VAN BUREN TOWNSHIP, Mich. — Once vilified for leadership in outsourcing jobs, General Electric is pulling more information-technology positions back in-house.

CEO Jeffrey Immelt has said that GE will add more than 15,000 jobs in the three years through December. About 1,100 will be just outside Detroit in a center for information technology, a field emblematic of outsourcing. So far, GE has hired about 660 people in Michigan, a state that led the nation in jobless rates, making it a symbol of U.S. industrial decline.

“About 50 percent of the IT work was being done by non-GE employees,” Charlene Begley, chief information technology officer, said in an interview at the center in Van Buren Township. “That strategy may have had its time, but there was a lot of downside. We lost a lot of the technical capabilities that we have to own.”

Bringing more information-technology work back to GE lets the company move quickly to develop programs that respond to technology demands cropping up faster than ever.

“With iPads and whatever mobile devices people want to use, the need for better user experiences is essential to competitiveness,” Begley said. “So we’ve got a team that’s really good at writing user applications that are sexy, impressive and quick.”

Companies such as GE and General Motors that once led in outsourcing are in the forefront of a move in the opposite direction: adding workers back to their own businesses in mature markets like Britain and the United States, said John Keppel, president for outsourcing consulting firm TPI International.

Advertisement

In the first half of 2011, the total global value of information-technology outsourcing contracts fell 20 percent, dragged down by a 51 percent second-quarter dip in the Americas, according to TPI data released July 20.

“GE, GM and companies like them founded the whole outsourcing business,” Keppel said in an interview last week. “What we’re seeing in America is more about the maturity of the market. Clearly, there are some macroeconomic factors and political factors that play into that to varying degrees.”

Immelt has worked to locate a variety of GE production sites closer to their markets around the world. The company has increased its information technology workers 30 percent to 9,600 worldwide in the past decade and plans to expand to 11,000.

In the U.S., the company took advantage of incentives such as Michigan’s tax benefits and skilled work force to bolster exports of large, complex equipment like gas turbines and jet engines while doubling research and development.

“The change in approach is critical, and it comes right from the top,” said Harley Shaiken, a labor professor at the University of California at Berkeley. “He’s addressed it both from the context of GE and in the importance of the U.S. having a vibrant, high-tech manufacturing base.”

The shift marks a turn of sorts for a company where Immelt’s predecessor, Jack Welch, once told CNN that the ideal scenario for business would be to “put every plant you own on a barge to move with currencies and changes in the economy.” In 2004, one of the company’s unions sought a study on whether outsourcing jobs outside the U.S. was damaging GE’s brand.

Advertisement

Anecdotal evidence so far shows that a single center employee can handle work for which GE would have needed three outside contractors, said Begley. She attributed the difference partly to lower costs with an in-house center.

Manufacturing expenses have narrowed in comparison to countries like China and India, helping GE add skilled jobs like the 125 planned at a flagship gas-turbine plant in Greenville, S.C., Immelt said in July.

About $17 billion of GE’s $150 billion in sales last year came from exports, a trend that fuels creation of such positions, Immelt said July 13.

In the second quarter, about 59 percent of GE’s total sales came from overseas.

“GE was a pioneer in outsourcing of high-technology, high value-added outsourcing” and developed a global production network, Shaiken said. “Clearly, Jeff Immelt is rethinking at least part of that direction.”

 


Only subscribers are eligible to post comments. Please subscribe or login first for digital access. Here’s why.

Use the form below to reset your password. When you've submitted your account email, we will send an email with a reset code.