General Motors Will Slash Outsourcing In IT Overhaul

[Newsjock]

Source: Information Week

As Randy Mott, the new CIO of General Motors, goes about his workday, he carries with him a well-worn calculator. It sits in front of him in the place of prominence that most people reserve for a smartphone.

Mott, who has been CIO at Wal-Mart, Dell, and Hewlett-Packard and joined GM in February, believes in numbers. And as he tries to transform GM's IT operations, he plans to flip one set of numbers on a scale that no CIO has ever done before.

Today, about 90% of GM's IT services, from running data centers to writing applications, are provided by outsourcing companies such as HP/EDS, IBM, Capgemini, and Wipro, and only 10% are done by GM employees. Mott plans to flip those percentages in about three years--to 90% GM staff, 10% outsourcers.

Insourcing IT on that scale will require GM to go on a hiring binge for software developers, project managers, database experts, business analysts, and other IT pros over the next three years. As part of that effort, it plans to create three new software development centers, all of them in the U.S. IT outsourcers, including GM's one-time captive provider, EDS, face the loss of contracts once valued at up to $3 billion a year.

Read more: http://www.informationweek.com/news/global-cio/interviews/240002892

[JBoy]

1. Surely GM is big enough to do their own IT.

Smart move.

[SharonAnn]

10. They were "sold" on the idea this would save money. It doesn't and the quality isn't as good.

People who know your business and have "institutional knowledge" are invaluable.

It just doesn't work.

Would they outsource all their other operations?

[JBoy]

11. It's the flaw in the MBA "stick to your core business" argument

For a small business, that may be true. But there's a tipping point (probably something like 500 employees) where many of these functions can be more effectively done in-house. The agility and knowledge of the business outweigh the specialized skills needed. Making a major change? Fine, hire a consultant to help. Otherwise get your own people to do it.

[Kennah]

14. Very true, their information is an integral part of their core business

[ramapo]

2. Wonderful News

Now all he has to do is not hire all H1B visa holders. Hire citizens and this man will have done something admirable.

[dreamnightwind]

28. My thoughts exactly

[MrsBrady]

3. I recruited a bit in this contract environment....

I worked for a firm that worked for one of the outsourcers...
that worked on finding people for these contracts...

interesting.

[lavenderdiva]

4. This is good news

glad to see this, and hope it portends a trend nationwide

[rox63]

5. Good news!

I hope other firms do likewise. A lot of IT professionals are looking for work right here in the US.

[high density]

6. Outsourcing simply isn't a good value

These outsourcing companies like IBM and Wipro don't care if you like what they provide you or not. They just collect a check and hope their service was minimally good enough to keep the contract active. The people making the decisions to keep the contracts probably don't even know if they're getting what they're paying for.

Mott doesn't think GM can be creative or fast enough with outsourced IT. "When the business says 'go,' then that means we start working on a contract, we don't start working on a project."

This is exactly why I have my job as an in-house software developer. When the business wants something urgent (this happens at least once a quarter), they just tell the software team what to do. A couple weeks later they have working software. After two weeks under a contract situation, the specifications probably wouldn't even be written to a sufficient enough level for the outsourced staff to even establish a statement of work, let alone start building something.

[FarCenter]

7. This is not necessarily a shift in onshore versus offshore employment

What GM is doing is hiring employees and contractors to do what they currently contract with HP/EDS, IBM, Capgemini, and Wipro to do. Wipro is the only one that is an Indian outsourcer. Otherwise, EDS, IBM, and Capgemini all have lots of staff in the US.

So GM hiring will be offset by EDS, IBM, and Capgemeni terminations. GM used to own EDS, and it is probably EDS employees who will take the biggest hit.

GM can hire a lot of less senior new employees, build a modern private cloud infrastructure, eliminate many overlapping applications and the licence and maintenance fees to third party software suppliers. So by insourcing, they can potentially significantly streamline their IT environment and get a significant expense savings .

This translates to more jobs at GM. Lots fewer jobs at EDS, IBM, Capgemini, and Wipro consultancies and numerous third party software suppliers.

[Kennah]

13. True, but a lot of companies, like IBM, hire subs that bring in a bunch of H1Bs

DeLoitte is another one that engages in this practice

[FarCenter]

20. GM would probably do the same. Everyone uses a mix of employees and contractors.

People need to make a distinction between:

Outsourcing = engaging another company to perform some business function formerly performed in house.

Offshoring = moving an operation outside the US, generally to reduce employee, real estate, shipping, etc. but sometimes to be near customers.

Contracting = bringing in temporary (up to 2 years) staff from another company to perform work that might otherwise be done by employees.

[WilmywoodNCparalegal]

24. I worked for IBM

and what you say above is not true. We did a lot of H-1Bs and L-1Bs in house (immigration is what I do), as in hundreds of these (mostly L visas). IBM uses a lot of proprietary software and they don't like having non-employees use it, for obvious reasons. This is one of the many reasons they don't use subcontractors, unless it is for special projects that don't involve the use of proprietary IBM stuff.

[Kennah]

29. IBM has a contract here in Olympia

They use a sub, and the sub brings in a lot of H1Bs. I don't work on the project, so I don't know the mix. A friend of mine does, and he says it's mostly H1B.

[bread_and_roses]

15. IBM outsources/off-shores - hugely decreased US workforce

read all about it here Alliance@IBM/CWA 1701 http://www.endicottalliance.org/

I don't know if this work is off-shored, but IMB has been decreasing it's US workforce for years.

[Evasporque]

16. IBM recently built a huge support facility for AIX server/os/database

in Iowa...they hired hundreds of midwest IT people...good jobs.

[FarCenter]

19. IBM does more business outside the US than inside the US

As more of its business is services and less manufacturing, the services employment tends to be more local to customers than was manufacturing where the goods can be transported to the customer.

Both IBM and GM are global companies. If putting a sofware development group in Bangalore makes sense for IBM it would probably make sense for GM. Lots of multinational have their own susidiaries in India and other places, rather than depending on a Wipro or other Indian firm.

[valerief]

8. So does that mean that 90% made up of GM staff will be in India and China? nt

[patrice]

9. Very cool! IT is such a frakking mess. No permanent jobs! Thanks GM!

[wilsonbooks]

12. Some rare good news.

[Evasporque]

17. Entropy has caught up to IT...

It was monolithic computing platforms...AS/400, mainframe, then came WIndoze and WInTel servers....and then VM's, software went from in house to vendors writing in VB, .NET and Java the result is a unmanageable, expensive pile of crap that expands exponentially...IT costs were were cut but worse s executive management did not want to be responsible for the software and infrastructure....they wanted to be able to point the finger at a vendor...it is the SEP field method of management or "Somebody else's problem"...

SO now IT has this steaming mess of old hardware, Windows 2000 et'al on slow 32 bit hardware, old applications no longer supported as the vendors took the money and ran, it is a unsustainable pile of crap for most companies.

IT pros are aging and getting near retirement and they don't want any big projects....I have seen a big project clean whole departments out...not because of layoffs or re-tooling of talent but because the IT people don't want to open a giant can of stinking worms and take responsibility for it. THey run...and rightly so....

So it take big brass ones to effect change in IT and a deep pocket book, hire young talent, pay them well expect turnover, stay focused and build in DR and HA at the start....most companies are not ready to completely real time mirror their critical applications and data....but that is what it is going to take....they also need to stop sucking the Microsoft tit, and managers that take Microsoft VAR kickbacks need to be fired. Lousy software vendors need to be fired and most importantly USERS need to learn more about what happens behind those mouse clicks....most users have no clue what is behind their insane request...they jsut want to click next and finish...on everything...

[sinkingfeeling]

18. I remember Randy Mott from his days at WallyWorld. I sure hope this

works out well. I was part of an IBM team hired by WalMart to do their large system debugging and maintenance, so it looks like he's changed his views.

[Roland99]

21. He's a great wide receiver, too.

oh wait...

[hootinholler]

23. Don't forget the applesauce either! n/t

[ChromeFoundry]

22. It's about time...

that a CIO actually listened to their employees and can see that most outsourced projects run way over budget and the deliverable is usually a bag full of shit. This especially holds true for offshore-outsourced projects and support.

If this proves successful, expect the masses to follow.

[Politicub]

25. This may portend a new trend with businesses pulling back on outsourcing

If GM is successful, other companies will follow suit. The company's size gives it a lot of gravity in the business world.

[OhioChick]

26. Good. K&R n/t

[SILVER__FOX52]

27. Wonderful.