Lloyds may have replaced 1,300 UK IT workers with Indian contractors

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Lloyds Banking Group appears to have been pretty hard on its IT workers recently. Following on from the revelation that a good proportion of the 5,000 redundancies announced last week will hit techies, comes the accusation that it may be under investigation for employing as many as 1,300 Indian contractors for homegrown projects.

The Lloyds Banking Group Union (LTU) has claimed that at least one MP has received a letter from the UK Border Agency on the bank's "policy of replacing existing UK-based IT staff by non-European Economic Area Nationals".

The union highlighted the fact that Lloyds was employing Indian techies at lower rate than their UK counterparts back in July. However, the scale of claim - that as many as 1,300 contractors have been flown in - runs counter to the bank's assertion that the numbers employed are small.

"Indian contractors have been flown to the UK to do the work of IT staff and many of those have been moving from project to project and have worked for the group for many months, if not years," says LTU.

While the union's outrage is not to be scoffed at, it's questionable whether Lloyds is entirely unique in employing this practice.

Once an outsourcing agreement has been put in place with a service provider, it's relatively common for the firm to then replace incumbent UK staff with their own Indian workforce, says Nigel Roxburgh, director of outsourcing consultancy SourceGene.

"I'd be highly surprised if no other bank was employing the same practice," he says.

There was also speculation earlier in the year that RBS was about to outsource more IT functions, with the bank's staff saying an "entire floor" of office space had been handed to Indian outsourcing technology firm Infosys.

Lloyds is clearly viewing technology as an area where there are cost-savings to be had. In June, it downgraded contractor pay by 15%, and Roxburgh suggests that Indian contractors could be as much as 50% cheaper than their UK counterparts.

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