F&C Asset Management will make greater use of IT contractors as it looks to cut annual costs by 7.5 per cent.

The London-based fund manager will save as much as £12 million by shifting a number of its back-office operations to contractors and downsizing its workforce.

It is believed that the outsourcing of various administrative tasks will result in 110 staff being moved or made redundant.

By restructuring its operations, F&C hopes to create a more flexible cost base. It is currently in the process of choosing its contractors.

Alain Grisay, chief executive of the company, said: "A major project over the last three years has been the consolidation and upgrading of the group's operational infrastructure.

"These developments will ensure we have the right operational platform to respond effectively to the evolving needs of our clients and as we continue to diversify the business beyond its historic focus on insurance mandates."

Last month, demand for contractors rose for the 17th consecutive month, according to research by KPMG and the Recruitment and Employment Confederation.