During 2003 and most of 2004, monthly board meetings and weekly management meetings were tortuous affairs for Keith Newman, head of IT for the UK and Northern Europe at holiday company TUI.
TUI was embarking on a massive change in its business model, moving from a traditional vertically integrated tour operator known for providing package holidays under the Thomson, Lunn Poly and Britannia Airways brands, to a broad leisure sector operator under the Thomson name that offers the multiple components its travelling customers are seeking – flights, hotel rooms, car hire, luxury extras, and so on – both through its own services and third-party operators.
But rather than management meetings being dominated by the strategic changes to IT that were necessary to support that change of business model, Newman found himself on the defensive at a much more mundane level – end user support.
An eight year, EU57 million outsourcing deal, signed in 2002 with IBM to provide desktop services and support to TUI’s 10,000 users at 800 locations in the UK, was going badly wrong. “I would find myself at meetings constantly fielding questions on reliability, responsiveness, quality of service,” he says. “The service was not fit for purpose.” Not only did he think it was costing too much but the quality of service was not there: “It was causing me real problem in terms of service delivery to my internal customers.”
The metrics were not good. It was taking the IBM helpdesk an average of 57 seconds to answer a call; and the average handling time for each problem was a lengthy 12 minutes. Equally telling, almost one in five users would abandon their attempts to simply get help by hanging up the phone.
With IT’s reputation within the organisation badly damaged, Newman started looking for an alternative in mid-2004 and brought the IBM deal to a rapid – and acrimonious – end late in the year.
The shift of supplier could not have been more extreme: from the traditional old guard of IT to one of the new wave of offshore service juggernauts.
After looking at a range of companies – both onshore and offshore – TUI selected India-based Wipro for the five-year contract, giving itself and Wipro just three months to get the service up and running – a tall order given the scope of the contact: service desk facilities, first- and second-line support, Intel server support, Exchange support, security management and 24/7 LAN monitoring and management.
Since the beginning of 2005, Newman had an easier time at board meetings as support issues have largely evaporated. “That noise has disappeared from the business,” he says. “It is not longer on the agenda – unless I bring it up myself.”
“It is a massive relief, because my team can now concentrate on things that are really going to make a different to the business,” he adds.
The core benefits to the business do not look bad either. “It drove about £1 million out of costs in terms of the provision of similar services from the previous contractor [Newman, at no point, chooses to name IBM]. That took it down by around 22%.”
But the gain was not just on the financial side: Even though, the previous service was “not a good benchmark”, the metrics around the service desk say a lot: Average speed in answering a call is now down to 5 seconds; handling times are down to 5 minutes, and user abandonment is down to 1%.
However, the move of services offshore has been a steep curve – on both sides.
The initial problem areas were around business knowledge, application knowledge and around accents, says Newman.
“We have done quite a lot of work with them in terms business knowledge. We’ve run a number of user surveys and found that although our people like the service, they feel the Indian support teams need to have a better understanding of the business. To address that we have done a lot of educational sessions, familiarising them with the business in terms of what happens to a travel shop, what happens in one of our sales call centres, talked them through our sales process, what the peak trading periods are, and so on.”
And he is convinced that domain expertise will grow over the years, be believes. Encouragingly in that respect, in the first year TUI has seen very little turnover in staff at the 24/7 Chennai service desk where 55 people work (20 working at any one point).
TUI, itself, though has enforced some turnover. Newman highlights how the company had issues to address around the strength of Indian accents among some of the Wipro agents, making it difficult for its staff to understand the help they were being given. “We have actively worked with the guys in India to move those people off the account. Wipro does an accent neutralisation process, but the reality is that with some people it doesn’t work,” he says.
He does, however, feel that Wipro needs to invest more in the UK, enhancing its senior and technical management at the upper, client-facing end.
“At this point they tend to rely on the Indian resource – which is very good – but is not as responsive sometimes and not as focused as you would like it to be,” he says.
There have been some unexpected pluses too. “Another thing TUI has found is that because of the time difference of around five hours, the Wipro team are tackling problems overnight so they are resolved before the start of the UK business day,” says Newman.
TUI UK, however, did not go into the Wipro deal blind. The company started using Indian programming expertise in early 2004, signing up Bangalore and Hyderabad-based Sonata Software, a mid-tier services company, for the development of its web applications. As a result of the success of that trial, the company took the bold decision to offshore all of his application development, a process that was only completed in December 2005.
Unlike the shift to Wipro from an existing third-party arrangement, the transfer of its development capability was a more delicate situation. “I had the support of my managing director to do this, but clearly the feedback from some people in the business was that this was not the right thing to do. And certainly the reaction from my team was not overly positive: turkeys voting for Christmas really.”
“Wipro has an accent neutralisation process, but the reality is that with some people it doesn't work.".”
Luc Tredel, director of IT operations, Digital Globe.
TUI’s approach was to put in place a “very significant” incentive package to enable the transfer of knowledge about its applications, systems and business to from the UK to India. “I would not say it was easy. It was challenging in terms of the people side. And anyone who goes into that very significant shift from an internal development team to a third-party, especially an offshore team, does not undertake it lightly. You have to have all you ducks lined up in terms of how you are going to handle the knowledge acquisition, the migration of applications, the dual running of applications, and so on.”
“We were very honest with staff in terms of the positions that were going to be retained within the organisation and which they could apply for those. [The UK IT organisation still numbers 250 with largely high-level skills across development, support, telecoms and other core areas]. But where people were leaving the business we made sure that was handle professionally, and from a reward point of view I think they benefited from that.”
The result is TUI now has 140 developers offshore at Sonata and, says Newman, the subsequent cost reduction has allowed the company to pursue a much broader development programme. “I now get a third more development than I would have done before,” he says.
“And given the change of business model that has involved – among other things, a growth in online revenues from 4% to 30% in two years – I need all the resources I can put my hands on just to keep up with demands from the business.”