The Indian connection will cut off more jobs

Published on Wednesday 3 December 2003 00:00

WHEN three of the major financial employers in Edinburgh decide to shift thousands of jobs to India in quick succession it was bound to raise fears about the future of the city’s industry.

First Scottish Provident, then Scottish Widows,and now Norwich Union have all announced plans in the past few weeks to axe jobs and send the work to the sub-continent.

Up to 60 jobs in Edinburgh at Britain’s biggest insurance firm, Norwich Union, were yesterday revealed to be among 2300 jobs UK-wide which the company plans to shift to the Asian subcontinent under the global trend of "outsourcing" back-office work in the financial services sector, which unions say could see two million jobs shifted from the west to India by 2008.

Lloyds TSB-owned finance firm Scottish Widows has said it is creating up to 50 back-office processing jobs in India as part of a pilot project, raising fears that thousands of jobs in Edinburgh could go - prompting Lloyds TSB Group Union (LTU) members to collect hundreds of signatures in a protest petition.

Life and pensions firm Scottish Provident also plans to move an estimated 100 data processing posts from Edinburgh and Glasgow to India in a bid to cut costs. At the same time, banking giant HSBC also recently announced plans to shed about 4000 UK staff as it relocates work to India, Malaysia and China, in what is understood to be one of the largest transfers of British jobs overseas.

Countless financial staff at call centres across the city and the UK must now be anxiously wondering if their jobs are next in line for the chop.

And with Indian workers - many of whom are well educated and view the jobs as a relatively high-level career - happily doing the same work as Scottish staff for a sixth of the pay, it is not difficult to understand why businesses are looking east.

Which is why unions and politicians fear that unless ministers act now to make Scotland a more attractive base for businesses some 20,000 jobs could be wiped out in Edinburgh alone. So does this spell the beginning of the end for the city’s booming financial district?

City business leaders certainly think that it is "inevitable" that most call centre staff in the city’s financial sector will lose their jobs. But they believe that although that is "regrettable" for the staff involved, the future of the financial sector itself remains secure - and in Edinburgh the jobs will involve a higher skill base.

Bill Furness, chief executive of Edinburgh Chamber of Commerce, says: "Obviously, a job loss is always a shame. There is an individual there, and a family being supported. But I think we have got to be realistic about this happening. It’s no good trying to stop the market behaving like a market behaves.

"We will keep some higher-skilled call centre jobs but other lower level jobs will inevitably migrate overseas. I think it is about whether a person adds value, for example if they have a wide knowledge of the product, in which case companies are reluctant to transfer their jobs, or whether they are just repeating information, which anyone could do anywhere.

"But I don’t see this [call centre jobs being outsourced] as in any sense crucial to Edinburgh’s future as a financial services centre. Edinburgh is a strong financial services centre, not because of call centres but because we have got a number of major institutions that provide first-rate services. They just happen to provide some of those services by call centre and some of those centres happen to be here.

"We would still be a strong financial centre without call centres. We have got to move up the value chain, and I think we are well placed to do that."

But his words can only add to the fears of call centre staff in the Capital, although he adds that he believes anyone who does lose their job will find it easy to get alternative employment. "The silver lining on the cloud is that we still have a very buoyant economy and the chances of re-employment are very good in Edinburgh at the current time."

Furness’s view is echoed by the Scottish Financial Enterprise (SFE), which promotes Scotland’s financial sector.

SFE chief executive Amanda Harvie says: "Scotland and Edinburgh should not endeavour to compete at the lower scale end of the market.

"We should be looking to compete, and we can compete very successfully, at the higher skills end of the market. I see opportunity, not disadvantage, in the long term."

Unions want to secure all jobs at all levels, however, and they remain fearful that unless action is taken now, redundancies will follow and also move up the career ladder.

John Quigley, Scotland regional secretary for financial sector union, Amicus, says: "If these jobs are going now, it is only a matter of time until higher quality backroom jobs go along with them if we don’t take steps to address the issues and make the sector more buoyant.

"We need dialogue now with employers and the Scottish Executive to secure the long-term future of the sector."

But Harvie disputes Quigley’s view, saying: "I don’t think this is the thin end of the wedge. Scotland has a number of global companies with international bases here which have to compete effectively in a competitive market. That presents an opportunity for Scotland, not a threat, and we have seen an increase in investment here."

However, both Harvie and Quigley are united in their optimism that a newly-created Executive think-tank, the Financial Services Strategy Group, (FSSG) will enable unions, employers and the Government to work together to secure the sector’s future. And although Quigley believes other firms may well follow suit, he is quick to stress that most financial services firms have so far rejected outsourcing and the sector is still growing in Scotland.

He adds: "I can’t predict the future, they [firms] may well follow suit. However, outsourcing is not the solution which most companies have come up with to run a successful business. The sector is growing more than it is being depleted."

He also has a glimmer of hope for Edinburgh’s Norwich Union workers whose jobs are under threat, adding that he believes the situation can be resolved without compulsory redundancies.

Meanwhile, the response from other financial giants in Edinburgh should reassure staff that, for now at least, their jobs are safe. Marcia Campbell, managing director of human resources at Standard Life, which employs about 8000 staff in Edinburgh, says: "We have created over 1000 new customer service roles in Edinburgh in the last five years.

"We have no plans to move any customer service roles overseas. We believe that having customer service operations at the heart of the organisation in Edinburgh delivers a real competitive advantage for Standard Life. We have one of the lowest staff turnovers in our industry and the depth of experience which has been built up could not be replicated by moving jobs elsewhere."

A spokesman for HBOS, formed from the merger of the Bank of Scotland and Halifax, says: "As a UK-based operation, our call centres are all based in the UK, we have no plans to change that."

And a spokeswoman for the Royal Bank of Scotland, which has around 7000 staff in Edinburgh, says: "We have recently completed a very successful project which has proven that we can locate some of our operations in offshore locations.

"But after considering all the facts we have decided not to pursue that option. We concluded that the best outcome for our staff, shareholders and customers is to continue to employ people in countries in which we operate providing that the fiscal and regulatory climate is supportive to our business."

It was the threat to Scottish jobs from low-cost countries such as India which prompted the Executive to set up the FSSG, which met for the first time last week.

The group - chaired by Enterprise Minister Jim Wallace - includes leading figures from financial institutions and unions in Scotland, such as Standard Life chief executive Iain Lumsden, Jim McFarlane, chief executive of Scottish Enterprise Edinburgh & Lothian and Bank of Scotland governor George Mitchell. They are tasked with drawing up a long-term strategy for the financial services industry to ensure its future is viable.

An Executive spokesman says the latest job losses announcement is "disappointing", but strived to be upbeat about the future. "We are clearly disappointed at Norwich Union’s plans in Edinburgh. Our main concern must be to try to ensure that everything possible is done to assist those who are facing the prospect of losing their jobs."

He says that the FSSG will consider "the threat to Scottish jobs" of increasing low-cost competition from overseas, and adds: "A recent study highlighted the fact that the number of financial services and call centre jobs has actually risen in Scotland in recent years.

"And this is something the Executive will, of course, continue to work at to ensure that we have high quality, sustainable jobs in Scotland."