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Last Updated: Thursday, 14 September 2006, 11:41 GMT 12:41 UK
Norwich Union boss backs job cuts
Norwich Union executive chairman Patrick Snowball
Mr Snowball said the job cuts will safeguard the firm's future
The head of Norwich Union has defended his company's decision to cut 4,000 jobs, or about 11% of its workforce, in order to reduce costs.

Speaking to the BBC, Patrick Snowball explained that changes in the global insurance market and consumer habits had prompted the firm to take action.

He also said that opponents to the firm's plan to offshore 1,000 jobs to India had a "Luddite" mentality.

Norwich Union-owner Aviva plans to offshore 7,800 jobs by the end of 2008.

Changing world

"You are just starting to see the impact of technology," Mr Snowball, the firm's executive chairman, said.

"We only have three costs - people, technology and buildings," he continued. "As you use more technology, you need fewer people and buildings.

"The business can continue to grow, but you won't need so many people to run it."

What we are seeing today is a reality of the dotcom world
Patrick Snowball, Norwich Union

While the current round of job cuts may seem harsh, they are vital to ensuring that the company remains cost effective and competitive and thus safeguards its future, Mr Snowball said.

It also should help ensure that the company can fight off possible takeovers and play a leading role in the consolidation of a fragmented insurance market.

"As a senior management team we have to convince shareholders that we are the best people to run the company," Mr Snowball said.

'No Luddite'

The executive added that offshoring jobs to India was a key component in preparing the firm to face future challenges.

Mr Snowball said that it would be pandering to "Luddite" opinions if Norwich Union - whose current advertising slogan is 'thinking ahead, so are we' - ignored the benefits of shifting jobs to India.

The move could potentially cut its cost-base by as much as 40%.

However, he added that offshoring was only part of a complete solution as there was a limit to the number of jobs that could be shifted to a time zone that was many hours ahead of the UK.

While Mr Snowball called the Indian market "immature and inexperienced" because it had only been offering outsourcing services to insurers for a short time, he said he expected workers to quickly match UK standards of service.

"The company and unions have a different view on outsourcing," he explained. "What we are seeing today is a reality of the dotcom world."


SEE ALSO
Norwich Union cuts 4,000 UK jobs
14 Sep 06 |  Business
Aviva profits up on world demand
09 Aug 06 |  Business
Jobs go at Royal & Sun Alliance
19 Jun 06 |  Business
Aviva buys US insurer for 1.6bn
13 Jul 06 |  Business
International sales boost Aviva
27 Apr 06 |  Business
Aviva scraps bid for Prudential
24 Mar 06 |  Business
Aviva rules out hostile Pru offer
20 Mar 06 |  Business

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