Travel giant TUI wades deeper into Indian outsourcing

European travel giant TUI AG is expanding its IT outsourcing in India and will also add some business functions to the mix, part of an effort to reduce its costs, an executive at the company said.

TUI has identified outsourcing as a strategic move that should help it reduce costs in the competitive market for travel booking services, said Keith Newman, IT director of TUI U.K. and chief information officer (CIO) for TUI Northern Europe. TUI competes with traditional tour operators, low-cost carriers and online travel service providers, he said.

The company has already moved part of the IT infrastructure support for its U.K. operations to Wipro Ltd., a software and services provider in Bangalore. The move, made last November, has produced cost savings of about 20 per cent, Newman said. The support was handled previously by a multinational IT services provider which Newman declined to name.

Wipro is providing remote support for about 10,000 desktops and 300 departmental servers, including helpdesk and monitoring services. It is also providing messaging services such as e-mail across TUI’s 800 locations in the U.K., where its brands include Lunn Poly and Thomson Holidays. TUI’s headquarters is in Hanover, Germany.

Newman was initially a little concerned about outsourcing to a provider in India, because of the remoteness and because he anticipated some problems with the Indian accent, but his fears turned out to be unfounded. Besides the cost savings, transferring the work to Wipro resulted in better quality of service, according to Newman.

TUI now plans to move all of the application development and application support for its U.K. operations to India by the end of the year. This will include custom software development and support for users of the applications. TUI has already outsourced some work in this area to Sonata Software Ltd., a software and services company in Bangalore.

The company has also begun talking to providers in India about outsourcing its back-end IT infrastructure, including management of its Unix servers and mainframes.

TUI is also conducting trials with WNS Global Services Ltd., a business process outsourcing company in Mumbai, for outsourcing some of its back-office business and administrative functions, such as invoice processing. “We are looking at both cost reduction and improvement of service,” Newman said.

TUI explored outsourcing some of the IT-related work to South Africa but found that it would have been more expensive than outsourcing to India, Newman said.

Although most of the offshore outsourcing within TUI is from its U.K. operation, its German division is also exploring outsourcing in India, according to Newman.

By the end of the year TUI expects to have about 190 staff working full time at service providers in India doing outsourced IT work. The number of staff working on back office processes would depend on a variety of factors, including the progress of the trials at WNS, Newman said.

To mitigate its risks TUI plans to work with a number of providers in India, Newman said. One of its U.K. suppliers, LogicaCMG PLC, which does desktop support and application development for Britannia Airlines, a part of TUI U.K., has moved a significant part of its delivery of services offshore to India, for example.