Directors of Capita have bowed to intense political pressure by abandoning plans to offshore 55 jobs at Birmingham City Council’s call centre.

The firm had intended to save money by recruiting back-office staff to work from its headquarters at Pune, near Mumbai in India.

Capita, which has a majority shareholding in the council’s IT provider Service Birmingham, said it was forced to hire cheaper labour in India because of an agreement to cut by £135 million the cost of its contract.

But all of the political parties on the council combined to ask Service Birmingham to think again.

The U-turn was announced following discussions between deputy council leader Paul Tilsley and Capita executives.

Coun Tilsley (Lib Dem Sheldon) said: “Capita has taken the decision to stop the jobs going to Pune following our negotiations. We will now be supporting jobs in Birmingham.”

Confirmation of the change of heart came as it emerged that Service Birmingham is pushing forward with another potentially controversial plan.

The company is proposing to install Intelligent Voice Recognition (IVR) technology at the call centre it runs for the council.

This means that customers phoning the local authority could soon find themselves talking to a computer rather than an operator.

People calling to request services, ask for housing repairs or to pay bills will be prompted by a recorded message asking which department they wish to talk to.

The idea has been criticised by opposition Labour councillors, who fear callers with poor English won’t find it easy to use the new system.