Fears of a new bout of offshoring in Scotland's financial industry were triggered yesterday as Aegon UK said it was cutting more than 200 jobs and looking at extending its use of India for IT support.
In the biggest announcement yet on the Edinburgh-based insurer’s £80m cost-cutting project which is due to slash 25% from its spending by the end of 2011, Aegon said 213 roles were to disappear in life and pensions. A further 106 roles are to be transferred out of the business in an outsourcing arrangement with Livingston-based document management specialist Oce.
David Fleming, national officer at Unite, said the union was “appalled” at the decision to cut jobs in the industry.
He continued: “Of the 213 jobs cut there will be a significant number of jobs offshored to India from its life and pensions division. This decision will have a devastating impact on the Aegon workforce at its key sites in Edinburgh and Lytham.”
Aegon said the latest restructuring would affect marketing, IT and personal assistant support staff, and it was seeking to minimise compulsory redundancies. Some of the IT roles under scrutiny are at Lytham, but Edinburgh, with 2600 of Aegon’s total 3700 UK workforce, is most at risk.
Aegis, the former staff association at Aegon and the TUC’s newest trade union, said it would “resist any attempt to impose compulsory redundancies”. Brian Linn, general secretary, said: “We recognise the current challenging business environment but are hopeful that job losses will come through volunteers.”
Mr Linn said it was not a foregone conclusion that IT roles would end up in India but admitted the company was “looking at offshoring in certain areas of IT”.
Six years ago, Lloyds TSB ran into a political storm when it piloted a transfer of customer service jobs from Glasgow to India. The bank later abandoned the strategy in the face of customer protest, but offshoring has been commonly used by the industry in IT support.
Aegon spokeswoman Lesley McPherson said: “We will be looking more closely at existing suppliers where we already offshore activity... in the UK and in India with IT support.”
Standard Life spokesman Barry Cameron said last night Standard “could not rule out” similar offshoring in the future. At Scottish Widows, Kevin Brown said: “It is not something we currently do.”
Aegon reiterated that it had so far achieved £37m of its planned £80m savings and said “a further update on the impact of the cost savings from today’s announcements will be given in the next few months”. Details of further job losses are likely after the summer.
Adrian Grace, chief executive, said: “This is a challenging time for our people and our business but achieving a lower cost base is essential to ensure Aegon remains a strong and successful business in the years ahead. The changes we’ve announced today mean we remain on track to meet our cost saving targets by the end of this year.”
Mr Linn added: “This is a sad and difficult time for our members, with many of them facing an uncertain future. Although we’ve all been expecting the announcements, we appreciate the huge impact they have on us all. We have insisted voluntary redundancy registers are opened and redeployment opportunities are offered to help mitigate compulsory redundancies.”
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