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The extension of a Government outsourcing contract with Siemens Business Services could lead to industrial action if plans to outsource some of the jobs to India goes ahead.

In 1999, National Savings and Investments (NS&I) - the Government-backed savings outfit - and Siemens agreed a ten-year contract for business process outsourcing with the option to extend the contact until 2014. As part of the deal, 4,000 civil servants were transferred to Siemens but only after having won Government assurances that such a move would not lead to a change in terms and conditions for staff.

Last Friday, Siemens announced that it had agreed, in principle, to a five-year extension to its NS&I contract running from 2009 to 2014. If it goes ahaead, the deal could be worth around £400m.

However, as part of the proposed agreement, Siemens wants to transfer a "small number of routine administrative tasks to Siemens in India". The IT outfit insists there would be no job losses or site closures in the UK as part of the plan and that all NS&I customers would continue to deal with UK-based staff.

But the move has angered staff and union officials who are concerned that, despite Siemens' assurances, the move would put jobs in jeopardy.

Union officials said staff fear that the move will put at risk their job security, their terms and conditions, and their pensions. Public sector union, PCS, said it has so far failed to secure sufficient guarantees for staff from Siemens.

Danny Williamson, PCS Group President, said: "Government ministers at the time promised that when Siemens took over National Savings the account would not be broken up and the company would be able to make a profit without risking the job security pensions or terms and conditions of staff. If the plan to offshore jobs goes ahead hundreds of PCS members will feel betrayed as those assurances will not have been worth a bean.

"There is no benefit for the UK Government, the taxpayer or National Savings customers in this proposal. It is purely aimed at saving the private contractor millions of pounds over the life of the contract. The UK Government should set an example to UK industry. It must reject offshoring Government work. It should not sanction the exploitation of workers abroad especially where that is only for the purpose of increasing the return for the private contractor."

The PCS is seeking an urgent meeting with a Treasury Minister and has warned that it will ballot members on industrial action if Siemens carries out its plan to outsource jobs to India. ®

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Legal threat halts second proposed BBC Tech strike
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