RSA shifts 1,100 jobs to India in cost-cutting move

Royal & Sunalliance, the UK general insurer, became the latest financial services group to embark on a major Asian outsourcing pro

Royal & Sunalliance, the UK general insurer, became the latest financial services group to embark on a major Asian outsourcing project yesterday, unveiling plans to move 1,100 jobs to India, adding to the 100 staff it already employs there.

The move, which is to be rolled out over the next two years, is expected to result in hundreds of compulsory redundancies. However, RSA said it has been in talks with unions over the past year to manage the change, and hopes that the majority of job losses will be as a result of natural turnover. RSA says it has an employee turnover of between 10 and 15 per cent a year.

The majority of the Indian jobs will be back office and call centre positions to service RSA's More Than consumer operation. The move follows a successful six-month pilot, started in March, during which the group moved 100 More Than jobs to India.

Duncan Boyle, RSA's UK chief executive, said: "As far as possible the reduction in UK jobs will be managed through natural turnover and redeployment. We have kept our people informed at all stages and have fully consulted with our union partners and will continue to work closely with them over the next two years. We are committed to providing our customers with value for money products and excellent service. We work in a very competitive environment and processing some of our work in India will not only help us control costs but will also give us greater operational flexibility."

Amicus and Unifi, the two unions who have been working with RSA, said yesterday that they were concerned about the growing trend of the outsourcing jobs to Asia, so-called "offshoring".

David Fleming, Amicus's national secretary, said: "This announcement clearly shows that offshoring presents an unprecedented threat to UK jobs and the economy. Over 8,000 job losses have been announced over the last few weeks.

"The Government needs to make raising skills a priority. Policies to enable the UK to compete need to be actioned with urgency, to reverse employers' under-investment in training and development which will hamstring the UK service sector if it is allowed to continue."

The cuts represent about 11 per cent of RSA's 11,000 workforce, and will help the group achieve its tough cost-cutting targets which it has set for the current year. At its interim results earlier this year, the group said it hoped to cut £270m in costs during 2004.

Speaking to analysts yesterday, Andy Haste, the managing director, said the company had already achieved £168m of cost-cuts this year. He said the latest move to outsource jobs would save the company more than £10m a year. Earlier this year the company sold its closed with-profits business to Resolution Life for £850m.

The group also announced yesterday that it aims to slash the amount the company pays to lawyers for personal accident claims. Only 45 to 50 per cent of personal claims reach the injured party, the company said.

Shares in the group closed up 0.5p at 76.75p, giving the company a market value of £2.2bn.