UK unions protest gas and power major's outsourcing

S Kalyana Ramanathan / London July 23, 2009

Three of the largest unions in Britain — GMB, Unite and Unison — have spoken against a proposal of National Grid, the gas and power supplier, to outsource some of its non-core activities like payroll processing, personnel functions, accounts, invoicing and procurement to India.

The unions are planning a major protest in Birmingham on July 27, at National Grid’s annual general meeting. National Grid (NG) is a leading supplier of gas and electricity in Britain and the northeast region of the US.

GMB has said senior executives from NG were in India earlier this month, scouting for ways to cut costs by outsourcing these functions from India.

In an e-mail response to queries from Business Standard, a NG spokesperson said the company already outsources some information services (IS) support from India, from companies including Tata Consultancy Services, Wipro and Zensar Technologies. “Cost is not the main reason why the company outsources some of its IS support to Indian companies. It is because there is currently an IT skills shortage in the UK and because of the high standard of IT skills in India.”

The unions have said that 181 jobs from NG’s Newcastle site (in northeast UK) that currently undertakes these activities are at stake. The unions have protested this move, particularly in the backdrop of NG recently announcing global profits of £2,915 million for the year ending March 31, a 12 per cent increase over the previous year.

“Despite these huge profits, staff and unions at Newcastle have been working with the company to identify further savings,” a union statement said.

Gary Smith, GMB National Secretary, said: “One of National Grid’s competitors is offering a commitment to not to offshore their back ground office functions. National Grid is the most profitable company in the sector and the employees deserve the same commitment.” Smith said the company had started to outsource some non-core activities from CSC in India in 2003, but was forced to return these activities to the UK in 2008.

The company spokesperson said no decision has been made on the future course of action for outsourcing more from India. “We have not taken any decisions to outsource any services or close any location. We announced we had narrowed down the number of external companies we are looking at from four to two. We don’t expect to make any decisions until later in the summer and we are committed to consulting our employees and trade unions throughout the process.”

The company said it has been exploring other way to cut costs, apart from outsourcing of services. “Since February, through an internal performance challenge, we have also been identifying internal improvements to meet the challenge of finding savings of around £7 million,” the company said.