Singapore's ministry of manpower said in a statement on its website on Wednesday that it stands to save close to two million Singapore dollarsmillion US) a year for the move.

The ministry said 23 staffers, comprising 60 percent of its technology department, have joined Hewlett Packard as private employees under the arrangement which went into effect on September 1.

The staff, who will cease to be civil servants, will receive salaries in line with Hewlett Packard's pay scales.

Eleven staff also joined the Infocomm Development Authority (IDA), which regulates the information and communications industry.

Under the three-year contract, the ministry will outsource its information technology (IT) application, hardware, software and services to Hewlett Packard and the IDA.

Staff were given an option to stay on, join the IDA or Hewlett Packard or to resign under civil service regulations.

The contract can be renewed for another four years after the three-year period is over.

It was the first time in technology-savvy Singapore that a government ministry has awarded an outsourcing contract to the private sector that includes transferring staff as well.

Manpower ministry permanent secretary Yong Ying-I said the outsourcing and transfer of staff was carried out so that they can keep pace with rapid changes in technology.

"With a stand-alone IT team at (the ministry of manpower), it was becoming an increasing challenge to keep up with businesses and technological changes," Yong said in a statement.

"So we decided that we could better realise the strategic benefits of IT going forward by bringing in specialist external parties to take charge of certain aspects of the role for us."

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