced plans to axe hundreds of jobs in the UK and once again increase the size of its workforce in India.

The move, which will affect about 700 jobs, will see the group close its sites in Bristol, Belfast and Egg's headquarters at Holborn Bars in London. Although the company guaranteed there would be no compulsory redundancies before the end of the year, and promised to offer jobs to those affected elsewhere in the group, unions reacted angrily to the news yesterday, accusing the company of looking to further "exploit cheap labour".

Prudential already employs more than 1,100 call centre and back office staff in Mumbai, India, and is expected to increase this significantly over the next few years to meet cost-saving targets.

Amicus said it was particularly disappointed with the news, coming just days after Peugeot announced the closure of its UK manufacturing plant at the cost of 2,300 jobs. "Weak employment protection and globalisation are eating away at the heart of the UK economy," David Fleming, at Amicus, said. "Finance and manufacturing fuels our wealth. Until the Government strengthens employment rights, more UK jobs will slip through our fingers.

"Amicus is prepared to fight these proposals and we will support our members in any action they choose to take to protect their jobs. We have told the company in no uncertain terms that we do not accept their proposals and that they are making no attempt to avoid compulsory redundancies. This goes completely against the spirit of agreements, which have basically been torn up by Prudential." The job cuts are the first major move by Nick Prettejohn, Prudential's UK chief executive who joined the company in January from Lloyd's of London. Commenting on the announcement yesterday, Mr Prettejohn said the move was part of an ongoing strategy to establish a handful of core sites across the UK, and to continue delivering cost savings.

"These reorganisation proposals are an important step in delivering the cost savings that will enable the UK business to continue to build on the strong positions we have established across the financial services market," he said. "Any change that results in redundancies is regrettable. We are consulting with unions and staff organisations and will make every effort to ensure that our people are kept informed and helped through this difficult transition period."

Prudential had resisted closing the sites earlier due to an agreement with the unions in 2002, which promised the group would make no compulsory redundancies as a result of moving jobs offshore. The agreement expired a few weeks ago. About 500 people are employed at the Belfast plant, the majority of whom are expected to reject the offer of new jobs elsewhere in the group - as this would require relocation to England. Forty jobs will be lost at the Bristol plant, while a handful of jobs will be lost at Egg's headquarters.

The company said another plant in Reading would be closed in 2008, adding to the job cut tally. Earlier this year, the company cut 120 jobs in its finance department - 80 in Craigforth in Scotland and 40 in Reading. Prudential is one of a number of UK firms to outsource a large part of its back-office and call-centre operations to India. Aviva, Pru's biggest rival, has axed more than 5,000 jobs in the UK over the past few years, and employs almost 4,000 people in Asia.

Mr Fleming said conditions in India would no longer be as favourable for Pru as they were when they began building their workforce there several years ago. He said labour costs are rising 15 per cent a year in India, while staff turnover is up 70 per cent.