THE company at the centre of a dispute over the so-called offshoring of jobs to India has won an extension to its contract.

Siemens Business Services has signed a five-year extension to its National Savings and Investments (NS&I) contract, running from 2009 to 2014, in a deal expected to be worth about £400m.

One of the National Savings offices is in Durham City, where there was an outcry about the company's plans to move about 250 administrative posts nationwide to India to reduce labour costs.

The company has said there would be no redundancies but members of the PCS union may yet be balloted on industrial action.

The union said the company had given improved guarantees about job security and terms and conditions, but was due to meet managers tomorrow for further talks.

The union, which said the move could be "the thin end of the wedge", had been on the verge of holding a strike ballot.

Danny Williamson, of the union, said: "The firm has given some commitment, but not everything that we are looking for.''

He said the Government's approval of the company's proposals meant it would be harder for it to send work to other countries in the future.

The union's executive will consider the outcome of tomorrow's talks and recommend to members whether to accept the firm's assurances or press ahead with a vote on industrial action.

The National Audit Office said that Siemens had significantly increased productivity and reduced costs at National Savings.

The company's UK managing director, Tom White, said: "The contract extension will further enable NS&I to provide quality services to customers in the future, as well as satisfy its remit to provide cost-effective financing for the government.''

In 1999, NS&I and Siemens agreed a ten-year contract for business process outsourcing, with an option to extend it mid-way through the contract, in a public-private partnership.

Siemens has been handling the service delivery of NS&I products and transforming business operations and IT systems.