Ping An Insurance plans to move groupwide backroom operations to a centralised service centre in Shanghai by the middle of next year to cut costs and better control risks, according to company officials. The Hong Kong-listed insurance company could make 7,200 to 10,800 backroom staff redundant in the process. Employees to be affected are those who handle data entry, investigations and claim settlements at Ping An's life, property and casualty insurance companies. Shenzhen-based Ping An would employ 8,000 to 10,000 people at the new backroom services centre in Shanghai's Pudong area that had cost more than a billion yuan to build, vice-chief executive Sun Jianyi said yesterday. He said Ping An's life insurance operation, China's second-largest, and property and casualty insurer, the nation's third-biggest, employed about 36,000 backroom personnel at thousands of branches across the country. 'Some of those people may choose to be relocated to Shanghai,' said Dominic Leung Ka-kui, chief executive of Ping An's life insurance business. 'Some will be reassigned to other types of jobs or frontline positions. I would estimate 20 per cent to 30 per cent of the people may leave the company.' Financial companies around the world have been centralising backroom support systems to reduce risks by separating front-end and backroom operations, and cut costs via economies of scale. The service centres are often located in lower-cost countries such as India, offering additional savings. Ping An's new service centre, taking up more than 170,000 square metres, is scheduled for completion by the end of next month, Mr Sun said. It will cater to the backroom support needs of the entire group, which runs securities brokerage and trust companies in addition to its core insurance business. Since Ping An's Hong Kong listing last year, it has created or is in the process of establishing four new businesses specialising in supplemental corporate pension schemes, health insurance, asset management and banking. Pilot programmes for centralising backroom services have been completed at three branches. Although the cost benefits may be marginal in the first two years, a period of transition, global experience has indicated a 10 per cent to 30 per cent cost reduction over the longer run, Mr Leung said.