Equitable Life has signed a ($200 million) £120 million deal for administration services with Indian outsourcer HCL.
The life insurance firm, which closed to new business in 2000 after a prolonged legal battle, will use the new contract to manage its policies until the last one ends, expected to be in over 30 years’ time.
HCL will take over from existing administration services provider Lloyds Banking Group when that deal expires in March 2011, and will focus on managing call centres and other administrative functions affecting policy holders.
Under the deal, Equitable Life expects to make £8 million worth of savings in the first year, and to cut overall costs through the lifetime of the deal by over £100 million.
Some 100 staff at Lloyds Banking Group will transfer to HCL when that company takes over the work, and HCL said a "small number" of the remaining 240 posts for that deal will move to its other locations in the UK and India.
Chris Wiscarson, chief executive of Equitable Life, said the contract signing was “one of the most important decisions” in the society’s history. “I want to help restore policyholders’ savings and this is an important step in that direction,” he added.
Wiscarson also said he “very much” regrets the “concern, uncertainty and disruption” that the outsourcing may cause to Lloyds staff currently working on the administration.
It also emerged today that a further 570 life, pensions and investment administration jobs will be cut at Lloyds Banking Group. Ged Nichols, general secretary at the Accord trade union described the cuts as a "a body blow" for the workforce.