LEEDS, ENGLAND – Supermarket chain Asda is outsourcing over 100 staff members to Mumbai-based Tata Consultancy Services (TCS), raising fears of job cuts as the supermarket’s private equity owner, TDR Capital, aims to reduce costs.
The outsourcing plans were announced in an email to staff last week, affecting IT employees at Asda’s Leeds headquarters, where more than 5,000 employees are based.
The proposal to shift employees came just a day after TDR Capital acquired majority control of Asda, taking over Asda’s co-owner Zuber Issa’s 22.5% stake and tightening its grip on the retailer, resulting in the billionaire Issa brothers relinquishing control.
More than 130 workers have been involved in the outsourcing consultation process. As of the publication of this article, Asda has yet to comment on whether jobs would be moved overseas.
National officer for the GMB trade union Nadine Houghton strongly criticized the decision, stating, “Outsourcing and offshoring jobs from ASDA’s head office is further asset stripping by TDR Capital. The GMB believes this initial round of job cuts is just the beginning.”
Asda’s financial struggles and market share decline
Asda’s IT operations have faced scrutiny recently due to a botched systems upgrade that led to thousands of employees being incorrectly paid. The supermarket has not yet fully resolved its payroll crisis, which was initially reported three months ago.
Mohsin and Zuber Issa purchased Asda for £6.8 billion ($8.6 billion) in 2021, relying heavily on debt to finance the deal. This debt has increased the supermarket’s finance costs, which MPs warned last year would hamper the company’s ability to reduce prices. ASDA has also faced challenges in maintaining its market share, which has declined from 14.4% three years ago to 13.1% currently.
Mohsin Issa has been overseeing Asda’s operations since replacing Roger Burnley in 2021 but is in the process of identifying a successor. Asda is prepared to offer up its new chief executive a pay package of up to £10 million ($12.6 million), potentially making them one of the highest supermarket boss in Britain, next to Tesco’s Ken Murphy.
