A hundred Brit IT bods' jobs under threat at Direct Line
Outsourcing on the agenda, says Reg source
Exclusive Insurance group Direct Line is considering cutting up to 100 IT jobs in its plan to save £100m a year, some of which may go to outsourced employees.
The Direct Line Group confirmed to The Register that 100 jobs are in the middle of a 90-day consultation period that started on 5 September and that outsourcing in general was an option being considered in the group's efforts to save money.
The group owns a number of insurance brands, including Direct Line, Churchill, and Green Flag.
A Reg source familiar with the matter said that the jobs would be lost in December and that permanent IT staff would be replaced by offshore workers in India. The jobs are to go from Direct Line offices in Croydon, Bromley, London and Leeds. It was also claimed that more IT jobs could be lost in the next two years as Direct Line expanded its IT outsourcing.
Direct Line Group separated from parent the Royal Bank of Scotland over the summer and floated in an IPO this month. Selling off the insurance group was a condition set by European regulators for the UK government bailout of the bank.
The group announced in August that it was targeting savings of £100m by the end of 2014 and has already implemented some job losses in the effort to become more efficient. A Teeside call centre for the group was told last month it will shut early next year, leaving 500 people out of work. Direct Line admitted that it would cut another 391 employees in the UK as part of its restructuring.
"We have not made these proposals lightly and fully understand the impact this will have on our people," chief exec Paul Geddes said at the time. "As we have done in the past, we will be open and honest, dealing fairly and carefully with those affected." ®
Re: They never learn...
The sale is under way as we speak as a slow flotation, and probably won't be complete until 2014. But RBS are still the largest shareholder, and culturally you've still got the same ****heads in charge who believe that offshoring jobs results in better performance and bigger profits to pay management bonuses.
Interestng to see that few companies would now dare to offshore their front office (many have tried, most have brought it back to the home market), but still expect the staff to put up with the sort of service that they can't inflict on cusotmers who have a choice. "Your salary has been screwed up? Well phone our Mumbai help desk, and speak to somebody paid peanuts, with three months experience, speaking a foreign language at 4am local time, they'll help you."
I've noticed anecdotally, that many of those companies who are the most enthusiastic offshorers are strongly correlated with companies with governance, service or performance problems after offshoring, sometimes in areas not directly touched by the outsourcing - so Dell (service, governance, performance), BA (service), RBS (governance, service, performance), BT (service), Vodafone (service), Abbey/Santander (service), Aviva (service, performance), Centrica (service). And people who's core business involves offshoring, well, are these the people you call and expect a good service? Crapita, HP, EDS/Dell, IBM, Vertex et al?
But that's why I avoid the likes of Dell, RBS, Direct Line, Santander and so forth.
Not to say that you can't make offshore delivery work, more that the boardroom twerps, advised by know-nothing management consultants are usually trying a short term fix for a "cost" problem, rather than address the root causes of process, culture and organisation.
nothing to do with actual cost savings. everything to do with balance sheet manipulation
Moves like this are never actually about cost savings/synergies or rightsourcing.
The article says it all when it mentions about the IPO.
They are interested in manipulating their metrics prior to the public offering.
Headcount / Turnover is an important metric. Outsourcing reduces headcount while not impacting turnover.
The fact it reduces profits by increasing costs is of no consequence, headcount/profit is not the metric.
Delivery will suffer, shareholders will suffer the UK economy will suffer but the analysts will be happy.
That is what counts in situations like this.
Re: Nationwide Building Society
The mind boggles - if you want to save money, the last people you should be talking to are IBM and Accenture. There's far too much crack being smoked in boardrooms these days.