Clearly there’s been some bad news in the outsourcing world. Texas has put IBM on notice and Indiana has sued IBM which in turn has sued Indiana. At the heart of all this bad news is outsourcing contracts gone bad.
But that doesn’t mean that all outsourcing gigs have been, are, or will be bad. In fact, if you ask General Motors, its outsourcing deals with Hewlett-Packard and Capgemini are running so well they all needed renewing. And North Carolina is currently shopping for potential outsourcing gigs. (By the way, if you want to read about the gigs gone bad, go here for Texas v. IBM and here for Indiana v. IBM.)
So on to the details.
GM has announced it has renewed two contracts for Capgemini to manage and support the automaker’s sales and marketing as well as dealer systems. The combined value of the contracts—two five-year agreements—is $250 million. According to a press release issued by Capgemini, the renewals extend contracts first struck in June 2006. Under the new contracts, Capgemini will provide application maintenance and development services and also help desk support for GM’s sales and marketing and dealer systems located in 38 countries. It also includes hosting services for test and development services.
Just a week before the Capgemini deal, GM renewed a multi-year, $2 billion contract with HP to manage its technology infrastructure, and includes work on GM’s OnStar vehicle communications system, mainframe services and service desk and site support. GM and HP have partnered on outsourcing and technology services for 25 years. Now there’s a relationship that’s working.
North Carolina, meanwhile, is considering several modernization and consolidation projects that could include outsourcing much of its IT work to a third-party. The state’s Office of Information Technology Services (ITS) has issued a Request for Information looking for input and ideas from vendors, according to a memo sent out July 21 and signed by Democratic governor Bev Perdue.
Specifically, the state issued a request for qualified vendors the N.C. ITS detailed that it is looking for expertise in IT infrastructure outsourcing, hosting and data center services, and network and telecommunications services.
North Carolina is facing a big budget shortfall of $3 billion, and Gov. Perdue is hoping the IT initiatives will save the state some money.
If all goes planned, it could. But clearly outsourcing contracts can unravel (just ask Texas and Indiana, right?). I’m interested in hearing from you, readers, about what organizations need to do to ensure their outsourcing contracts save, rather than cost.
