17 nearshoring
Software Development

Large-scale insourcing: an opportunity for specialist outsourcers

date: 14 July 2012
reading time: 2 min

At the beginning of July I read a profile of Randy Mott, CIO of General Motors in the US magazine Information Week.

At the beginning of July I read a profile of Randy Mott, CIO of General Motors in the US magazine Information Week. The article contained quotes from Mott about GM’s new strategy to bring most of its IT outsourcing back in house and the challenges that insourcing will bring for the organisation.  Currently the company outsources about 90% of its IT services and Mott wants to reduce this figure to just 10%. GM is a truly huge organisation and it has outsourced a much wider range of IT activities than we at Future Processing provide. However, I found much about the company’s IT strategy and its motivation that I could relate to, and much that, despite the fact the company is turning away from outsourcing, heartened me.

According to Mott, “GM’s IT transformation doesn’t emphasize budget cuts but instead centers on delivering more value from IT, much faster.” Delivering more value, much faster, is what we do for our customers, and is one of the reasons they come to us – it certainly isn’t all about the cost savings. This leads me to another point: perhaps the larger outsourcers that GM uses weren’t able to deliver this because it is not what they are geared up to do – they are renowned for their high-volume, low cost approach and not for the high-skill level required to deliver extra value. By choosing smaller, niche outsourcers, companies like GM could achieve their objectives without the hassle of bringing everything back in house. And it is a hassle – Mott talks about a “hiring binge” and setting up three new “development centres.”

Actually, GM isn’t bringing everything back in house: 10% of its IT services will remain outsourced. I imagine this10% will be mostly specialist skills that are hard to recruit. Focused, highly-skilled outsourcers – like Future Processing – are clearly well-placed to undertake this work. Furthermore, these projects may well be just too small for the big players. So, while it is always a shame to read about outsourcing contracts that haven’t worked, I wish Randy Mott well with his new strategy and I hope he – and others like him – remember the smaller, specialist outsourcers when they consider in-sourcing some or all of their IT services.

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