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Insurance giant Hibernian is to cut 580 jobs and move them to India in the latest body blow to the economy.

The company insisted last night that the "vast majority" of the job losses would be "totally voluntary". But it outlined plans to move a significant part of its service and support functions to India over the next three years.

The restructuring will begin early next year and will initially affect up to 80 jobs across the firm's three centres in Dublin, Cork and Galway.

A further 500 jobs will be moved to Bangalore, India, before 2012, slashing the insurer's Irish workforce to 1,600.

"Today's news is a hammer blow to staff who have dealt with two previous reorganisations of the company in 2000 and 2004, and who have been wholly accommodating in the development of significant operations outside Dublin, in Cork and Galway," said Jerry Shanahan of Unite, the company's largest trade union.

"We now face a greater challenge as the company has seriously narrowed the options ... the anger expressed after hearing the news could best be described as a red mist."

Hibernian is one of the country's largest insurers and has approximately 1.2 million customers here. It reported a group operating profit of over €352m last year - an increase of 86.8pc on the previous year - but said yesterday that it was reorganising its business to reduce costs and increase future competitiveness.

Workers based in Hibernian's Dublin offices will be the most affected, while there will also be minor cutbacks at the insurer's operations in Galway and Cork.

Voluntary

Mr Shanahan said the question of whether the redundancies would be voluntary or not was "the first we asked" at a meeting with Hibernian management.

"They gave us a commitment that anyone who wants a job will still have a job," he said. "But that's not the only issue here. We have a very big issue with the company taking 580 sustainable jobs out of the Irish market."

Fine Gael's labour affairs spokesman Damien English described the latest jobs losses as "another nail in the coffin of the Government's alleged economic competence", while Labour's Willie Penrose said it indicated that the Government is "sleepwalking" into a major economic meltdown.

"While we have become accustomed to hearing about redundancies in the manufacturing and construction sectors, job losses on this scale in the financial services sector will set alarm bells ringing," he said.

Tanaiste Mary Coughlan last night noted her "disappointment" but praised the firm for implementing the changes in a phased and measured manner".

Although data processing and claims recovery will be among the services that will go to India, Hibernian chief executive Stuart Purdy said Irish customers will continue to deal with Irish call centres "as a port of first call".

Describing the decision as "regrettable" for Hibernian's 2,200 workers, he insisted the reorganisation was "necessary" to ensure the company's future competitiveness. He added he was "very confident" of securing the "vast majority" of cuts without compulsory redundancies.

The work will be taken over by a sister company of Hibernian's in India, which already carries out back office work for Hibernian's sister companies in the UK and Canada.

Unite will meet management over the coming weeks to see if an alternative proposal can be agreed.

Jason O'Brien and Laura Noonan