Friends Provident yesterday said 200 of its employees will transfer to IBM and its partners as part of a ten-year IT and infrastructure outsourcing deal.
The life and pension firm expects the move will generate cost savings of £6million a year as it looks for group savings of £40million by the end of 2009. In January, Friends announced plans for 600 job losses.
Chief executive Trevor Matthews said the agreement with IBM will make Friends a “leaner, fitter and more efficient business”. The outsourcing process – mainly affecting Dorking – is expected to finish by March.
Friends has suffered a torrid year after failing to secure an £8.6billion merger with closed life insurer Resolution at the end of 2007. It launched a review soon after, under which it hoped to downsize by offloading assets and cutting costs.
While it has struggled to sell assets, Friends remained on track with cost cutting aims. It scrapped plans to sell its wealth management arm Lombard.
Mr Matthews added: “This is a big step forward in achieving our targeted £40million of annual cost savings.”