Outsourcing is common in travel management. What questions should buyers be asking?
There have been better weeks, PR-wise, for British Airways.
Over the Bank Holiday weekend TV screens showed endless scenes of frustrated and angry travellers stuck at Heathrow and Gatwick because of an IT outage which had led to lost baggage, flight delays and cancellations across the globe not to mention a drop in share price, market value and a likely, unbudgeted cost for the debacle of between £100 and £150 million.
In the immediate aftermath, when speculation for the cause was rife, the UK’s GMB union whose membership covers a wide variety of jobs, claimed that responsibility for the failure lay with the airline’s management’s decision to outsource some of its IT functions to India.
And now this week it has emerged that BA will be outsourcing its call centre operations.
Outsourcing in itself is never a universal explanation of failure. After all, travel management depends on it. Think of all the outsourced travel management functions from hotel booking to meetings and events, security and technology. Then there are RFP consultants, TMCs and travel managers.
Press coverage suggests that BA is outsourcing some of its business support functions such as IT and call centres as a means of cost reduction. This is not the same as outsourcing because of a lack of core skills. It is a good reminder for everyone to examine why one chooses to outsource.
Taxes on employment and workers’ rights regulations in many European countries (including the UK) add a layer of complexity and cost to employing someone rather than using contract labour but most companies will outsource not just to save money but because the function requires a skill which is not core to that company’s business.
Organisations engage security companies, for example, because most service and manufacturing companies do not collect appropriate data nor do they have staff on tap with the knowledge and mind-sets necessary to minimise risk for companies and people.
The reasons for outsourcing become murkier when the skill one is choosing to outsource is one that also can be performed within a company such as meetings management or hotel specialists or, indeed, TMCs.
Why, other than IATA ticketing rules, does an organisation engage a TMC when most travel managers have data collection and analysis capabilities, procurement and negotiating skills and market knowledge? The short answer might be for the extra value. The longer one requires an honest assessment of the costs and benefits outsourcing to a specialist are likely to deliver.
When the exercise is repeated for consultants evaluating RFPs or meetings specialists, it becomes obvious that not all of the benefits – and costs – are quantifiable.
There are things that many of us do on one level that others can do much better because of more knowledge, experience, training, perspective or just plain ability.
But all of these carry associated benefits as well as costs.
Identify what you’re looking for before you ask the questions and make the decision.
Everyone working in a competitive, market economy is under an obligation to control costs. But that can’t be at the price of not achieving the objective.