GM to slash vast outsourced IT empire
Much of it from HP. The GM CIO used to work there ...
You fire me? I'll fire you! It ain't that simple really, but GM CIO Randy Mott, sent into the cold, cold outside by HP's then CEO Leo Apotheker from his HP CIO post, has announced GM will stop outsourcing IT, bringing it back in house. The big loser? HP.
Chief Information Officers (CIOs) control IT spend and Mott, the arch-consolidator of HP's 85 in-house data centres to just 6, is going to collapse GM's 23 world-wide data centres into just two according to Reuters. About 90 per cent of the US car giant's IT is outsourced on the basis that outsourcers can do a more cost-effective job than in-house IT departments.
HP, via its acquired EDS services subsidiary, bought from GM in 2008 for almost $14 billion, signed a $2 billion-plus outsourcing deal with GM in July 2010. At the same time GM signed outsourcing contracts with Capgemini worth $250 million. IBM and Wipro also provide outsourcing services to GM.
An outsourcer is unlikely to recommend consolidating data centres by reduction factors of 2x to 12x because that would destroy an income stream based on running data centres. It's inherently inefficient and inflexible in that sense.
Mott will streamline GM's use of applications, losing 40 per cent of them - about a thousand - off its list and moving to more standardised computing platforms. It will run four SW development centres in the USA, three of them new, and recruit thousands of new developers. The overall move will take up to five years.
http://www.theregister.co.uk/2012/07/16/gm_reverses_outsourcing/
EDS was founded by Ross Perot, acquired by GM, and then sold to HP. The big losers will be HP's employees who worked for EDS.
Outsourced is not the same as offshore. Most of the HP layoffs will be in the US.
Insourcing, private clouds with standardized hardware and software platforms, and application elimination/consolidation will reduce IT employment across the board beginning a few years from now. Currently, the transition work results in no immediate reductions.