Through this webinar we would like to share our observations and thoughts on what lays ahead for airlines with respect out-tasking and 3rd party management. In the next hour we would like to discuss how companies in general and airlines in specific can benefit from dealing with a specialized consortium of vendors.
Historically, airlines have outsourced a variety of functions ranging from checkin, to cargo handling, to information technology and even to flying itself. Many of the large carriers have done their outsourcing in a piecemeal fashion — according to the U.S. Department of Transportation, more than half of all airplane maintenance is outsourced to contract mechanics; Reservations and customer service call centers, in-flight catering, human resources administration, finance and accounting, and information technology support has been outsourced to various 3rd parties across the globe.
As business in general and airlines in specific graduate from transaction-centric out-tasking to information-intensive outsourcing, it becomes imperative for the airlines to be able to have access to intelligent information in the right format, which can help them take business decisions. In a multiple and diversified vendor scenario the airline could be plaque with information black out. Even though each vendor may feed into the MIS from their end, lack of interoperability can lead to a total loss of comprehensible information. For Eg. Airline A had outsourced activity X to p,q,r and activity Y to s,t,u. As X and Y are interdependent, the airline wants to understand the total financial impact X can have on Y. But as the reporting received from all the vendors is not collaborative and cannot be use to derive the necessary information. How do you deploy end-to-end delivery processes across multiple providers?How do you transfer accountability and responsibility, to whom and under what circumstances? Howdo you optimize the contribution of each supplier, determine the scope of their activities and, moreproblematic still, adjust roles and scope over time?
Airlines across the world are now focused on deploying more flexible solutions to support new customer-focused business strategies and to manage risk in a volatile economy. Deregulation and growing customer demands are driving change in the market. In an era of tight budgets, growing global competition and game-changing technologies, the ability to innovate is a make-or-break proposition. That means smart investment of time and effort into outsourcing are crucial.
Given the benefits of larger scale & deeper relationships, airlines working with integrated service providers can increase the ability to leverage productivity benefits and strategic value. This in turn can facilitate the output based commercial strategic engagements and the ability to transfer more accountability to service providers. Carriers that have current outsourcing experience will be analyzing potential opportunities with a practiced eye, and converting viable opportunities into real savings — and bottom-line success. As carriers less experienced with outsourcing are forced to take another look at it, they will be playing catch up with their competitors.
The differential between the annualized TCO of the 2 types of supplier portfolio ( fragmented and consolidated) represents potential benefits on a steady state basis. Given the larger scale& scope of work supplier can better optimize their sourcing through greater leverage of offshore and onsite relationship managers. The resulting reducing in supplier fees is typically the largest driver for the buyer using fewer suppliers. However the ability to realize these benefits typically depends on the extent of current engagement even within a fragmented portfolio.
Airlines can typically realize multiple benefits beyond cost saving by integrating the service providers in their portfolio. Due the benefits of scale and deeper relationships, airlines can increase the ability to leverage productivity benefits and strategic value from the specialized suppliers. An integrated environment also allows the customer to use the vendor engagement more effectively, by reducing operational expenses as well as providing a foundation for adoption of innovation.
One of the crucial parts of moving to a integrated outsourcing approach is managing the process. To effectively cope with these new challenges, organizations need to develop a coherent plan for the ongoing management of their supplier relationships and the services that are provided.Service providers must be able to understand how their services impact the company’s business processes and be ready to work collaboratively with other partners impacting the same area.
Future of outsourcing rise of integrated & specialised service provider
Connecting The Dots<br />The Rise Of Specialized & Integrated Service Provider<br />
Today, companies are looking ahead, determining how to do more with less... seize opportunities... and gain competitive advantage<br />
More and more decision makers are turning to outsourcing — to help them improving efficiencies, driving value and optimizing cost<br />*Source- PricewaterhouseCoopers Global Outsourcing Survey<br />
Challenges Involved In Outsourcing to Multiple Vendors <br />Discovery<br /><ul><li>Can’t find information</li></ul>Integration<br /><ul><li>Can’t combine information</li></ul>Insight<br /><ul><li>Can’t extract value from information</li></ul>Dissemination<br /><ul><li>Can’t consume information
Managing multiple vendors is time-consuming, complex and expensive
Need dedicate staff to oversee each vendor relationship and establish regular reviews of vendor performance </li></li></ul><li>Savvy market watchers believe<br />that the outsourcing market will continue to evolve<br />toward domain specialization and bundling of outsourced activities<br />
Airlines need to work with industry specialists who understand their unique challenges, who can see<br />the world as they do and who can help<br />set them apart in the industry<br />
Creating A Pool Of Specialized Outsourcers<br />Airline<br />Check-in<br />Sales<br />Admin<br />Ground Handling<br />Baggage<br />Reservation<br />In-flight<br />Catering<br />Technology<br />The portfolio of service providers working with an airline is often complex and creates considerable challenges to manage and optimize. Consequently airlines should look towards rationalizing the number and quality of service providers to attain financial benefits coupled with a less complex sourcing organization.<br />
Aligning Synergies Of Outsourcers<br />Airline<br />Admin<br />Sales<br />Ground Handling<br />Check-in<br />Reservation<br />Baggage<br />In-flight<br />Catering<br />Technology<br />The partnered approach calls for two or more specialized and skilled service operators with different roles and responsibilities to work together to deliver the desired array of services.<br />While they are individually accountable to the airline through their respective SLAs, they are also accountable to one another.<br />
Admin…</li></li></ul><li>Best Practices For Selecting The Right Partner<br />Seek a service provider they can trust to provide a direct and immediate response to their business challenges<br /><ul><li>Seek specialized providers that focus on what they do well
Seek alliance-friendly organizations that partner for the rest
Seek innovative solutions tailored to each of your need</li></li></ul><li>Cost Benefits of Partnered Outsourcing<br />Organizations can achieve financial benefits of more than 15% by utilizing integrated and specialized vendors<br />.<br />1-1.5%<br />100%<br />3-3.5%<br />95-96%<br />1-2%<br />15-17%<br />4-5% savings driven by reduced internal buyer costs in setting up and managing service provider relationships<br />81-84%<br />17-19% savings from reduced supplier fees driven by leveraging synergies & multi shore relationships<br />TCO* - Integrated service provider (specialized service provider’s savings)<br />TCO* - Integrated service provider ( airline’s savings only)<br />Onetime<br />Recurring<br />TCO* - multi-supplier portfolio <br /> Source: Everest Research and IGT experience <br />Onetime<br />Overall<br />Recurring<br />
Benefits of Partnered Outsourcing<br /><ul><li>Reduced redundancies and costs
Operating multiple processes from a single platform can reduce costs for development, maintenance and licensing
Creating a relationship with one service provider is much more cost efficient than managing across many different providers</li></li></ul><li>Managing Integrated Service Provider Relationships <br />
InterGlobe Enterprises<br />InterGlobe is a leading conglomerate spanning travel, aviation and hospitality sectors with revenues ~USD 1.5 billion and a network of over 8,000 professionals with presence in 13 countries<br />Travel, Technology and General Aviation Services<br />Hotels<br />Aviation<br />InterGlobe Technologies<br />Integrated BPO and travel IT solutions provider for global clients<br />InterGlobe Technology Quotient<br />Distributor for Galileo and Worldspan GDSs in India and Sri Lanka<br />InterGlobe<br />Air Transport<br />Largest airline management company in India<br />InterGlobe Aviation<br />‘IndiGo’India’s Largest & Fastest growing domestic low cost carrier<br />InterGlobeHotels<br />JV with Accor <br />to build ‘Ibis’ hotels and to manage Accor brands in S. Asia<br />InterGlobeGeneral Aviation<br />Exclusive partnerships with Hawker Beechcraft, Sikorsky Helicopters & Dornier Sea Planes<br />
Refunds</li></ul>Operations / Technology / Business Process Outsourcing<br />
Global Services 100 annual ranking of IT and BPO service companies<br />(InterGlobe Technologies) GS100 – 2010, 2009<br /> <br />Rising Stars Category Global Outsourcing 100 service providers list (InterGlobe Technologies)IAOP – 2010, 2009<br />Top 50 Best Places to Work in India 3 years in a row(InterGlobe Enterprises)Great Place to Work Institute, USA 2010, 2009, 2008<br />Black Book of Outsourcing<br />Ranked 2nd Travel BPO Outsourcing and Ranked 3rd Travel IT Outsourcing (InterGlobe Technologies)Global Black Book of Outsourcing - 2009 <br />Fast 50 India and Fast 500 Asia Pacific<br />(InterGlobe Technologies) Deloitte Technology – 2009, 2008, 2007, 2006<br />Top 15 Exciting Emerging Companies to Work for(InterGlobe Technologies) NASSCOM – 2008<br />Americas | Europe | Africa | Middle East | Asia | Oceania<br />InterGlobe Technologies (IGT) is a leading BPO & IT Services provider committed to delivering innovation and business excellence across the entire spectrum of the travel, transportation and hospitality domain. Ranked amongst the World’s Top 3 Travel Technology Solutions providers, the company offers integrated Application Development and Maintenance, Call Center Services, Back Office Services, Consulting Services and Solution Frameworks to the travel industry worldwide. <br />Phone: + 91 (0) 124 458 7000 <br />Fax : + 91 (0) 124 458 7198<br />Email : firstname.lastname@example.org<br />Website : www.interglobetechnologies.com<br />Follow us on <br />Corporate Headquarters:2nd floor, InfoTech Centre, Milestone 14/2, Old Delhi Gurgaon Road, Dhundahera, Gurgaon - 122016, Haryana, India<br />