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Wed, Apr 9, 2008 15:43 EDT

Chrysler Stakes Turnaround on IT Outsourcing

Topic: Partner/Vendor Management

Blog: Talent Show

Current Rating: 5 Comments: 6

Chrysler made news in Motown with its announcement that several hundred technology workers would lose their jobs as it moves ahead with plans to outsource more IT.

Shortly after the headline appeared in the Detroit Free Press, Tata Consultancy Services (TCS) issued a press release Friday announcing that it bagged a deal to deliver IT application and maintenance support services from "various locations around the world as well as the recently announced TCS Seven Hills Park domestic delivery center outside Cincinnati, Ohio and through a locally recruited team in the Detroit, Michigan region."

On Tuesday, Computer Sciences Corporation (CSC) joined the party with its pronouncement of a deal that has it taking over mainframe, server and storage services for all of Chrysler's worldwide locations, as well as applications support, maintenance and development services for a portion of Chrysler's application portfolio.

Neither Chrysler nor its new vendors disclosed the size of the latest deals. Presumably, TCS learned its lesson in February when it inadvertently included a price tag of $120 million along with its press release for a smaller application maintenance and support services deal with Chrysler. (TCS's PR folks later asked journalists and others to omit the $120 million from reports on the deal per Chrysler's request. Apparently Chrysler-parent Cerberus really puts the "private" in private equity.)

That deal was relatively small in the grand scheme of things. But public angst about potential outsourcing from local union reps back in February hinted at the fact that more announcements were to follow.

According to the Detroit Free Press, about 200 of Chrysler's 1,000 full-time employees and "several hundred" of its 1,110 contractors will be shown the door as a result of the deals -- all part of Cerberus's three-year recovery plan for the ailing automaker. There was no word on how many of the remaining workers would be transferred to CSC or TCS.

"This partnership represents the next step in our continuous efforts to operate more efficiently and effectively and gives us the tools and flexibility to drive – not just react – to business growth," Jan Bertsch, Chrysler's vice president and chief information officer told the newspaper. She also said it would better position Chrysler in its attempts to access global markets previously ignored by the company.

Of America's "Big Three" carmakers, General Motors (GM) is the most closely aligned with IT outsourcing. The company bought EDS in the mid 80s, spun it off in 1996, then signed on a ten-year deal with the freed IT services provider. GM CIO Ralph Szygenda loves to market himself as an outsourcing maverick – pioneering what he calls the "third wave" of outsourcing, in which competing IT service providers work together to support GM. EDS still has the biggest slice of the pie, but must share the rest with, Cap Gemini, Accenture and others.

Ford has been less forthcoming about its strategy for IT outsourcing and offshoring of late. There is a deal on the books between CSC and Ford's European operations, and the company has its own Indian captive center handling BPO services. Former

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Wed, Apr 9, 2008 18:23 EDT
Anonymous user
Posted by: Anonymous
Rating:

Maybe, just maybe, the title "Chrysler Stakes Turnaround on IT Outsourcing" is a little over the top for the substance of the article?

 
Sat, Apr 12, 2008 9:02 EDT
Anonymous user
Posted by: Anonymous
Rating:

While other companies are outsourcing, I have not seen a single company perform this in such a disasterous way.

Chrysler recently decimated its business ranks with layoff and retirements. The business knowledge only existed with the current ranks of IT professionals. Now a failing attempt at business knowledge transfer is being tried by TATA. After which all those experienced people will be laid off, only to be replaced by "junior" resources, which of course means, no experience in business or technology.

This transition is the most illogical transition I have ever seen in the history of business.

1. Eliminate your business community
2. Eliminate your business knowledge that's left in the IT community
3. Replace everyone with sub-standard workers, who barely know anything about the business and technology. (How can I say this, well, I know many of them could not pass a basic interview process)

 
Sun, Apr 13, 2008 19:59 EDT
Anonymous user
Posted by: John Hughes
Rating:

Hello World!

 
Tue, Apr 15, 2008 8:52 EDT
Anonymous user
Posted by: Anonymous
Rating:

So all these IT people are being shown the door. For successful outsourcing/offshoring to occur knowledge transfer must occur. No knowledge transfer - no outsourcing.

Its that simple. I say the 1100 people who are losing their jobs walk off the job ala union strike.

 
Tue, Apr 15, 2008 10:58 EDT
Anonymous user
Posted by: Anonymous
Rating:

American Auto Industry has shown the foresight of a brick when it comes to competing with Asian automakers. They were making gas guzzlers when the rest of the world needed gas stingy cars. They were making inferior cars when Toyota was stealing market share from all of them every year for the past 50 years. They were heavily into the excuses business - It's the asian mindset, japanese cannot be creative, we follow a different muse when it comes to quality with quality fad of the year every year!

If this works, they take credit. It they screw up they blame the Tatas and the Indians!

It's a win-win any way!

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