UK insurance giant Aviva has signed a 10 year, £700 million outsourcing deal with HP-owned outsourcer EDS.

 The world's fifth largest insurer aims to save 20 percent a year in IT costs and move to a largely pay as you go IT operation.

Under the deal, EDS will modernise and manage two datacentres in Norwich, with some 300 Aviva employees transferring to become EDS workers.

Igal Mayer, UK general insurance chief executive officer at Aviva said: "Partnering with EDS for datacentre services, in our view, supports Aviva’s goals to improve flexibility, increase operational efficiency and lower costs.

"After a thorough evaluation, we chose EDS over other global service providers because of its collaborative approach as well as its unmatched reliability, security and value."

HP and Cisco will provide tools, technologies and resources to EDS to support the contract with Aviva.

EDS workers in the UK currently face a pay cut under cost cutting measures introduced by parent company HP last month. The Unite trade union has pledged to fight the move.