GM Outsourcing : Finally Awarded

The much awaited outsourcing award has happened – in what is seen as one of the most rigorous exercise carried out by a very large enterprise. My personal views, like all other posts in this blog - while the list of awardees were more or less known, given that all of them closely worked with GM in the recent past in creating new guidelines and frameworks, the distribution key amongst them was keenly watched - Looks like EDS has not lost much but may have taken a slightly lesser share of business.Clearly their management would be happy that their new strategy endeared GM. GM has taken a different approach – a tiered approach to outsourcing with different set of governing frameworks and procedures. The awards to EDS, HP, Capgemini, IBM, Compuware Covisint and Wipro are essential elements of GM's future information technology program. This initiative was driven by the ending of a 10-year split-off agreement with EDS that expires in June 2006. Ralph Szygenda opines that with the new outsourcing contracts, focus increases on driving innovation and supporting future globalization and digitization of the company. GM is in hot water financially, and some observers fear the company could be skirting bankruptcy., Szygenda points out that GM in 1996 was spending $4 billion per year on IT. Having cut that expense to $3 billion, Szygenda aims to cut it further through the just announced round of contracts. More important to note is his claim that IT enables GM to have industry-leading design-to-build timeframes for its vehicles. GM looks at 2005 as one of the most difficult years in GM's history, reporting a net loss of $8.6 billion, compared with a profit of $2.8 billion in 2004. GM as a company and the administration and performance of these contracts would be surely watched closely by a lot. Good luck to GM for a bright future.