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The recently announced recompetition for General Motors Corp.’s outsourcing business has put $15 billion in contracts into play.

That’s the word from Bob Swan, executive vice president of Electronic Data Systems Corp., the company with the most at stake in the GM deal-making.

EDS won about two thirds of GM’s outsourcing spend—a chunk worth about $2 billion. The company’s 10-year master service agreement with GM expires June 30, 2006, according to Swan, who spoke this week at Bank of America’s Annual Investment Conference.

Industry watchers expect EDS, Accenture, Hewlett-Packard Co. and IBM to pursue the recompeted contracts, which amount to about $3 billion each year for five years.

Though it hasn’t announced plans to do so, GM could also put out telecom-only contracts, which would add such companies as AT&T, MCI and SBC to the mix, according to Jeff Kaplan, managing director of THINKstrategies, a Wellesley, Mass. consulting firm.

Swan said he anticipates contract awards in December or early next year. He said he believes—based on a conservative projection—that EDS will come away with at least $1 billion in revenue per year. That’s about half the amount of business it had with GM in 2004.

But he said he expects EDS to do better than that, as the company will be vying for more work than it performs today.

In addition to the GM recompete, Swan also discussed EDS’ applications outsourcing business and its offshore strategy. Today, about one third of EDS’ commercial application delivery personnel are located offshore.

“We think we have to double that” over the next three years,” Swan said.
EDS will build the additional offshore capability on its own and through partners such as Cognizant Technology Solutions , which operates software development facilities in India, Swan said. Cognizant provides EDS with application development and maintenance resources.

Next page: ABN Amro business goes out to bid.

Partnering At ABN Amro

ABN Amro has also launched a major outsourcing initiative, a $2 billion set of contracts involving Accenture, IBM, Infosys Technologies, Patni Computer Systems Ltd. and Tata Consultancy Services.

But the five-contract deal may call for cooperation as well as competition among the outsourcing players.

“All preferred contractors will likely partner in some capacity or other as the contracts signed cover infrastructure, applications support and development, all of which must be to some degree harmonized,” said David O’Brien, a Global Financial Services partner with Accenture.

ABN Amro will employ local, regional and global information technology personnel to manage the outsourcing contracts.

Chief information officers attached to individual business units will work with Group Shared Services IT regional heads to “define and deliver shared IT services for their businesses,” O’Brien said. Group Shared Services IT global heads, meanwhile, will drive the “strategy, direction, and policy for their respective areas such as vendor management [and] service management,” he added.

As for other banks following the ABN Amro example, O’Brien said he sees “a healthy balance” between organizations that pursue single-source outsourcing deals and those that pursue multiple-source contracts. But the multiple-award practice, he said, has become more prevalent among customers experienced in outsourcing.

“Certainly in recent years this multi-vendor approach has gained traction within mature sourcing organizations, especially where the business operates pan-continental, and where the ability to manage multiple vendors is regarded as offering additional flexibility,” O’Brien said.

Rent-A-Center Outsources To ICG

ICG Commerce on Tuesday said it has captured a multi-year procurement business process outsourcing deal with Rent-A-Center Inc.

Rent-A-Center, a rent-to-own operator, will tap ICG Commerce for a range of procurement services. ICG Commerce will provide technology infrastructure for managing strategic sourcing, purchase-to-pay transaction processing, and category management. The company’s Philadelphia-based Buying Center is also part of the deal. Rent-A-Center will use the Buying Center for miscellaneous purchasing and spot buys, according to ICG Commerce.

Jason Gilroy, vice president of outsourcing services at ICG Commerce, said the Rent-A-Center pact underscores the amount of indirect spending companies are willing to outsource. A few years ago, companies outsourced 5 to 10 percent of their indirect spending, but now that slice runs in excess of 50 percent, Gilroy said.

In Rent-A-Center’s case, indirect spending involves such things as store supplies, IT gear, and telecom equipment, he added.

Apparent Networks Signs Telus

Apparent Networks Inc., a developer of network optimization software, has signed a reseller deal with Telus, Canada’s second largest telecommunications company.

The arrangement, announced Monday, gives Telus the right to distribute Apparent Networks’ products to North American carriers. Apparent Networks’ flagship AppareNet suite aims to identify network bottlenecks to boost application performance. The company’s latest release, AppareNet Enterprise Voice, offers voice-over-IP network management.

Apparent Networks has been courting partners for several months, inking pacts with such companies as Affiliated Computer Services.

A company spokeswoman said Apparent Networks has signed more than a dozen partners.

Matt Dion, vice president of marketing at Apparent Networks, cited Telus as the largest reseller the company has signed to date. The $8 billion carrier has a sales force of about 60 people who sell to other North American carriers, noted Dion. Telus’ main rival is Bell Canada, which lessens the opportunity for conflict in the U.S. market.

“They already sell products and services to most of the carriers in the U.S.,” Dion said, noting that Apparent Networks will be able to tap into Telus’ established relationships with carriers.

Rick Stokes, regional vice president for U.S. markets at Telus, said the company’s U.S. customer base includes Internet service providers as well as competitive local exchange carriers and incumbent local exchange carriers.

Stokes said Telus has been using AppareNet internally for about a year. As for external sales, the company has closed a couple of deals and has more in the pipeline, according to Stokes.

ACS Nets Johns Manville Deal

Affiliated Computer Services said Monday that it won a 3-year outsourcing pact with Johns Manville, a building products manufacturer.

The contract marks an extension of the company’s work at Johns Manville, which first outsourced to ACS in 2001. ACS will provide invoice processing, payments reconciliation, invoice validation, and inventory validation among other services.