Outsourcing Has Paved Way for GM's India Push - InformationWeek

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IT Leadership // IT Strategy
Commentary
12/13/2005
12:51 PM
Paul McDougall
Paul McDougall
Commentary
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Outsourcing Has Paved Way for GM's India Push

General Motors' announcement this week that it intends to triple the number of cars it produces and sells in India while substantially adding to its labor force there provides another example of how outsourcing will help boost the U.S. economy. Yes, you heard that right.

General Motors' announcement this week that it intends to triple the number of cars it produces and sells in India while substantially adding to its labor force there provides another example of how outsourcing will help boost the U.S. economy. Yes, you heard that right.With its domestic sales in a tailspin, GM desperately needs to win in emerging markets if it's to continue to grow, avoid bankruptcy and forego additional cuts to its domestic operations and workforce. And India's population of one billion-pus includes millions of potential car buyers that could seriously boost GM's fortunes.

So where does outsourcing come in? Through its own operations, and through the Indian arm of its major (at least for the moment) IT services provider, EDS, GM already has thousands of technology workers on the ground in India--workers familiar both with GM and the Indian market--that could help support any expansion the company undertakes in Asia. Indeed, if GM's offshore workers in India can build high quality systems for its U.S. operations, they should have no problem building them for the domestic Indian market.

Additionally, the whole outsourcing phenomenon has helped build a market for GM cars and other Western-made goods in India because it is helping to create an Indian consumer class with the disposable income needed to buy such goods.

So, while it's a painful fact that GM is currently cutting up to 30,000 positions in North America, in the long term a globally competitive General Motors is one that will be a job creating machine in the U.S. and abroad. A lot of current sales, marketing, engineering, and finance positions in Detroit are already directly linked to GM's global efforts. On the other hand, a GM that is not globally competitive will go the way of AMC--anyone driven a Pacer, lately?

Ironically, GM's current mess is in part due to millions of American consumers--thousands of IT workers among them, no doubt--"outsourcing" their personal transportation needs to Japanese car makers. The success of Toyota and Honda in this country proves that consumers are no different from businesses in that they want the best product, for the best price, regardless of origin. That's as true for cars as it is IT labor.

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