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GM awards IT outsourcing contracts worth $7B

Among those getting parts of the automaker's business are EDS, HP, IBM, Covisint and Wipro

February 2, 2006 12:00 PM ET

Computerworld - General Motors Corp. today awarded IT contracts worth approximately $7 billion over five years to six vendors, including Electronic Data Systems Corp., which is now responsible for most of GM's IT operations, as well as IBM and Indian offshore firm Wipro Ltd.

The other winners of outsourcing deals from the automaker are Hewlett-Packard Co., Capgemini and Covisint, a subsidiary of Compuware Corp.
EDS will continue to have the most business at GM, but somewhat less than it has today, GM officials said in a statement, while HP and Capgemini will increase their existing business.

IBM, Compuware Covisint and Wipro "will continue to be strategic IT partners to GM," the automaker said. It planned to offer more details about its IT plans later this morning.

"This is a significant milestone for General Motors and its Information Systems & Services Group," Ralph Szygenda, group vice president and CIO at General Motors, said in a statement. "Of critical importance is the focus we have had on driving innovation and supporting future globalization and digitization of the company."

Details about the contract splits and values were not immediately available.
GM said the contracts awarded today amount to about half of what it expects to spend on IT with outsourcing vendors and systems integrators over the next five years. Based on current expenditures, GM would have laid out about $15 billion during that period, but it also said the changes announced today will cut costs.

"Over the next five months, we will focus our efforts on assuring a smooth transition," Szygenda said. "Our primary goals are to avoid any business disruption and ensure our efforts fully support the company's global operations."

GM's existing telecommunications contracts expire at year's end, and the automaker said new versions of those contracts will be awarded later in the year. It added that the rest of the expected contracts with services firms will be awarded "as a part of the natural business process," as GM's Information Systems and Services unit assesses spending needs for things such as hardware and software purchases and development and deployment of new systems.

GM's announcement, which came before the financial markets opened, has been one of the most anticipated outsourcing decisions ever -- and not just because of the stakes involved for vendors.

Szygenda, in an interview last year, made it clear that he wants to use IT to help transform his company and said GM's outsourcing contracts won't be based on low price alone.

"You've got to realize that information technology is a catalyst for change at General Motors. The whole end goal ... is

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