Prudential plots cost-saving push

Plans annual cost savings of up to £25m

Financial services group Prudential plans to make annual cost savings of between £20m and £25m by integrating its global IT infrastructure.

The company confirmed last week that it will retain a majority stake in its online banking subsidiary Egg, rather than sell it off.

Group chief executive Mark Tucker says cost savings can be achieved by managing administration and IT infrastructure more closely across Prudential UK, Egg and its fund management division M&G, as well as through co-ordinating the separate marketing efforts.

The announcement is part of the first strategic review of the business by Tucker since his appointment in May.

A Prudential spokesman says it is still too early to disclose full details of the cost-saving programme, but adds that the organisation plans to consolidate its global IT support centres into just three locations in the UK, US and Asia.

Other IT employees, such as programmers, are not expected to be affected.
‘There is no detailed announcement yet. But business process, application development and IT maintenance staff are outside the scope of the project,’ said the firm’s spokesman.

A spokeswoman at Egg says exact details are sketchy about how cost cuts will be achieved at this stage, but suggests the three businesses will look to combine their IT purchasing power to achieve further savings.

In July, Prudential revealed plans to bring part of its outsourced IT operations back in-house after conducting a benchmarking exercise to determine the level of service and value for money offered by a Capgemini data centre outsourcing deal.

About 80 per cent of Prudential’s data centre requirements are outsourced to Capgemini in a five-year deal that is due to end in April 2006.