General Motors in $15bn IT outsourcing bonanza

US car giant General Motors (GM) is embarking on a $15bn IT outsourcing bonanza that will see major restructuring of key contracts and some work previously handled by EDS handed to other suppliers.

GM's 10-year deal with EDS ends in June this year and the motor company has decided to increase the amount of work it gives to other IT outsourcers, including Capgemini, Compuware, Covisint, HP, IBM and Indian company Wipro, as well as reducing the length of deals from 10 years to five.

EDS has had its contracts reduced by GM but the IT services company estimates that its share of the pot will still be worth $3.8bn over five years.

HP estimates its share of the outsourcing contracts will be worth more than $700m over five years for work that includes global product development, manufacturing and quality, GMAC customer and dealer information systems, and global SAP enterprise architecture management support.

IBM landed deals worth around $500m, while India's IT industry made further mainstream outsourcing gains against the traditional players with Bangalore-based Wipro awarded work worth $300m.

Around half of the $15bn of contracts up for grabs, including GM's telecommunications deals, will be awarded later in the year.

Ralph Szygenda, group VP and CIO at GM, said the deals are a "significant milestone" for the company and its IT division and will provide greater speed and flexibility for the motor giant.

He said in a statement: "Of critical importance is the focus we have had on driving innovation and supporting future globalisation and digitisation of the company."

Cutting costs will also be a key component of the deals, following GM's quarterly results at the end of January which showed a $4.8bn loss.

The re-sourcing initiative saw GM break down all its work into 40 segments including everything from computing operations to application support for areas such as automotive product development, manufacturing and supply chain on a global basis as well as GMAC financial services.