A plan to move 100 jobs to India at Birmingham City Council’s privately-run IT outfit is purely a cost-cutting measure and nothing to do with skills shortages in the West Midlands, the Birmingham Post can reveal.

Service Birmingham, the company run by outsourcing firm Capita with council contracts worth almost £1 billion, says it has been forced to order redundancies and recruit cheaper Indian labour as a direct result of local authority spending cuts.

When Service Birmingham negotiated an extension of its main contract at the beginning of the year, the company had to agree to reduce its costs by £135 million over 10 years as a contribution to the spending squeeze facing the council.

Trade unions claimed to have been told that the decision to move jobs to India was caused by a shortage of skilled IT staff in Birmingham.

But Service Birmingham spokesman Kevin Meagher insisted that this was not the case.

Mr Meagher said: “The issue is about reducing costs. It is an extension of the £212 million cuts the council has to make this year and the new deal we signed.

“The cost has to come down and the service level has to go up. How do you make this go in the right direction? This is how we are doing it.”

“Skill shortages isn’t the issue. The issue is cost. We have been very straightforward about this.”

He confirmed that about 55 jobs will be taken offshore by the end of the summer. Between 30 and 35 redundancies are expected at the two council call centres run by Service Birmingham.

A further 45 jobs are likely to move to Capita’s headquarters in India by the end of the year. Mr Meagher stressed that all of the jobs involved are back-office IT functions, data inputters and analysts. There is no intention to re-route council phone calls from the public to a call centre in India.

He confirmed that some of the new Indian employees will be brought to Birmingham to be “acclimatised” for several weeks, but denied union claims that the purpose was to be trained by staff who stand to be made redundant.