Has GE realised the perfect Outsourcing Cycle?

Has GE realised the perfect Outsourcing Cycle?

The news that GE is bringing IT and Business services back onshore and is, for example recruiting 1100 new technologists for its centre in Michigan, does not sound particularly awe-inspiring, but actually it may turn out to be the closure of the perfect outsourcing cycle.

GE in no small part, legitimised offshoring to India by sending its own IT and Business services to a captive subsidiary in 1996. In 2005 it sold 60% of this unit to Genpact for a reported $800. With additional sell downs of shares, even in late 2010, GE has received significantly more than $1.1Bn in returns.

Has any other end-client ever made such profits out of outsourcing? GE pioneered, perfected and profited from moving at the right time in outsourcing. In many ways GE has always been ahead of the market in thinking and acting on sourcing solutions.

For GE’s Chair and CEO Jeffery Immelt, the end of this wondrous cycle has been hugely beneficial to the balance sheet, the investor community, GE’s prestige and to perpetuating the legacy of Jack Welch. Immelt took over from Welch in 2000. GE is now, according to Fortune, the 6th largest firm in the US, as well as the 14th most profitable.

No so enamoured with Outsourcing is Charlene Begley CEO of GE Home and Business solutions, who seemed quite lost when she commented on Bloomberg News that the offshoring “strategy may have had its time, there was a lot of downside. We lost a lot of the technical capabilities that we have to own”. Mirroring this GE spokesperson Campanelli stated that the Michigan Technology Centre was “a significant investment … in regaining some of the technical (IP) we had outsourced in the past”

Before we heap too much praise on GE being at the forefront of outsourcing intellect, perhaps we should contemplate whether or not politics might have no small part in this reversal of opinion. In January 2011, President Obama announced Immelt’s appointment as chairman of his outside panel of economic advisors. Immelt will become “chairman of the Council on Jobs and Competitiveness”.

Perhaps there is still time for someone else to contend the title for “realising the perfect Outsourcing Cycle”. Anybody?

Posted in Outsourcing Comments: one


One Response to Has GE realised the perfect Outsourcing Cycle?

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