DETROIT – General Motors on Thursday said it has chosen several technology companies to outsource up to $15 billion of information technology work, as the No. 1 automaker tries to cut costs, restructure operations and replace work done by EDS in a 10-year contract that expires this year.
EDS, formerly owned by GM, will have less business with GM than it currently has, while Hewlett-Packard and Cap Gemini will increase their existing business, GM said in a statement, which did not provide dollar figures.
But EDS, which has 8,500 employees in Michigan, said in a statement it was pleased it retained “the majority share” of the GM contract, winning contracts valued $3.8 billion over five years. EDS said it won about 70 percent of the contracts it pursued and would get $1.2 billion to $1.4 billion a year in business from GM, which includes the $3.8 billion plus project-based work it expects to win over those five years and non-IT outsourcing services it provides for GM.
Compuware Corp.?s Covisint subsidiary was selected by GM as its global Tier 1 messaging service provider.
About $7.5 billion of the $15 billion in contracts over five years was awarded on Thursday, GM said. Five-year contracts are being given to IBM, Electronic Data Systems, Hewlett-Packard, France’s Cap Gemini, the Compuware Covisint unit of Compuware and India’s Wipro.
The announcement follows a two-year review and is expected to cap one of the largest technology outsourcing efforts by a single corporation.
The outsourcing work will include computing operations and application support for areas such as automotive product development, manufacturing and supply chain, as well as GMAC financial services.
GM said it would separately award telecommunications contracts later in the year.
GM, which posted a loss of $8.6 billion in 2005, has been struggling to come to terms with diminishing U.S. market share, excess production capacity, and high pension and health care costs. Cutting IT costs is part of this downsizing.
