Asda is outsourcing more than a hundred staff to an Indian-based supplier in a move that has raised fears of job cuts, as the supermarket’s private equity owner strives to cut costs.
Outsourcing plans were unveiled in an email to staff last week, affecting IT staff working in the company’s Leeds headquarters where more than 5,000 colleagues are based.
The proposal to shift employees to Mumbai-based Tata Consultancy Services was announced 24 hours before private equity company TDR Capital took majority control of Asda.
It achieved this by acquiring Zuber Issa’s 22.5pc stake in Asda, in a move that tightened TDR’s grip on the retailer and saw the billionaire Issa brothers cede control.
More than 130 workers have so far entered the outsourcing consulting process, the company said. Asda refused to rule out redundancies when contacted.
Tata Consultancy Services (TCS) is headquartered in Mumbai and operates in 150 locations around the world. Asda declined to comment on whether jobs would be moved overseas.
The process is expected to be pushed through by September, fuelling fears of job cuts.
Nadine Houghton, national officer for the GMB trade union, said: “The outsourcing and offshoring of jobs from Asda’s head office is yet more asset stripping by TDR Capital.
“The GMB believes this first round of job cuts is only the tip of the iceberg, with over 5,000 Asda colleagues employed in Asda House – we expect more announcements like this in the months ahead.
“TDR Capital have cut millions of hours from the shop floor and now they are cutting the head office functions that support the stores. Asda workers are asking what will be left?”
Following the latest announcement regarding Asda’s outsourcing proposal, bosses are understood to have been inundated with questions from worried workers.
Asda’s IT operations have recently been under fire amid a botched systems upgrade that led to thousands of employees being paid incorrectly.
It is understood that Asda is yet to fully resolve its payroll crisis, which first came to light in The Telegraph three months ago.
The Issa brothers, Zuber and Mohsin, bought Asda with TDR for £6.8bn in 2021, relying on huge amounts of debt to finance the deal.
This has since burdened the supermarket’s balance sheet with growing finance costs, which MPs warned last year was hampering the company’s ability to lower prices.
Asda has also been battling to improve its dwindling market share under the Issas and TDR. The supermarket currently accounts for 13.1pc of the grocery market in the UK, compared to 14.4pc three years ago.
Mohsin Issa has been overseeing Asda’s operations since replacing Roger Burnley in 2021, but he is trying to identify a successor.
The Telegraph revealed last week that Asda is prepared to offer up its new chief executive a pay package of up to £10m, which would make them the joint-highest paid supermarket boss in Britain. Currently, the highest-paid chief is Ken Murphy, who is in charge at Tesco.
An Asda spokesman said: “We are building world-class systems in a once-in-a-generation IT transformation – Project Future – to separate Asda from Walmart’s legacy systems.
“Project Future will deliver a step-change in our data capabilities, our customer experience, and competitive edge. Put simply, it is a key building block of our strategy that will set Asda up for long-term success.
“As part of this process, we have taken the difficult decision to propose some changes to our technology function to ensure we have the necessary skills and capabilities in place to support these new systems.
“We have opened a collective consultation with colleagues impacted by this proposed change and will do all we can to support them during this process that they may find unsettling. We are fully on track to complete the three-year Project Future programme by the end of this year.”
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