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GM Goes for New Outsourcing Model

General Motors decision today to split its multibillion-dollar outsourcing contract into 40 projects managed by six vendors gives the auto giant two things: vendor leverage and a fair amount of risk.

The $15 billion, five-year IT outsourcing contract taps big name systems integrators (SIs), including rivals HP and IBM, Capgemini, Compuware Covisint, Wipro, and EDS. (See IBM Picks Up $500M GM Deal and HP Grabs $700M of GM Biz.)

Previously, EDS handled the bulk of GM’s technology infrastructure. But now the six SIs will be responsible for tying together hardware and software products from a range of vendors in different parts of the GM empire. HP, for example, will manage all the auto firm’s servers.

Among the 40 different projects are challenges for financial services, computing operations, and applications support, and the scope and scale led some analysts to label the approach high-risk.

"There's always a risk -- there's risks in everything that we do," acknowledged Ralph Szygenda, GM's CIO, in this morning's conference call. "I have had to take risks for 10 years."

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