Norwich Union cuts 4000 jobs: outsources 500 IT roles; offshores 1000

Norwich Union cuts 4000 jobs: outsources 500 IT roles; offshores 1000

Insurance group Aviva is cutting 4000 jobs at its Norwich Union business in the UK by 2008, of which 500 IT roles will be outsourced to third party suppliers and 1000 jobs will be shifted to offshore centres in India.

The redundancies account for 11% of Norwich Union's 36,000-strong UK workforce. In a statement, Aviva says the cuts will reduce duplication and improve efficiency in marketing, human resources, finance and IT.

The group is closing offices in cities including Belfast, Glasgow, Newcastle, Norwich and Cambridge, although it says it will not completely shut down operations in those locations.

Patrick Snowball, executive chairman, Norwich Union, says the restructuring is necessary to reshape and simplify operations and is in response to a combination of changing distribution dynamics in the insurance industry and changes in the use of technology.

"Customers buying habits are changing rapidly as technology becomes more accessible, demonstrated by the fact that 50% of our new direct motor insurance policies are now bought online. Consumers, IFAs and brokers are increasingly operating in a self-service world and we have to continue to respond to this," says Snowball.

The redundancy programme will cost the firm £250 million, but save an equivalent amount from 2008.

Norwich Union says around 2000 of the 4000 redundancies would be compulsory, with the remaining job cuts made through normal staff turnover, redeployment, not filling vacancies and voluntary redundancy where appropriate.

Financial services union Amicus has reacted fruriously to the move and claims there had been no prior consultation with company staff before the announcement.

David Fleming, Amicus National Officer described the move as "brutal".

"This is a betrayal of Norwich Union's long serving workforce who have woken up to news in the media this morning that their jobs are going, rather than hear it from their employer," Fleming says in a statement.

The union has also condemned the move to shift 1000 job overseas, saying that "offshoring will not be accepted by us or our members". The offshoring is part of Aviva's earlier-announced plans to move 7800 jobs overseas by the end of next year. In the past two years the insurance group has almost doubled its Asian workforce to 7000, with 5500 staff now based at centres in India and Sri Lanka.

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