Top jobs will go to Far East

AT LEAST 30,000 highly paid executive jobs within Britain's financial and insurance sector could disappear within five years as big institutions gear up to transfer operations to low-cost centres such as India, according to an employment study circulating in the City.

While headlines continue to focus on outsourcing call centres and processing work, such as HSBC and Abbey National's new Indian servicing divisions, there is now a real threat to accountancy jobs that command salaries of £70,000 in London but could be filled by graduates in Madras or Mumbai for £10,000.

'We are in talks with almost every British bank and insurance company so the quantity and quality of British jobs being mentioned do not seem unrealistic,' said Raja Gopalakrishnan, head of banking and insurance at India's second-largest bank Icici, whose US operation is India's leading outsourcing conduit.

Gopalakrishnan said: 'If the first wave of offshoring was IT jobs, and the second was call centres and financial and data processing, the third wave will definitely be more senior accountancy jobs from Europe and the US.

'India has a large number of graduates in commerce and economics and there is now a large and credible infrastructure here as British companies have already been setting up Indian operations and, understandably, the Indian government has been eager to clear away all the red tape.'

HSBC, which recently confirmed that a fifth of its processing work, such as change of addresses and direct debit mandates, is being channelled to operations in India, China and Malaysia, has established a company in Hyderabad, while Standard Chartered and Norwich Union have set up operations in Madras.

HSBC's new chief executive, Stephen Green, said it was too early to tell what impact offshoring would ultimately have on the bank's 45,000-strong British workforce. He said he expected the use of the service centres to 'evolve' and did not have specific plans for their growth: 'We are an international business. We use resources globally.'

However, Chris Gentle, senior analyst at Deloitte Consulting in London, which is closely monitoring the emerging financial and accounting outsourcing market, warned: 'There isn't a bank or financial institution in the City that isn't now grappling with the economics of all this.'

Taking toll on the capital

'PEOPLE have not yet grasped the enormity of what could happen,' said Deloitte's Gentle. 'If middle-office jobs are hit, London and the South-East region will really suffer because these higher-paid jobs are the drivers of the South-East economy, particularly of house prices. Potentially, within five years we could see a downward pressure on wage rates and a deflationary effect. By the end of this decade, the City could be transformed.'

According to Deloitte, the world's 100 largest financial services companies have indicated that they expect to transfer an estimated $356bn (£220bn) of their operations and two million jobs offshore by 2008 in their efforts to cut costs.