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Prudential U.K. to Close Three Sites; May Export 200 Jobs to India(BestWire Services Via Thomson Dialog NewsEdge) The United Kingdom's Prudential plc said it is closing offices in three locations as part of a reorganization designed to cut costs. The life insurer plans to close its sites in Belfast, Northern Ireland, Bristol and Holborn Bars in London. The closings will involve the transfer of about 700 jobs -- some to other locations within the United Kingdom and others to India, Prudential said. The moves are part of a 40 million pound ($72.3 million) a year cost-savings initiative announced last December. Prudential's Belfast operation employs about 500 people in customer service, direct-to-consumers and support services. The office will close by the end of 2007. In the Bristol office, set to close by April 2007, about 40 employees work in human resources. Another 120 people work in the Holborn Bars office in London. This is the head office of Internet banking affiliate Egg, and the employees work in treasury and support and shared services. The insurer has entered a 90-day consultation period with unions and staff organizations representing affected employees, and those talks may influence how many jobs are transferred out of the United Kingdom, said spokesman Anthony Frost. "The positions currently in the London area will remain in London," he said. Of the 500 or so other positions, Frost said the current estimate is that about two-thirds will remain in the United Kingdom, mostly customer service and other positions related to telephone communications. Up to 200 jobs are expected to be shifted to Mumbai in India. Those positions are mainly back-office functions, said Frost. One union representing some Prudential workers, Amicus Britain, reacted angrily to the announcement and hinted at possible strike action. "Amicus believes the announcement is designed to undermine union representation and export more jobs to India," the union said in a statement. "The proposals would close Prudential's office in Belfast where union density is strongest." Amicus said that in 2002, the union signed an agreement with Prudential stipulating no layoffs were to result from outsourcing. The agreement ran out in February 2006, and Amicus said it believes the Prudential has waited until the agreement expired "to slash U.K. jobs where the union is strongest." "Amicus will begin to consult with Prudential staff over strike action and will support them in whatever action they choose to take," the union said. The union also claims the labor market in India is not as accommodating as it was only three years ago, when Prudential first shifted jobs to that country. "Labor costs are rising by 15% a year, staff turnover is up to 70% and there is a crisis across middle management levels who are ill equipped with the right skills to manage offshoring projects," the union said. "Further expansion in India will distort the labor market further, increasing the intensity of the problems plaguing the Indian offshore industry." Nick Prettejohn, Prudential's chief executive officer, said the moves continue the company's policy of establishing "core sites" in the U.K. business. "These reorganization proposals are an important step in delivering the cost savings that will enable the U.K. business to continue to build on the strong positions we have established across the financial services market," he said in a statement. "Any change that results in redundancies is regrettable," said Prettejohn. "We are consulting with unions and staff organizations and will make every effort to ensure that our people are kept informed and helped through this difficult transition period." For 2005, Prudential had a profit of 760 million pounds, an increase of 47.3% over 2004. Revenues for the year were 41.1 billion pounds, an increase of 21.3% (BestWire, March 16, 2006). Life insurance new business sales rose 15%, as each of Prudential's regional operations reported double-digit growth. Growth was particularly strong in Asia, where new business sales rose 23%. Prudential Assurance Company Ltd. currently has a Best's Financial Strength Rating of A+ (Superior). (By David Pilla, senior associate editor, BestWeek: [email protected]) |