IN WHAT could be the start of an insourcing trend, DBS has decided to take back some of its 500 IT staff who were previously transferred to IBM in 2002 when it awarded a $1.2 billion, 10-year outsourcing deal to the technology giant.

Confirming this, a DBS spokesman said: 'There has been a joint review with IBM with regards to our application development capabilities and we have identified key areas for further improvement.

'To enable this function (application development) to be more responsive to the business, a limited number of staff have been transferred back to DBS to support high level (business-related) design activities.'

However, DBS declined to detail what these activities were.

The spokesman added that the number of staff affected 'are very few, less than 10 per cent of what was outsourced'. In 2002, DBS said that some 500 of its staff will be transferred to IBM as part of the outsourcing deal. Based on this, less than 50 ex-DBS employees currently with IBM are expected to rejoin the bank.

He added that the re-hiring exercise involved staff from both Singapore and Hong Kong, and that 'they have been offered an equitable package'. Out of the 500 staff that DBS transferred to IBM then, 329 were based in Singapore and 171 were based in Hong Kong.

The returning DBS staff will start work on Feb 1.

DBS declined to disclose the number of people it has in its IT department currently. In 2002, it was reported that after transferring 500 of its staff to IBM, the bank would still have some 400 people in its IT operations, about 300 of them in Singapore and some 100 in Hong Kong.

'This does not affect our out-sourcing arrangement with IBM which is still on-going,' said the spokesman.

'The outsourcing arrangements with IBM still stands. This exercise is part of our ongoing effort to refine and improve this arrangement based on new developments in technology. There will not be a decrease in the overall cost savings.'

In November 2002, DBS said that by outsourcing a large part of its IT application development and IT infrastructure to IBM, it expected to save about 20 per cent off the cost of the services being outsourced, resulting in savings of about $50 million over the first three years of the agreement.

'This will free us to focus on IT services that can bring value to the bank, while our partnership with IBM will give significant advantages of leveraging on their global network, skills and scale,' said its then-chief information officer Steve Ingram, who left DBS in the middle of last year and joined IT services firm EDS in October.

Following Mr Ingram's departure, Rajan Raju, DBS' managing director for its South and South-east Asia region, took on Mr Ingram's role, while retaining his existing responsibilities.

When asked about the implications of the latest developments which will see the firm losing some of its staff, an IBM spokesperson declined to comment.

This article first appeared in BT on January 29, 2007