NEW YORK - Insurers in the United States and Europe are hiring more employees in India to perform administrative jobs, according to recent studies and company announcements.
The Principal Financial Group Inc. has announced plans to expand its main office in India to 600 employees by the end of 2007, from 230 today. The new employees will handle administration for retirement, investor services and health insurance units, the company said.
The work in the company's office in India will be "transactional" and will not require "customer facing or phone contact," said Rhonda Clark-Leyda, a spokeswoman for the Des Moines, Iowa-based insurer.
"I have yet to have any contact with India," said Gary Chard, a Principal senior financial representative in Rochester, N.Y. "None of my work has been routed through there."
Principal is not looking to lay off any U.S. staff; indeed, it is planning to hire about 200 people for the global-investors unit in Des Moines, according to Jim DeVries, vice president of human resources.
Outsourcing charge rankles
Insurers are becoming more sensitive to how their staffing moves are perceived.
Last month, Jackson National Life Insurance Co. demanded a public apology from Sen. Debbie Stabenow, D-Mich., who in a television campaign advertisement accused the Lansing, Mich.-based company of moving jobs to India and China.
"We did not outsource any jobs," said a company spokesman, who asked not to be identified. "We contracted with Computer Sciences Corp. [in El Segundo, Calif.] for certain services, and they outsourced some of that work," the spokesman added.
No apology was received. Ms. Stabenow, who was re-elected, ran against Republican Mike Bouchard, who is on Jackson National's investment board.
In September, London-based Aviva PLC announced that it was laying off 4,000 of its employees in the United Kingdom, with 1,000 of those jobs being moved to India. The layoffs and "offshoring" are expected to save the insurer $474 million by the end of next year.
A previous promise to keep jobs in the United Kingdom had to be abandoned because it was "discriminatory" and "racist," according to a statement by Patrick Snowball, chief executive of Norwich (England) Union, which is owned by Aviva.
Aviva also owns AmerUs Group Co. in Des Moines and Aviva Life Insurance Co. in Quincy, Mass. The company did not immediately return a request for comment on offshoring plans, if any, involving its U.S. operations.
In good company
Principal is not alone in its efforts to shift more jobs abroad, where wages are often lower.
About three-fifths of insurers worldwide plan to increase their use of outsourcing in 2006, according to a survey by Datamonitor PLC in London.
When one of its U.S. employees retires or leaves the company, Principal often attempts to hire a replacement in India, Ms. Leyda-Clark noted. An anticipated shortage of employees in the United States is one of the reasons for expanding in India, she said.
Large companies will average $116 million each in annual cost savings by moving jobs to India and other emerging nations, according to a study released this month by The Hackett Group, a research firm in Atlanta.
"Over the past few years, the resources available offshore have matured rapidly, creating immediate opportunities to materially reduce companies' cost structures," said Julio Ramirez, Hackett's managing director.
Prudential Insurance Co. Ltd. of London in April announced plans to move 500 jobs to India with the intent to save $71 million in wages.
Insurers with established back-office operations in India include Allianz AG in Munich, Germany, American International Group Inc. in New York, AXA SA in Paris and Phoenix Life Insurance Co. in Hartford, Conn.
"We have some of our policy administration for life and annuities in India," said Alice Ericson, a Phoenix spokeswoman.
Insurance brokers also are outsourcing jobs. Willis Group Holdings Ltd. in London announced last month that it is laying off 400 employees worldwide and is expanding outsourcing of jobs to India. The firm expects about $60 million in cost savings by 2009.