Delta Airlines cancels BPO contract with IBM Daksh

The world’s second largest airline (in terms of passengers carried) – Delta Airlines has pulled out its back office operations from Gurgaon-based IBM Daksh. About 500 people were working under Delta processes in the BPO providing ticketing, customer relation services to the US-based airline. IBM also services world’s fourth-largest airline (by passengers carried) — United Airlines (UA). IBM provides upgrade changes, fare loading, customer relations, ticketing, re-issue etc to UA customers from its Gurgaon, Pune and Mumbai centres. Employees working under Delta have been shifted to other United Airlines processes. Delta was one of the oldest processes in IBM Daksh, dating back to more than five years. The reasons for the pull out were not known as Delta Airline officials failed to respond to ET queries. Though companies in other sectors like banking, IT and public utilities have pulled out processes from India due to quality issues, this is the first instance of an airline pulling out.

Last year, UK based public utility major Powergen pulled out of Vertex, leaving about 700 people on the bench. Last month, UK-based Lloyds TSB bank announced closure of its Indian call centre. Taking a minimum of 1,840 hours per year per seat, the Delta contract may have fetched Daksh a good sum in five years. “The billing rates were hovering around $11 per hour five years back and Delta contract would have fetched Daksh about $50 million. The Philippines, however, has become an attractive destination for such clients looking for only voice-based work,” says Avinash Vasishtha, CEO and MD of Tholons, a BPO advisory firm. Earlier in November last year, Delta Airlines had also announced a seven year IT infrastructure services contract with IBM to help it recuperate from bankruptcy. The Atlanta-based airline had filed for chapter 11 bankruptcy protection with the SEC (Securities and Exchange Commission) in September 2005. IBM as a whole, however, continues to service Delta Airlines in other areas like IT infrastructure services.

Post September 11 attacks, outsourcing of travel ticketing and related services is on the rise. World’s largest – American Airlines alongwith other airline majors like British Airways, KLM, United Airlines, South African Airways and Virgin Atlantic outsource tasks to India. The BPOs handle processes like fare loading, departure control support and internet booking from India. Besides, Indian IT companies provide software development for airline control, ticketing and travel agency automation. World’s largest tour operators like EF Travels, OTC (Online Travel Corporation) and Thomas Cook outsource to Indian BPOs like Interglobe Technologies. WNS Holdings holds the largest portfolio of airline clients which includes British Airways, Air Canada, Virgin Atlantic apart from travel agencies SITA and Travelocity.

Courtesy: Economic Times

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