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Asda outsources staff to an Indian company due to cost-cutting measures

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Asda is outsourcing over 100 staff members to Mumbai-based Tata Consultancy Services (TCS), fuelling fears of potential job cuts as the supermarket’s private equity owner, TDR Capital, aims to reduce costs.

Asda outsources staff to an Indian company due to cost-cutting measures- Asda is outsourcing more than 100 staff to Mumbai-based Tata Consultancy Services (TCS), fueling fears of possible job cuts as the supermarket’s private equity owner TDR Capital looks to cut costs.

The outsourcing plan, which was revealed in an email to staff last week, will affect IT workers at Asda’s Leeds headquarters, where more than 5,000 colleagues are based.

The announcement came just a day before TDR Capital acquired Zuber Issa’s 22.5% stake in Asda, tightening its grip on the retailer and relinquishing control from the Issa brothers. Currently, more than 130 employees are involved in the outsourcing consultancy process. While Asda has not ruled out redundancies, the company declined to comment on whether jobs would be moved abroad.

The outsourcing process is expected to be completed by September, raising concerns about job losses. Nadine Houghton, national officer of the GMB union, criticized the move, saying: “Outsourcing and offshoring jobs from Asda’s headquarters means further asset stripping by TDR Capital. The GMB believes that this first round of job losses is just the tip of the iceberg.”

Houghton added that with more than 5,000 employees at Asda House, more announcements could follow, further removing essential head office functions. Asda employees, she said, are increasingly concerned about what the future holds.

Asda’s IT operations have recently come under scrutiny following a botched system upgrade that led to thousands of employees being paid incorrectly. The supermarket has not yet resolved this wage crisis, which was first reported three months ago.

The Issa brothers, Zuber and Mohsin, bought Asda with TDR for £6.8 billion in 2021, making heavy use of debt to finance the deal. This debt burden has increased the supermarket’s borrowing costs, which MPs warned last year could affect the supermarket’s ability to cut prices. Asda has also struggled to maintain its market share, which has fallen from 14.4% three years ago to 13.1% now.

Mohsin Issa, who has led Asda’s operations since 2021, is in the process of finding a successor. Reports suggest Asda is ready to offer its new CEO a pay package of up to £10 million, potentially making him the highest-paid supermarket boss in Britain, alongside Tesco’s Ken Murphy.

An Asda spokesperson said: “We are building world-class systems in a once-in-a-generation IT transformation – Project Future – to separate Asda from Walmart’s existing systems. Project Future will deliver a step-change in our data capabilities, customer experience and competitive advantage. It is a key building block of our strategy that will set Asda up for long-term success.”

The spokesperson added that the company has opened a collective consultation with affected colleagues and will support them through the disturbing process. The three-year Project Future program is on track and will be completed by the end of this year.