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By Andy McCue, 2 December 2003 16:20

NEWS Norwich Union is to send 2,500 jobs offshore to India next year in a move that could lead to the loss of hundreds of IT jobs at the insurance firm.

Aviva, which trades in the UK as Norwich Union, said 2,000 'back office' administration, processing and IT roles will be moved offshore along with 350 call centre positions and 150 administration roles to support its general insurance business in Canada.

The company claims that 80 per cent of the jobs moved to India will be accommodated in the UK by a combination of expansion, current vacancies, staff turnover and voluntary redundancy. However, that still leaves 500 positions under threat and Aviva said it cannot rule out compulsory redundancy.

Aviva said the move will increase the number of staff in its existing offshore operations to 3,700 by the end of 2004. Call centre positions will be moved to processing centres in Delhi and Bangalore to deal with motor and household insurance enquiries and claims, while some IT service positions in the general and life insurance businesses will be transferred to Delhi, Bangalore and Pune.

A Norwich Union spokesman told silicon.com the number and existing location of the affected IT roles has not yet been finalised and that the announcement was made to prevent staff finding out about the plans through rumours and speculation.

Aviva said offshoring will give the company extra flexibility and capacity for its UK business, while providing further scope to enhance efficiency and improve service to customers.

Richard Harvey, group CEO of Aviva, said in a statement that while it is a tough decision, the action is necessary for the group to remain competitive and that it will secure a long-term future for the business.

"We are operating in an increasingly competitive environment. Our customers want value for money products and high levels of service so it is vital that we continually explore opportunities to improve our efficiency while maintaining service levels. Our staff in India are an important part of this process and our experiences to date have been positive," he said.

Harvey also hinted that the latest round of jobs moving offshore will not be the last and said that over the course of 2004 Aviva will continue to assess what future application offshore operations could have to other parts of its business.

Lee Whitehill, spokesman for union Amicus, told silicon.com the decision is just the "tip of the iceberg" and called on the government to establish a forum for unions to sit down with companies and plan for technological change.

"These are the first signs of a landslide which is going to engulf the British economy," he said. "The workforce is very angry and we will support them in any steps they see fit."

Georgina O'Toole, analyst at Ovum Holway, said the proportion of back office functions being moved offshore by Norwich Union reflects a wider growing trend, especially in the financial services sector, for firms to keep the customer-facing elements of their businesses in-house and not automatically put call centres offshore.

"There is a retreat away from that but it depends on the priorities. If they want to differentiate on customer service they are keeping core customer facing processes in-house. If the strategy is to offer the cheapest mortgage then the pivotal thing is to keep costs down."