Yesterday I saw headlines about General Motors’ plans to hire 1,500 computer technology professionals. On the surface, it sounded insane. This morning I looked into the story and found that this is part of a plan to hire 10,000 computer professionals over a five-year period. Insane six times over.
I know General Motors likes to think of itself as the largest company in the world, but there is no company large enough that it could legitimately plan on needing 10,000 computer geeks — right?
Perhaps that is a reasonable reaction in my idealistic mind, but the way the corporate world works in practice, this “crazy” plan may actually be a step forward. Large-scale projects have diseconomies of scale, so they need more than a proportional number of workers. This is especially so when it comes to computer work. Maybe 10,000 engineers is not such a crazy number. The $2 billion annual cost for these tech centers (that’s my rough estimate of the operating expenses) will replace more than $1 billion that General Motors currently spends to get computer-related services done by other companies. By insourcing, General Motors will save administrative costs, which are always increased with an outsourcing approach. At the same time, it may end up reducing the security concerns that arise when the company’s most valuable designs and information are in the hands of hundreds of third parties. The company could plausibly undertake an Apple-like secrecy on some development projects, if it chose to, and get a three-year head start on competitors. Perhaps that is a larger consideration than the costs involved.
In general, any expansion plan can succeed if it is implemented well and costs and revenues are kept in balance. One advantage General Motors has is its eastern Michigan location, where hundreds if not thousands of qualified computer professionals struggle to find work. It remains to be seen how well its tech centers will do — so even if I balk at the scale of the initiative, I can’t argue with the core idea.
