Till the Wall Street Journal wrote on March 23 about GE’s role in India’s IT and BPO success, few in the US appeared to know the extent of offshoring at GE.
4 years ago I took a client from a major non-US GE competitor on a due diligence trip to India. As we visited various vendors I started to add up likely GE project staffing at each of the vendors and did some rough calculations. By my estimation GE had a $ 1 billion dollar a year advantage over this company through its sophisticated use of offshoring.
GE has been masterful in its offshore program and vendor management – going through waves of preferred vendors to keep rates in check, astutely picking up equity stakes in these vendors to lower long term investment, tying its business unit CIO bonuses to specific offshore (v/s onsite) team metrics, pushing its Six Sigma philosophies through its offshore vendor ecosystem, building parallel captive units in addition to outsourcing and so on.
It is a remarkable story. GE’s offshoring rigor is a best practice other companies should emulate. Of course, there are people who take a narrow view of such offshoring. They need to see the other side of the coin - GE recently announced that 60% of its growth will come from developing countries in the next decade versus about 20% for the past ten years.