IT firms brace for $10bn GM contracts

General Motors’ proposed IT restructuring is likely to throw up a $10 billion opportunity for Indian IT firms, some of which are already amongst the suppliers to the US auto major.

In 2006, General Motors (GM) had put its $15 billion IT projects for bids.

“As the firm has been in the middle of a restructuring process after the management has been taken over by the government, the size of the IT contract would be lesser this time round. But it would still be over $10 billion,” said an executive of a firm that provides IT services to GM, requesting not to be named.

Among the high-priority projects at GM is a companywide rollout of Windows 7 operating system that is about to start in March 2010 for some 100,000 PCs.

The firm is also aiming to roll out a virtual PC on a USB for each employee through which employees would be able to work from home while remaining in the company’s private network.

“We are among some of the existing IT suppliers to GM. We are upbeat on the new IT projects under discussion at GM. It may be on design, applications, migration from earlier operating system to new ones etc,” said Atul Kunwar, head of operations for Mahindra Satyam in Europe, Asia Pacific, the West Asia, Africa and India.

At GM, 70% of applications run on the Windows environment and, according to people familiar with GM’s IT projects, “a big project to move its SAP application to Windows environment will soon be taken up”.

Meanwhile, Infosys Technologies, which recently announced its focus on high-end auto engineering work such as design, is also learnt to be in discussions with GM. “We are extremely happy with the kind of discussions that GM is engaging us in. You know the talks are of the level of ‘can you drive efficiency to our customers’, rather than ‘how many more people would you engage to finish the project’ types. We are focusing on new deliverables such as spend reduction, value generation etc, which are largely outcome based. They actually appreciate our questioning of many ‘holy cows’ in GM IT,” said an Infosys executive who did not wish to be named.

The executive added that various deals are at various stages of closing.

GM, which has outsourced 90% of its IT work to firms such as HP/EDS, IBM, Capgemini, Wipro Technologies and Mahindra Satyam amongst others, is embarking on vendor consolidation exercises as well.