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.
The outsourcing plan, revealed in an email to staff last week, impacts IT employees 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 seeing the Issa brothers relinquish control. Currently, over 130 employees are involved in the outsourcing consultation process. While Asda has not ruled out redundancies, the company declined to comment on whether jobs would be moved overseas.
The outsourcing process is expected to be completed by September, heightening concerns about job losses. Nadine Houghton, national officer for the GMB trade union, criticised the move, stating, “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.”
Houghton added that with over 5,000 employees at Asda House, more announcements could follow, further stripping essential head office functions. Asda workers, she said, are increasingly anxious about what the future holds.
Asda’s IT operations have faced scrutiny recently due to a failed systems upgrade that resulted in thousands of employees being incorrectly paid. The supermarket has not yet resolved this payroll crisis, which was first reported three months ago.
The Issa brothers, Zuber and Mohsin, purchased Asda with TDR for £6.8 billion in 2021, heavily leveraging debt to finance the deal. This debt burden has increased the supermarket’s finance costs, which MPs warned last year could impair its ability to reduce prices. Asda has also struggled to maintain its market share, which has dropped from 14.4% three years ago to 13.1% currently.
Mohsin Issa, who has been managing Asda’s operations since 2021, is in the process of identifying a successor. Reports indicate that Asda is prepared to offer its new chief executive a pay package of up to £10 million, potentially making them the highest-paid supermarket boss in Britain, alongside Tesco’s Ken Murphy.
An Asda spokesperson stated, “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. 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 impacted colleagues and will support them throughout the unsettling process. The three-year Project Future programme is on track to be completed by the end of this year.
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Asda Outsources Staff to Indian Firm Amid Cost-Cutting Measures