GE Capital’s CIO rolls back outsourcing

There’s been a seeming never-ending fight within the C-level of many organizations in the last decade about how much of IT can be outsourced. Those who have control of the budget often force the hand of the CIO.

But in the last few years there’s been a turnaround, in part because the cost of labour in places like India is no longer so low, and in part because of the loss of certain IT skills.

The latest North American company to reverse the tide is General Electric, one of the first to eagerly embrace the idea of looking offshore.

As much as 80 per cent of the IT work was outsourced until recently. Now it’s down to 70 per cent. But according to Information Week, GE Capital’s new CIO Jim Fowler wants to make it 50 per cent in two years — and maybe less after that.

 “We’ve outsourced some of our expertise, and we’ve given up some of the knowledge of how we run the business, how the place is wired,” he told the publication. “That we need to get back in-house.”

That means hiring at company-owned data centres in Detroit, New Orleans and India.

Okay, easy for a trillion-dollar corporation to turn around, you might say, particularly because it has so many projects on the go. But smaller enterprises are doing the same — looking at the numbers and calculating the cost of not having certain expertise on-call for critical business processes and systems.

As one expert quoted in the story says, it’s hardly a flood of backtracking, but there is a noticeable shift.

In GE’s case, the insourcing push in many divisions comes at a time when it is adopting an ]Agile-related software development process. Dubbed FastWorks, teams focus on delivering small pieces of a given project every week or two. There are also short, frequent meetings among IT developers and business unit leaders to keep the project on track.

The idea is  that as the project evolves, people realize new features they didn’t know they needed, and drop ones that no longer seem important. 

It isn’t truly Agile — because GE Capital is a regulated finance company it can’t put code into production quickly. But for some projects it works faster than traditional waterfall development (which will still be used in other parts of the company, like ERP).

The point is that insourcing and FastWorks are aimed at getting things done faster to market with skilled staff that in some cases can’t be outsourced.

Howard Solomon
Howard Solomon
Currently a freelance writer, I'm the former editor of and Computing Canada. An IT journalist since 1997, I've written for several of ITWC's sister publications including and Computer Dealer News. Before that I was a staff reporter at the Calgary Herald and the Brampton (Ont.) Daily Times. I can be reached at hsolomon [@]

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