Lloyds Banking Group, which is one of the United Kingdom’s largest FIs serving a large and diverse customer-base, is set to cut hundreds of permanent IT jobs in the UK while simultaneously hiring engineers for similar roles in India, according to a recent FT report.
The banking institution reportedly plans to employ 4,000 permanent staff in technology and data roles in India by the end of 2025, effectively shifting nearly half of its global engineering workforce outside its home market. Many companies are now doing this, because it dramatically reduces operational costs – which is becoming imperative in a fiercely competitive business environment (that’s being transformed by rapid globalization and AI adoption).
This restructuring, centered around a technology hub in Hyderabad opened in 2023, also highlights a growing trend among UK banking institutions to tap into India’s vast pool of tech talent.
However, it also raises sharp questions about job security, cost priorities, and the long-term impact on the UK’s tech workforce.
The Hyderabad based technology center will host highly skilled roles, including full-stack, cloud, and quality engineers, which is reportedly a key part of Lloyds’ £4 billion digital transformation strategy.
This shift aligns with a broader review of its IT operations, which aims to create 1,200 new high-skilled tech positions globally.
Yet, the process has put 6,000 UK-based IT employees on edge, with warnings issued last month that their jobs are at risk. Staff face a skills reassessment in March, competing for the newly created roles.
In a letter to employees, Lloyds COO Ron van Kemenade acknowledged the uncertainty, noting that while many will transition, some “will not secure a role” due to mismatched skills, location constraints, or reduced demand.
The bank’s statement—“Making changes means… saying goodbye to talented people”—offers little comfort to those facing potential redundancy. However, this might be a great time for learning new skills and focusing more on professional development. With the advancements in AI, it has become essential for workers globally, not just in the UK, to become more productive.
But Lloyds definitely isn’t alone in this approach.
Other UK banks, like NatWest (with over 17,000 staff in Bengaluru and Gurugram) and Nationwide, have similarly outsourced IT functions to India, drawn by lower labor costs and a robust tech ecosystem.
For Lloyds, the move is consistent with CEO Charlie Nunn’s push to boost profitability through digitization, reducing reliance on interest-rate-driven revenue and slashing overheads.
Yet, this outsourcing strategy comes amid significant domestic downsizing: in 2024, Lloyds announced the closure of 292 branches in 2025, including 61 Lloyds, 61 Halifax, and 14 Bank of Scotland outlets, following 500 job cuts across departments earlier this year.
Critics argue that this reflects a broader pivot away from UK focused investment, prioritizing short-term savings over local talent retention. But this may not necessarily be a short-term strategy when we consider the long-term implications of doing business without being careful with costs.
Nevertheless, the implications are stark.
For UK IT workers, the review process—essentially a reapplication for their own jobs—introduces uncertainty and erodes morale. Unions have voiced concerns, with posts on X highlighting fears of “job market pressure and potential layoffs.”
Meanwhile, India’s tech sector gains a foothold in global banking, bolstered by Lloyds’ expansion.
The bank’s competitors, including Barclays and HSBC, may now also feel pressure to follow suit, intensifying the outsourcing trend. While many locals complain about these moves, it is actually a matter of survival for many companies that are being forced to improve efficiency given the rising costs of doing business and the dramatic rise of AI (artificial intelligence).
Objectively, Lloyds’ strategy makes financial sense: India clearly offers skilled labor at a fraction of UK costs, and the Hyderabad hub supports its digital ambitions. But the human cost—displacing hundreds while shuttering branches—casts a shadow over its so-called “Helping Britain Prosper” ethos.
Despite this, businesses need to take a practical and realistic approach towards sustainable growth. Otherwise, they will be unable to maintain operations in an increasingly competitive global environment.