The warning by Troika, the financial services consultancy, comes just days after Patricia Hewitt, Trade and Industry Secretary, said it is important to avoid protectionism on job transfers. She spoke amid controversy over the Lloyds TSB bank shifting 750 full-time jobs from Newcastle to India.

Andrew Stewart, managing director of Troika, said that up to 20,000 jobs had already been moved to India, or less than 5 per cent of back-office staff in life and pensions, general insurance, retail and investment banking and mortgage and credit-card processing.

At least 40,000 jobs in the life and pensions and general insurance industries and 60,000 in banking are likely to be moved abroad within five to seven years, Mr Stewart said. This represents 25 per cent of all back-office staff.

Mr Stewart said financial services providers faced huge pressure to cut costs to meet Whitehall’s drive for financial products with 1 per cent fees. Coupled with the advent of cheap global communications and the emergence of skilled workers in developing nations, the temptation for companies to shift jobs abroad was high.

Mr Stewart said: “Operating in a 1 per cent world will require radical change in distribution and cost reduction. More efficient processes are likely to include outsourcing and offshoring to India and South Africa, where costs are roughly £10 per policy, as opposed to £30-plus in the UK.

“The real prize may turn out to be China, where policy costs are expected to fall to 50p per policy within five years.”