HP’s IT outsourcing deal with GM faces trouble

HP’s IT outsourcing deal with automobile giant GM is facing troubles.

The technology major HP is likely to face troubles as the automobile giant is planning to bring much of its information technology work in-house.

GM now plans to handle most of its own IT needs internally, completing the transition within three to five years by hiring thousands of software developers and replacing its outsourced work.

In July 2010, HP bagged a multi-year, $2 billion services agreement from GM, which outsources some 90 percent of its IT needs.

HP currently manages GM’s technology infrastructure including providing applications development and management services for product development, manufacturing, business services, and supply chain.

GM’s automotive division alone accounts for $350 million annually in IT services business for HP. HP also sells a lot of its products and other related services to GM. The $600 million figure does not include that portion of HP’s work with the company.

The automaker also outsources technology-related work in its OnStar division, a contract that is separate from the IT services deal the two hashed out, and one that GM may find difficult to unravel. Onstar is GM’s in-car navigation and communications system, according to Reuters.

HP’s Services business generates $36 billion revenue annually.

HP acquired a lot of GM’s business through its purchase of Electronic Data Systems in 2008 for $13.9 billion. EDS was previously owned by GM, one of the pioneers in outsourcing, for more than a decade before it was spun off in 1996.

HP announced that it is enhancing solutions in its operational support system (OSS) and actionable customer intelligence (ACI) portfolios aimed at telecom companies.

It will also be adding new consulting capabilities to help communications service providers (CSPs) define business and marketing strategies that can be aligned with real operational execution.

The additions to HP  portfolio of solutions and services for telecom companies are expected to help  them drive business growth with better management of service quality for customers.

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