Standard Life may join outsourcing bandwagon

Friday, 26 November 2004, 08:00 Hrs
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LONDON: After resisting the economic attraction of moving jobs to India for some time, insurance and pensions major Standard Life has admitted that it would soon have to succumb to labour market forces.

The company's chief executive Sandy Crombie, addressing an insurance industry conference here, cast doubt for the first time on the long-term viability of keeping jobs in the UK.

Crombie has so far stood firm in his view that customer service roles would remain UK-based. The company employs about 7,755 people in Edinburgh and 173 in Glasgow.

He said Standard was constantly examining what services add enough value to make customers want to pay a premium for them.

"If it's non-value added, we have to get it done as cheaply as possible whether it's done by people in our office, or by people sitting elsewhere," Crombie said.

Asked at the sidelines of the conference what he meant by this, and whether he was alluding to offshoring, he said Standard remained committed to providing services that add value.

Crombie told the media this meant staffing its customer contact phone lines with people who are based in the UK.

Pressed on whether Standard could afford to stand alone in this view over the long term if all its competitors are reaping a sizeable cost advantage by sending these functions to cheap labour locations, he said: "Ultimately, if everyone else in the industry moves to India at half the cost, then Standard Life will have to.

"But for the sake of our staff in Edinburgh and Glasgow, we are trying to focus at the moment on doing it more efficiently."

A spokesman for Standard denied the apparent change of heart on offshoring had been prompted by its conversion from mutual to public limited company, when it will have to satisfy hard-to-please shareholders, many of whom are already seeing the cost benefits being delivered by rivals such as Prudential and Aviva.

Prudential reportedly saves 200 million pounds annually by shifting its cost base to India, while Aviva has set in motion plans to export 7,000 jobs offshore by the end of 2007.

The Aviva group, which owns Norwich Union, has already shipped 3,700 mainly administrative jobs to India. Lloyds TSB, which owns Scottish Widows, also expects to have over 2,000 jobs in India by the end of next year.

Standard Life's healthcare division already has a small offshore operation of 100 people based in Mumbai.

Source: IANS
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