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Fears of Reduced Outsourcing Probably Unfounded, According to Proctor & Gamble

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Earlier this week, the Indian news publication The Economic Times caused quite a stir among information technologies services suppliers, especially those in India. The article quoted a source close to the retail company Proctor & Gamble, and claimed that the company intended to begin reductions in outsourcing. Most of the speculation surrounded a $3 billion contract the company signed with IT provider Electronic Data Systems in 2003.

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The article came on the heels of announcements that General Motors and American Express also intended to bring more of their information technologies work in-house and depend less on outsourcing. However, Proctor & Gamble almost immediately countered these claims in a statement released to Procurement Leaders.

According to the statement by Proctor & Gamble’s chief purchasing officer Rick Hughes, the article was too “speculative.” Hughes went on to say the company has no plans to move more IT work in-house, and stated that Proctor & Gamble has actually increased the amount of IT work they are outsourcing over the past year.

Hughes further commented on Proctor & Gamble’s commitment to contracts with Indian technology companies, which have experienced a decade of solid organic growth and contribute 35,000 jobs both directly and indirectly. He also mentioned the benefits to the economy the taxes from these Indian suppliers contribute.

According to the consulting firm Everest Group, there are over $100 billion outsourcing contracts up for renewal this year. The sheer volume of these contracts makes it scary for suppliers to think about losing large contracts, such as those offered by huge companies like Proctor & Gamble, General Motors, and American Express.

American Express announced plans to discontinue outsourcing to Indian firms in January following a lawsuit by a customer who was angry their sensitive personal information was sent overseas. General Motors announced in July 2012 their plans to halt outsourcing and create approximately 10,000 in-house jobs. [/show_to]

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