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GM reverses gears on outsourcing, plans sweeping IT overhaul
DETROIT (Reuters) - General Motors Co (GM.N), a pioneer in outsourcing information technology, said it is beginning to reverse that trend with plans to at least double the number of in-house IT experts over the next three years.
GM now outsources about 90 percent of its IT services and provides 10 percent of that work in-house. Within the next three to five years, GM hopes to reverse those percentages in part by hiring "thousands" of new software developers, database experts and others globally, GM spokeswoman Juli Huston-Rough said.
The IT overhaul is spearheaded by GM Chief Information Officer Randy Mott, who outlined the plan to GM's 1,500 IT employees in June. Mott, a former Hewlett-Packard Co (HPQ.N) executive, believes the moves will make the largest U.S. automaker more efficient, and ultimately more productive. Some elements of the overhaul will take five years to implement.
"If you're more efficient and you can go through the process more quickly, you have more time and more resources to be looking at innovations that provide a competitive advantage for the company," Huston-Rough said.
GM plans to cut the automaker's sprawling list of IT applications by at least 40 percent and move to a more standardized platform. GM will also simplify the way it transmits data.
A GM spokeswoman declined to comment on how much the planned move would cost or on the overall cost savings that might result. Details of the planned move were reported earlier by Information Week magazine.
The automaker will shift from 23 data centers worldwide to just two, both in Michigan. The company will also run four software development centers, including a pre-existing one in Warren, Michigan.
Mott will also require that employees provide a cost-benefit analysis of new IT projects and he plans to expand recruiting efforts and hire new college graduates.
The moves reverse what has been a longtime trend for the U.S. automaker, which accepted a government bailout in 2009 and filed for bankruptcy protection.
In July 2010, GM signed a multiyear information technology contract with Mott's former employer, HP, that was worth more than $2 billion, renewing an existing contract a year early.
HP said then it would provide such services as network maintenance, product software development and supply-chain management. HP provided much of that work through a former GM unit, Electronic Data Systems, which HP bought in 2008 for about $13.9 billion.
GM bought EDS from former presidential candidate Ross Perot in 1984 for $2.55 billion, shifting much of its IT operations to that business, but spun it off 12 years later.
GM shares were down 2.9 percent at $19.32 on Thursday afternoon on the New York Stock Exchange.
(Reporting by Deepa Seetharaman and Ben Klayman; editing by Matthew Lewis)
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