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John Moore  
$15B Up For Grabs At GM
By John Moore, Ziff Davis Internet


The recently announced recompetition for General Motors Corp.'s outsourcing business has put $15 billion in contracts into play.

That's the word from Bob Swan, executive vice president of Electronic Data Systems Corp., the company with the most at stake in the GM deal-making.

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EDS won about two thirds of GM's outsourcing spend—a chunk worth about $2 billion. The company's 10-year master service agreement with GM expires June 30, 2006, according to Swan, who spoke this week at Bank of America's Annual Investment Conference.

Industry watchers expect EDS, Accenture, Hewlett-Packard Co. and IBM to pursue the recompeted contracts, which amount to about $3 billion each year for five years.

Though it hasn't announced plans to do so, GM could also put out telecom-only contracts, which would add such companies as AT&T;, MCI and SBC to the mix, according to Jeff Kaplan, managing director of THINKstrategies, a Wellesley, Mass. consulting firm.

Swan said he anticipates contract awards in December or early next year. He said he believes—based on a conservative projection—that EDS will come away with at least $1 billion in revenue per year. That's about half the amount of business it had with GM in 2004.

But he said he expects EDS to do better than that, as the company will be vying for more work than it performs today.

In addition to the GM recompete, Swan also discussed EDS' applications outsourcing business and its offshore strategy. Today, about one third of EDS' commercial application delivery personnel are located offshore. Channel Insider Special Report: IT Spending in the Channel

"We think we have to double that" over the next three years," Swan said. EDS will build the additional offshore capability on its own and through partners such as Cognizant Technology Solutions , which operates software development facilities in India, Swan said. Cognizant provides EDS with application development and maintenance resources.

Next page: ABN Amro business goes out to bid.

     
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