Hibernian defends outsourcing decision

The chief executive of Hibernian Group, Ireland’s largest insurer, has defended the company’s decision to outsource 560 jobs to India saying it is the best way of preserving the remaining jobs left in Ireland.

Stuart Purdy told a conference on corporate responsibility organised by Concern and the British Embassy this morning that issues relating to insurance in Ireland are “relatively stark” and that profit levels in its life and pensions business are the lowest in the 27 countries in which its parent company Aviva operates.

Hibernian has been accused of corporate greed for its announcement last week that will be outsourcing the jobs to its centre in Bangalore over the next three years. Hibernian made a gross operating profit in the Irish market last year of €352.9 million, an increase of almost 90 per cent on the previous year.

Mr Purdy said he had spent the last two days “looking in the eye” of his employees and explaining to them why the company was proposing the move.

“The reality is that when we find it difficult to get and maintain people and difficult to make the business pay. We do have to look at solutions that bring attractive savings to our business and the reassurance of ongoing service,” he said.

He explained that Hibernian made a loss of €63 million in its life and pensions business in 2006 (it made €116m this year), but that its profit level last year was only 1.4 per cent.

He said making the move to Bangalore is a “really important step in getting significant profitability and sustainability into the business”.

“It is a third of the profit level we get across our European businesses. It is the lowest level of profit level we get in any of our 27 countries of the operation.

“The general insurance business is a challenging business which is subject to cyclical impacts as all general insurance markets are.

“People driving a Ford Mondeo this afternoon are paying half what they paid for insurance five years ago.

“But the reality is that if my company does not take the steps it announced this week, the 1,600 sustainable jobs that my company can support from 2010 onwards will be less.”

Unite, which represents two-thirds of the 2,200 employees in Hibernian, will begin balloting for strike action over the proposals on Friday. The union says the decision is unnecessary as other Irish insurers have not outsourced and that the savings generated from outsourcing are not as great as they used to be.