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When Hibernian Insurance announced on Monday that almost 600 jobs would be lost as it shifts some operations to India, the shock was palpable.

When Hibernian Insurance announced on Monday that almost 600 jobs would be lost as it shifts some operations to India, the shock was palpable.

For years, many Irish employees in the manufacturing sector knew they were on borrowed time. A wave of firms, making everything from clothing to mobile phones and car parts, arrived here to take advantage of seductive tax rates, attractive grants, and low wages. The tax rates remained, but soaring labour costs quickly eroded any fiscal advantage for remaining in Ireland. The jobs went elsewhere, including to eastern Europe and Morocco.

But the decision by Aviva's Hibernian unit is unlikely to herald an exodus of the country's financial sector.

While a number of international financial groups such as Bank of America and Citibank have outsourced to India (neither without bad experiences), don't expect the big Irish names -- Bank of Ireland, AIB, Anglo Irish Bank and Permanent TSB -- to necessarily rush to follow.

"The retail banks are such big employers here that there'd be an outcry if they attempted anything like that," said one industry insider.

Bank of Ireland has been the most visible exponent of the outsourcing model, but it's had to jump through hoops to achieve its goals. Chief executive Brian Goggin launched a cost-saving programme in 2005 to axe 2,100 jobs and €120m off its annual cost base in four years, to be achieved largely through outsourcing.

In 2003, the bank had already agreed to hive off its IT division to Hewlett-Packard in a €500m deal that saw 500 bank staff transfer to the technology giant.

"AIB and Bank of Ireland have always had different approaches to outsourcing," said banking analyst Emer Lang at Davy Stockbrokers.

"AIB has previously stated it will look at opportunities where they arise, but that it's not in the business of reducing costs in the same manner as Bank of Ireland has engineered."

Ciaran Callaghan, an analyst at NCB, says that AIB has been reducing costs by reining in recruitment and using natural attrition to lower its overall cost base.

Permanent TSB's Irish Life unit has managed to crack its cost base through the efficient use of technology. Meanwhile, Anglo Irish Bank, which doesn't have a retail network has always run a tight ship, and its cost base has reduced in recent months largely because a reduction in lending has crimped staff bonuses, which were often related to earnings per share growth.

Analysts say they were "amazed" by how much its cost base had shrunk in the first half of this financial year. "About two-thirds of a bank's costs are usually related to staff," analyst Gerry Hennigan at Goodbody Stockbrokers points out.

He added that Aviva owns its business process outsourcing unit in India, so it's easier for it to maintain overall control.

John Mulligan