GM offers $15 billion in tech contracts

Wikinews
December 16, 2005

Despite being in financial trouble General Motors is holding $15 billion in tech contracts. The five year contracts, planned to be awarded within weeks. The 40 contracts will be the largest group of contracts ever awarded at the same time.

EDS, spun off by GM in 1996, carried out $2 billion in business with GM last year 10% of EDS' revenue. EDS's contract will expire in June.

GM plans to break up it's tech outsourcing budget into smaller pieces and standardize its outsourcing operation so that it can remove a partner without effecting the entire operation. This will shake up the $300 billion tech outsourcing industry.

"This is revolutionary, If it works for both sides, in a couple of years you'll see a lot of other companies doing it." George F. Colony, president of Forrester Research said.

Ralph J. Szygenda, GM's CTO, said he decided that the whole outsourcing industry was broken when GMs Hermes web site, intended to sell cars in Brazil, kept crashing. The site was run by EDS, IBM, and a few others. When Szygenda held a meeting to find out why, "there was a lot of finger-pointing, and nobody would fess up to the problem," he said. "I realized this wasn't going to work. And I saw it wasn't just a GM problem. It was an industry problem."

So now Szygenda intends to implement his plan. Either GM's way, or the highway.

What about the little guys? Szygenda intends to place $2.5 billion to $3 billion aside on innovative technology. "We use hundreds of start-up companies," he says. "We're not closing out innovation."

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