IBM and Accenture, major IT contractors to the government, have proposed to create 500 new developer roles in the UK and India for work on the Department for Work and Pensions' Universal Credit system.
By having some of the development work done offshore, the DWP expects to save "both cost and time". However, the Public and Commercial Services (PCS) union, has branded the move as "sheer hypocrisy".
The recruitment plans were revealed this month on the DWP intranet, according to The Guardian, which also said that 'delivery centres' were being established in Mumbai and Bangalore.
Paul Macpherson from the department's Universal Credit Design Technology wrote on the intranet: "I truly believe we have an offshore capability which provides world-class expertise and we are leveraging the best resources Accenture and IBM, in particular, have to offer.
"We are looking to maximise the use of offshore development in the interests of both cost and time.
He added: "In relation to cost, the greater the amount of development work we can do offshore, the lower the overall blended rate for the programme. Another benefit of offshore where time is concerned is that we are able to drive more design and development hours from each working day."
A DWP spokesperson insisted that no existing jobs in the UK are being sent overseas under the plans and the department is understood to be exploring how jobs previously off-shored could be moved back to the UK in future.
Furthermore, suppliers are required to seek approval before they offshore any government-contracted work.
"Ministers have already intervened to stop government-controlled jobs being sent abroad and they are determined to continue encouraging companies to invest in the UK to create jobs," the spokesperson said.
However, PCS believes that the DWP appears to be contradicting itself.
"We want the government to honour its commitment to parliament that it is 'important that we do not see government-controlled employment move offshore'. Ministers can exercise - and have - control over contractors, for example, with last year's HP decision," said a PCS union spokesperson.
"Given the claims [employment minister] Chris Grayling made to MPs that he believes it is "by far the best option to see people investing in the UK' and the statement by DWP that it is 'examining' how to bring previously offshored work back to the UK, then it is sheer hypocrisy to allow contractors developing your flagship single benefits system (arguably one of the biggest tasks in government IT for some time) to send more work offshore."
Around 60 percent of the IT required to deliver the new Universal Credit system is already in place, with some parts that needing to be built from scratch and others to be updated.
The system will restructure the UK's benefit system by unifying the current system of means-tested out of work benefits, tax credits and support for housing, to create a single, income-replacement benefit for working age adults.
The DWP hopes that it will also enable it to process and implement claims automatically and more efficiently than at present.
The Universal Credit is said to be on track for a four-year rollout - to get everyone on the system - from October 2013.