General Motors To Slash Outsourcing In IT Overhaul

gManZboy writes "GM's new CIO Randy Mott plans to bring nearly all IT work in-house as one piece of a sweeping IT overhaul. It's a high-risk strategy that's similar to what Mott drove at Hewlett-Packard. Today, about 90% of GM's IT services, from running data centers to writing applications, are provided by outsourcing companies such as HP/EDS, IBM, Capgemini, and Wipro, and only 10% are done by GM employees. Mott plans to flip those percentages in about three years--to 90% GM staff, 10% outsourcers. This will require a hiring binge. Mott's larger IT transformation plan doesn't emphasize budget cuts but centers on delivering more value from IT, much faster--at a time when the world's No. 2 automaker (Toyota is now No. 1) is still climbing out of bankruptcy protection and a $50 billion government bailout."

Comments

In-house staff do have advantages

[Calibax]

In-house staff provide a number of advantages:
        Quicker response from people who actually work for the same orgainzation
        Dedicated staff rather than whoever is free at the moment
        Familiarity with how your business operates
        Longer term institutional memory

Which taken together provide long term cost savings, mostly because you are investing in your own resources.

At least you are less likely to be training someone who will be working for your competitor on his next project.

Re:In-house staff do have advantages

[ackthpt]

In-house staff provide a number of advantages:

        Quicker response from people who actually work for the same orgainzation

        Dedicated staff rather than whoever is free at the moment

        Familiarity with how your business operates

        Longer term institutional memory

Which taken together provide long term cost savings, mostly because you are investing in your own resources.

At least you are less likely to be training someone who will be working for your competitor on his next project.

Smart, smart move by GM, who I do not often credit with making many. As a victim of outsourcing a couple times, I've seen how outsourcers operate - bring in the Crash team, of sharp, smart people, who gradually are rotated out to the next Crash site, while rotating in people with little to no experience who spend their days peering over the shoulders of others trying to figure out what they are supposed to be doing (and once they have it figured out to some degree, they leave their employer for a wage they can actually live on.)

Re:In-house staff do have advantages

[Raistlin77]

10% cost saving which you will likely need to help your new potential employees fight their non-compete contracts with the employer that you just poached them from. And possibly to fight your own lawsuit for poaching them in the first place. Outsourcing firms are typically fully aware of the possibility of losing their mostly underpaid workforce to their clients. Most have non-competes in place for this very reason.

Re:In-house staff do have advantages

[theshowmecanuck]

And like some people keep trying to drill into other peoples' heads here, business isn't about facial haired, espresso swilling ping pong playing computer hackers coming up with gee wiz bang frameworks. Business is in business to make money. GM isn't a software company. They want reliable un-sexy computer systems that help them get business done. Hiring highly individual IT people who tend to do things like drop new code bases on production servers without telling people because they read a cool article on some web site isn't what they want. They want people who can write code good enough to let them do business. And that is easily maintainable (something that using flavour of the day frameworks that will disappear quickly and will puzzle the hell out of people who have to program this weird shit 15 years from now). GM is not a software company. Sure they need to create some system software, but the majority will be bought and then maintained in house.

Re:In-house staff do have advantages

[Anonymous Coward]

Nope, I predict an "insourced" but "offshored" branch will be opening soon wherever labor is cheapest.

Re:In-house staff do have advantages

[rolfwind]

They got their ideas about IT from playing golf with other CEOs.

This is the downside to "professional" CEOs, people (MBAs) who train to be management and nothing else. Never worked in the company before, doesn't understand the business, but they sure can juggle the numbers as if the pieces of paper told the whole story.

Which ups my admiration for the Steve Jobs/Bill Gates of the world who pretty much built it from the ground up and is in there real nitty gritty, or even Warren Buffett, who at least learns what he buys from the inside out and usually leaves the functioning parts the fuck alone.

Re:In-house staff do have advantages

[CAIMLAS]

You are mistaken, or you must be confusing developers with IT people.

"Highly individualistic" pretty accurately describes most developers I've met. Most of them? I'd pay to watch be thrown off a cliff: obnoxious, usually wrong, unthinking jerkoffs.

Most IT people I've met and worked with have at least been curious and questioning, even if they lack skills, natural ability, or personality. Most IT people who have a "rockstar" personality really are rockstars in one guise or another (or developers pretending to be sysadmin types), or they're something like 18 years old and haven't learned anything yet.

THe mindset between "systems" and "developer" is night and day. There are engineers in both groups, granted - but the people who aren't engineers on the developer side seem to make all the decisions (due to their 'visionary' status, apparently). On the IT side, those are the people you have count spare ethernet cable...

Re:In-house staff do have advantages

[TooMuchToDo]

Elon Musk built a car company like a software company, and now provides production electric cars in what, under 10 years? But GM, run like a "traditional business" couldn't deliver that in the last 40 years (except the EV-1). Huh.

I'll take the company run like a software company thanks.

Disclaimer: I own TSLA stock; a lot of it.

Re:In-house staff do have advantages

[gweihir]

They got their ideas about IT from playing golf with other CEOs.

This is the downside to "professional" CEOs, people (MBAs) who train to be management and nothing else. Never worked in the company before, doesn't understand the business, but they sure can juggle the numbers as if the pieces of paper told the whole story.

Which ups my admiration for the Steve Jobs/Bill Gates of the world who pretty much built it from the ground up and is in there real nitty gritty, or even Warren Buffett, who at least learns what he buys from the inside out and usually leaves the functioning parts the fuck alone.

Actually, the problem is not the "numbers juggling". It is that they are incompetent at juggling numbers. The numbers, when looked at carefully, say that outsourcing for IT is a losing game and a huge risk in addition (except in a few rare cases). The problem is IMO, that the MBA types deep down know that they cannot do anything well and compensate by treating everybody as inferior. As IT people do not push back (they typically consider this game infantile and stupid, and rightfully so), they get plowed under. That means that first the good ones leave, refusing to play these stupid games, then the mediocre ones leave a bit later and finally only the duds remain.

The second effect I see is that the MBAs very keenly feel their inferiority to competent IT people and hence try to move them as far away as possible, best into other companies or even out of the country. Stupid, but all too human and what is bound to happen when you put big egos with little skill in charge.

I think what the MBAs really cannot get their head around to is that they are only support and help for those doing the actual work. They somehow think they are leaders and strategic thinkers, when in fact they are just bean-counters without any insight into the problems they are "managing". My impression is that that the MBA is fundamentally flawed insofar as MBAs are being taught that they are more important than those understanding the actual problems. Possibly an effect of all the competing MBA programs stemming from marketing, i.e. the "Do an MBA with us and you will be a highly respected leader". That is the wrong approach and cannot work well.

On the plus side, there is a (still small) counter-movement: Evidence-Based Management. Of course the MBAs are not equipped emotionally and intellectually to practice that, so it will be a long and bloody battle. But without it we will see enterprises fail because their IT has become too dysfunctional.

Re:In-house staff do have advantages

[gtall]

And guess who Carly Fiorina advises these days....the Republican Party. Saw her on some talking heads pundit show recently, she's just as clueless now as back then. The dumbest bit is that she thinks she's somehow understands how the private sector works well. And Hurd is now working for Oracle. HP has got to stop inflicting their failures on the rest of the country.

Good luck with that.

[daninaustin]

They should be done with hiring right around the time they file for bankruptcy again.

Just about time

[mwvdlee]

It's been about 5 years or so since all IT was outsourced.
We're right on time for managers to start the in-house cycle again.
Good luck in the next 5 years and see you all again on the jobmarket in 2017!

Not high-risk at all

[WindBourne]

What was high-risk was outsourcing to the likes of IBM, HP, CapGemeni, wipepro, etc. who outsource the work to India or China. That information is then able to be used against GM. Real stupid on GM's part.

It's how you want to go when you are large

[Sycraft-fu]

You only outsource general functions like IT, payroll, maintenance and so on when you are small enough that it makes economic sense to do so. When the amount and kind of service you need is such that it would cost more to employ people in house than to outsource it, you do. However when you get large, it is silly to outsource. You can get it cheaper in house since you are large enough to need the equivalent of many full time people working for you, and if they are outsourced it is just another layer of cost.

A small business of 5 people? Ya you probably want to outsource IT needs (and other stuff). It would be infeasible to hire an IT person and have 17% of your staff be IT. A company of twenty thousand people? Don't outsource it, you will need a hundred plus IT people anyhow, might as well have them work directly for you.