Monday, June 09, 2008

Aviva (Norwich Union) and the offshore market

The decision of Aviva (Norwich Union) to cut 1,800 jobs is a story making most of the national press and Finextra this morning.

This is on top of the restructuring announced in 2006, which would shed 4,000 UK jobs. Of these, 1,000 were call centre workers whose roles would be replaced by offshore call centres.

Interestingly, this time it is not the call centre that is being expressly targeted as a cost centre. For starters, 500 of the job losses announce this morning are in IT. This to me seems to be part of the trend that saw Lloyds TSB a few weeks ago offshore its IT rather than its customer facing operations (I covered the story here on the blog or here on Finextra).

My impression is that the need for high quality customer service is being recognised as a differentiator while the focus on cost is shifting to more back office areas. In UK insurance, I suspect also that the arrival of the web insurance aggregators ( , go, etc...) has really hit volumes and margins in the direct web channel. By contrast, the telephone channel is less affected by these new players and may be a way for insurers to preserve margin and brand.

It may also be the time that the contact centre gets recognition in the wider enterprise for its ability to deal direct with customers and stops being a cost centre.

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