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General Motors Brings IT In-House |
| by - 07/13/2012 |
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| "The Detroit auto maker is planning to reverse its IT outsourcing strategy, going from outsourcing 90% of its IT staff to having 90% as internal employees." |
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GM to hire IT workers in bid to hike profits
General Motors Co. plans during the next three to five years to hire thousands of information technology workers, as the company embarks on a major IT transformation that it believes will improve its competitiveness and help drive profits and market share.
Today, 90 percent of GM's IT function is handled by about 10,000 workers outside the company, while about 10 percent is handled by GM's global IT work force of about 1,500.
Randy Mott, GM's vice president of information technology and chief information officer, wants over three to five years to flip those percentages so about 90 percent of its IT function is handled by its own employees. And Mott said he expects the change will actually cut costs, though he provided no figures in a Thursday interview with reporters in Detroit.
GM is in-sourcing IT jobs because the company wants to increase the numbers of IT workers who work on adding capability such as new business solutions for the automaker instead of just supporting the business, said Mott, who joined the company in February.
And the automaker wants the work to get done faster.
Eye on innovation
Mott said 75 percent of GM's in-house and outsourced IT workers support the business, but just 25 percent work on innovation.
"We want to change that," he said.
Some of the new GM hires, though, could come from GM's IT contractors, who may simply swap company badges.
Mott said he expects the changes will create some efficiencies, which could also affect total hiring numbers.
Hewlett-Packard Development Co., which in July 2010 said it renewed a more than $2 billion multiyear applications and infrastructure services contract with GM, declined to comment Thursday on GM's plans; so did IBM Corp. The two IT contractors declined to disclose their GM-related work forces or their employment figures for Michigan.
Capgemini, which also in July 2010 said it signed two contract renewals with GM worth $250 million over five years, also would not comment on its GM contract, but confirmed that the Detroit automaker is its largest customer in Michigan.
"We hope to provide high value services to them throughout the transformation and into the future," Capgemini spokeswoman Jill Wilmot said in an email.
Mott said GM would work on transitions "in a business-like fashion, with the different suppliers that makes sense."
While it may cost a bit more to have in-house information technology workers handle innovation, companies see value in protecting intellectual property, said Dennis Severance, Accenture professor of information systems for the University of Michigan Ross School of Business.
He said labor prices also have risen in India and China, where companies have sent some IT work.
GM's IT plan includes reducing GM's data centers from 23 globally today to two, both of which will be in Michigan; creating three software development centers in the United States in addition to a small one operating today in Warren; and reducing the company's more than 4,000 applications, many of which are redundant and increase its global applications.
"We want to simplify the environment that we run in so it takes less effort to do that and at the same time drive more capability to our business," said Mott, a former chief information officer for HP, Dell Inc. and Wal-Mart Stores Inc.
Data center set for Warren
One of the data centers will be in Warren, where GM is spending $130 million to house data servers, IT laboratories and the tech center's IT engineering operations.
In May 2011, GM received a $10 million state tax incentive to redevelop 30 acres at its Warren Tech Center for the new IT facility. At the time, GM said it expected to create 25 jobs at the facility.
The other data center location hasn't been announced by GM, but will be in Michigan.
GM will go after recent college graduates for many of its IT jobs, Mott said, and will tap into some of the top computer science locations in the country.
The automaker's website already gives a hint of IT hiring to come.
A link to information technology jobs is prominently displayed on GM's U.S. careers page and lists more than 200 IT-related job openings, many added just this week.
The company will be hiring workers in areas such as software development, infotainment, telecommunications, data engineering, and IT operations and security.
"We're currently undergoing one of the largest information technology transformations in the history of the automotive industry," the website says.
The automaker bought Electronic Data Systems Corp. in 1984 and later spun it off as an independent company. HP bought EDS in 2008.
From The Detroit News: http://www.detroitnews.com/article/20120713/AUTO0103/207130346#ixzz20X1kvK3 n
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