More than 100 jobs at the British Council are to be outsourced to India as part of a massive cost-cutting drive to save the taxpayer money, The Times has learnt.

The decision to recruit local Indian workers to fill finance and IT posts has infuriated unions, who fear that this could be the blueprint for Whitehall.

It is believed to be the first time that the Civil Service or a quango has directly exported jobs to save costs. The Foreign and Commonwealth Office, which funds the British Council, is exploring similar options. A spokesman said that administrative jobs could be carried out by local staff in regional hubs overseas.

The Public and Commercial Services Union (PCS), which represents civil servants, said that the British Council decision went against Gordon Brown’s stated principle of “British jobs for British people” and could not be justified during a recession.

The council, which promotes British culture and language abroad, said that 500 of its 1,300 British workers would have to go in the next 18 months to save £45 million. More than a fifth of these posts are to be filled in India and the body plans to bring some of the Indian recruits over to “shadow” finance staff in Manchester.

The proposals coincide with the Treasury’s review of quangos, which cost the taxpayer £64 billion a year. The Treasury wants to cut or merge as many as possible. David Cameron has pledged a “bonfire of quangos” if the Tories win the next general election.

Martin Davidson, the British Council’s chief executive, said that 280 of the 500 back-office staff to be cut were permanent and the remainder were agency, part-time or contract staff. The body received £205 million from the taxpayer this year. He said that its budget had already been cut by 10 per cent and that he had drawn up a further £25 million in efficiency savings. It makes about £450 million from its commercial programme including language and teaching courses.

The Times has seen documents showing that the quango is considering plans to cut 80 per cent or 800 of its permanent staff to just 240 within five years. However, Mr Davidson said that this had not been discussed by the council executive or trustees and that there were no proposals to implement cutbacks beyond next year. He said that finance staff had looked at a series of scenarios involving heavier job losses but that these were “not part of discussions in any sense whatsover.” He acknowledged that such cuts would involve “catastrophic” changes to the programmes that the council wanted to deliver.

The PCS is furious that jobs are to go to India. A spokesman, Dave Cliff, said: “We think it is an absolute disgrace. The British Council is an educational and cultural organisation to support British culture, but a big part of this organisation is now going to be based abroad.”The union is considering lodging a tribunal application because management failed to consult them over the job changes. It claims that staff at the British Council are civil servants since they belong to the Civil Service Pension scheme. Mr Davidson said that technically they were public servants.

A spokesman for the Cabinet Office said that it was unlikely that Whitehall departments would send jobs offshore, partly for security reasons.

A spokesman for the Foreign Office said: “The FCO is working actively to deliver cost savings and to ensure that as much of our resource as possible is focused on frontline activity delivering for the UK. We therefore fully understand the British Council’s efforts in that direction.”

Mr Davidson said that he hoped that most of the cuts could be made through voluntary redundancies. “Our spending power overseas has been hit by the fall in the value of sterling in the last year,” he said. “To ensure that we continue to spend as much of the money we receive from the taxpayer as possible on our programmes abroad, we are cutting our running costs by creating leaner, lighter and more effective administrative and back-office functions.”

Final decisions about which jobs will go to India will be taken in the next few weeks, but they are expected to include 58 finance posts, up to 40 IT posts and 15 posts for a new centre of excellence. About half the jobs to be cut will be in education and teaching. Some of these areas will have to be contracted out to voluntary groups or local authorities.

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