How Aviva bet big on India

When Norwich Union announced its offshoring plans at the end of 2003 there was an outcry. The mainstream media notched it up as another sell out by a historic British brand and there were fears customer service would deteriorate.

But, in a rare speech about the whole shift, the man charged with ramping up operations in India has detailed the success so far.

The fact that the decision was made as recently as 2003 now seems bizarre - it feels like a strategy that has been in place for longer. But Sean Egan, Aviva CEO of Offshore Services, yesterday told a conference that when the company had hit a wall in being able to build a call centre and recruit the necessary staff, the die was cast and since that time there have been benefits in terms of improved costs, quality and productivity.

Egan said: "Our greatest successes have not come in back office work but have come - after a bit of pain - in the front office."

He portrayed the whole move - as one might expect from the UK's largest insurer - as being about risk mitigation. As such, five sites have been used across India, spread out from the north of the country to Bangalore and Chennai in the south and even a facility in neighbouring Sri Lanka.

There are three providers for business process outsourcing (BPO), 247, EXL and WNS, once upon a time BA's captive operation in India which it then spun out.

The two companies used for IT are well-known Indian giants, namely TCS and Wipro.

After initial speculation about job numbers to go to India, Egan revealed that by this year there are around 4,500 employed in BPO and 1,100 in IT. As if to answer some of the critics, he said most of those who lost their positions in the UK were able to stay within the group.

The very precise forecast is that by 2008 there will be 7,607 employed in BPO in India and 1,381 in IT outsourcing.

The company opted for a build-operate-transfer approach to offshoring - as opposed to plain offshore outsourcing, building from scratch or a managed services approach. Egan said this has "allowed the company to ramp up fast" - though he later said that in hindsight expansion should have been more cautious.

He insists that cost, while "a huge driver", wasn't the only reason for offshoring - though he said savings are an impressive 40 per cent and "sometime better than that". He said Aviva's brands must be competitive in a UK market driven by service levels and that quality is key. There is a well-developed to-ing and fro-ing of staff from India to the UK and vice versa, and he described the buildings and working conditions in India as the best in the whole group.

So where does this leave the UK workforce? According to Egan, they now work in a more "data rational and analytical space" than they were previously. It's what advocates have long promised about moving up the value chain.

But was the move completely necessary? In one important way, Egan admits the overhaul isn't all about the location that is chosen. He admits some of the benefits would have come about if the company had moved anywhere else. Processes and management has improved just by shaking out large operations. "It's like lifting up the carpet and seeing what's underneath," he said.

Sean Egan was speaking at the Financial Services IT Summit, organised by the European Technology Forum (ETF). ETF is owned by the same parent company as silicon.com.