A hundred Brit IT bods' jobs under threat at Direct Line 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 …
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.
You don't think they'll offshore sales, do you? It's only when you've paid your money that you'll encounter the impacts of the offshoring of the IT, back office, and possibly claims department.
Companies will always be there to take your money and promise the earth. Your problems start when you need them to deliver on their side of the bargain.
Anyone with an account with these guys should be aware that all IT services are going to be outsourced to India via those friendly chaps at IBM and Accenture. There's to be no graduate recruitment in the meantime and selected permies will be shown the door. Gotta love the global marketplace!
AC for obvious reasons.
I know. This is really poor. Nationwide Building Society used to be a decent organisation, now it seems to be run of the mill, ill-governed financial services outfit, with a fat cat board busying themselves with acquisitions, outsourcing, offshoring, and the same focus on cross selling, and milking your loyal customers.
Due to the lack of information to members, and even more limited opportunities for activist investors than listed companies (and that's a low enough bar), the board appear do what they want to amuse themselves.
I moved my account to get away from this sort of nonsence, looks like I'll be moving it again.
It gets worse - Nationwide are sniffing round the RBS branch disposal now, in part because they want the SME lending book....
So they're considering spending around £800m of my money (well, my very, very small share of the £800m) buying a largely duplicate branch network of expensive leases (probably with RBS associated companies), a handful of very pi55ed off customers, and the dodgiest business loan book that RBS can pull together and spray with bleach to disguise the smell. You can be sure that Natwest and the wealth management arm will be trying to secure the better quality outgoing RBS customers (eg I had a load of guff from St James Place trying to get me on board as soon as the branch divestment became a requirement), and when this goes through the faster account transfer rules will be in place, so even those who they do get will be weighing up their options to leave.
After all, why did Santander walk away? Clearly had nothing to do with systems, and if they'd been getting good assets at a good price that would have strengthened the group, so helping offset the Spanish home market problems. I reckon they realised that RBS were trying to sell a pig in a dress, but luckily for RBS, who comes round the corner, but the country bumpkins of Nationwide, with a bulging wallet, and a vacant smile.
I thought the same at first; but the article does indicate that the IT changes are part of the overall plan and not just the only part.
The problem is of course that even if you get rid of 100 people at an average of say £55k per year (including employment costs, admin, offices etc.) and replace with someone overseas, their costs (including the extra comms costs) will perhaps be half of that; but as many people find, the quality of service nose dives. This then causes issues down the line and the end result is wasted time, possibly loss of customers.
But the main problem is that most businesses now are focussing purely on short term savings; long term planning went out of the window a while ago. They call this "strategy"; (I'm not sure that I would agree, but there you go).
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.
... and FULLY understand the impact this will have on our people," chief exec Paul Geddes said at the time. "Therefore, in the spirit of solidarity, the whole board, including myself, are resigning and being replaced by our colleagues from India, to whom we wish the best of luck"
I swear, this is what he meant to say!
Seen it all before when I was made redundant just after RBS bought Churchill. Must have have paid a lot of money in redundancy payments plus reduction in work / distractions caused by these redundancy exercises.
Funnily enough I have had a call from a "headhunter" with regards to an "exciting posittion working for Direct Line Group", obviously the recruitment side of HR doesn't communicate with the rest of HR!
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