Aviva has relocated 200 roles to India, but what went on behind closed doors in its Manchester office? Will more jobs be exported overseas?
It was a typical morning in Aviva’s Manchester claims unit, with staff going about their work, answering claims calls and dealing with other paperwork. But their work routine was about to be shattered by a bombshell announcement.
The senior managers rounded up the staff for a major announcement. The message was as brief as it was brutal: all 200 staff would lose their jobs in December, because the motor claims team would be outsourced to Bangalore, India.
To rub salt into the wound, the Indian workers being sent to Bangalore to usurp the function of the Manchester office had been receiving training from the Manchester staff.
Double blow
What had caught staff by surprise was the sheer scale of the sackings. And their unwitting role in training up the people who were taking their jobs left a bitter taste in the mouth.
“We knew they were getting rid of staff, but we all felt very secure. We were expecting recruitment to stop and to lose a small percentage of staff, not everyone,” one staff member said.
“The mood was utter shock - no one was expecting the news. Some people were in shock, some were disgusted about the work being offshored, as some of our staff have helped train the staff in India, so felt exploited.
“We also had a few tears from people who had just had children or taken mortgages, who were scared for the future.”
Union outrage
Staff union Unite certainly feels Aviva could have handled the situation better. Unite officer Daryl Williams said it was “outrageous” that Aviva wasn’t supporting UK employment.
So why has Aviva taken such drastic action? The root of Aviva’s decision to make redundancies is its desire to cut £400m from its annual cost base by 2014, as its strives to bolster its capital base, which has come under pressure from the eurozone troubles.
New chief executive Mark Wilson is also keen to boost earnings and generate more operating cash. The group racked up a £3bn loss last year, forcing the insurer to slash its dividend by seven pence to 19p.
This loss was largely driven by a write-down in the sale of its US life and annuities business. But Wilson isn’t letting one-off costs fool him about the problems of the business.
‘Essential’ cuts
Announcing the cuts in April, Wilson said: “I know this is difficult news for our employees, but these changes are essential if we are to remain competitive. Aviva needs to become a more efficient and agile organisation to unlock its potential.
“We must take tough decisions on costs to provide our customers with great value products and ensure our future success.”
Wilson clearly believes one way to save money is via offshoring. In May, Aviva announced the offshoring of roles from its life business in the UK, resulting in the loss of 600 jobs from its York, Sheffield and Norwich offices.
In its full-year results for 2012, Aviva said it had already achieved annualised cost savings of £275m and this offshoring will add to that total.
More jobs to go
So, have we seen the end of the Aviva job redundancies as a result of offshoring? Probably not.
A leaked memo from Aviva said that as part of the £400m cost savings, a total of 650 permanent and 300 contractor roles would be lost as part of the cost-cutting, making further redundancies likely.
According to one insider at Aviva, other office staff are now on edge about their future.
He said: “There is still an office in Bishopbriggs, Scotland, which will be handling claims, but I’ve spoken with someone there and they are unsure and anxious about their current roles.”
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