General Motors, Outsourcing, Re-sourcing, EDS

GM completes phase one of its $15B re-sourcing initiative

07 Feb 2006 | (News)

General Motors has named the winners in the first phase of a $15 billion (£8.5 billion) outsourcing plan that will support its global business over the next five years. The initiative, one of the largest commercial bidding processes in IT history, was undertaken before a 10-year master services agreement with EDS - a former GM subsidiary - expires in June.

The first-phase awards are worth about $7 billion. EDS has won the lion's share, gaining $3.8 billion worth of new contracts, but losing about a third of the business it holds under the 10-year contract. New contracts cover product development, manufacturing, purchasing and supply chain, business services and mainframe and server operations systems.

Behind EDS, Hewlett-Packard won $700 million of IT services business over five years and Capgemini and IBM both secured contracts worth $500 million. Indian outsourcing supplier Wipro took $27 million worth of contracts, while Compuware Covisint picked up a contract that was not valued to provide business-to-business supply chain collaboration to GM.

These awards mark the end of the first phase of this re-sourcing initiative and the beginning of the second phase - transitioning the work between suppliers and implementing innovative technologies that will support the company's global enterprise by providing speed and flexibility to the business.

With about 50% of its total five-year budget allocated to systems integrators and service providers, GM said the second phase of the $15 billion project would be awarded later this year when its telecoms contracts expire, with any remaining funding being used over the five years on required developments.

As part of the process to re-source its IT, GM broke down the work into 40 segments and insisted that IT suppliers develop standardised work processes that will provide a common approach and greater efficiency in delivering services.

Chief information officer Ralph Szygenda said: "This is a significant milestone for General Motors. Of critical importance is the focus we have had on driving innovation and supporting future globalisation and digitisation of the company. Over the next five months, we will focus our efforts on assuring a smooth transition. Our primary goals are to avoid any business disruption and ensure our efforts fully support the company's global operations."

Note: See SBPOA's Thinking Point, Outsourcing Alone Won't Save GM

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