Outsourcing heralds sea change

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According to Klaus Thoma, spokesman for Deutsche Bank, every new process is assessed for its Smartsourcing potential, where jobs are transferred to lower cost locations. Smartsourcing alone has saved 1,200 jobs within Deutsche Bank following efficiency measures taken in the fourth quarter of 2004, expected to reduce the bank's permanent headcount by 6,400 staff.

Como says: "The role of IT staff is changing. Those people who are experts in managing IT vendors and processes will always be the people who will continue to work within the bank, but more technical work is more likely to be undertaken by the vendors. In the past, 100% of IT staff worked within the bank. Today, there are more opportunities to work with the IT providers, and gain their knowledge which is not a core competency of the bank."

Como adds that some years ago, there were major changes in the banks' back offices as rationalisation and automation saw reduced staff numbers. Now the trend is to outsource back office functions entirely to an external provider.

In December 2002, Deutsche Bank outsourced the maintenance of its computers centres across Europe to IBM in a 10- year contract which saw 900 of bank's IT staff transfer to IBM.

While industry analyst firm Gartner has predicted that, in 2005, outsourcing will continue to outperform the overall IT services market, growing by 4.6%, banks are still less inclined to outsource dealing room IT support.

ABN Amro: in or out?

When ABN Amro signed it application development work for Wholesale Client Services to EBS two years ago, exchange-traded derivatives was ring-fenced from the deal and now it is understood that ABN Amro is trying to bring IT support for fixed income and credit derivatives, back in-house.

The Dutch bank transferred 1,100 IT staff and outsourced desktop, networks and data centre technology operations to EDS at the beginning of 2003, as part of a five year contract. The bank also outsourced the majority of application development and maintenance services for Wholesale Client Services (WCS).

However, following the appointment of Paul Greenwood from Deutsche Bank earlier this year to head up this division, as fixed income securities portfolio manager, headhunter sources say the bank is recruiting contract staff for this division once again.

ABN Amro says there is no change in its outsourcing arrangements. A spokesman for the bank says: "This is a role that was always filled by a member of bank staff to manage IT requirements. While EDS runs WCS's desktop support, globally, ABN Amro still continues to employ permanent and contract IT staff for specialist areas."

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