By: David J. Wardell

© 1996 By: David J. Wardell.  Reproduction or redistribution in any form without written permission is strictly prohibited.

Fortunately, the movement toward outsourcing is slower. Usually, this is because the theorists have not figured out how to do it, not a result of their loss of confidence in the principle.

It’s time the travel industry took a serious look at precisely what is gained by outsourcing, as well as what is lost.

"Outsourcing" means to acquire from an external supplier basic business products or services that otherwise might be produced internally. This is done to improve quality or timeliness or, more commonly, to lower costs.

Travel outsourcing has a long and successful history, ranging from services that have routinely been outsourced for years, such as 24-hour help services, to travel products themselves, such as vacation packages, which are, in a sense, outsourced from agency to wholesaler.

Recently, outsourcing has taken a much higher profile in the travel industry, as a few very large companies and some midsize ones start outsourcing major components of their operations and essential services. A good example is reservations. Hotels, airlines and, recently, agents have outsourced reservations to vast "factories" where teams of reservationists sit before CRTs and take bookings.

The reason for doing this is clear: A scripted process allows workers who may lack traditional travel skills but possess others, such as sales ability, to handle more calls per hour in low-wage markets.

A closer look, however, reveals that some substantial elements are compromised. Changing the skill base of the reservationist means that many of the things customers value no longer can be delivered. The efficiency and sales skills that are important to the supplier become paramount.

For agencies, the problem is worse: Most agencies did not build local branches because they wanted to but because the customer required it. In a competitive industry, it is challenging and risky to tell the customer what is best.

Outsourcing is offered as a solution to the high investment cost of the technology required to improve productivity. There are clear examples of where this has and has not been true.

Clearly, outsourcing many parts of the travel business has been successful for both principals and their customers, the best example being 24-hour emergency services and complex airline itinerary pricing, where outsourced services can be offered that most agencies never could replicate.

Outsourcing technology service has been far more uneven. When it comes to technology, most travel companies want to outsource some things that must never be outsourced, such as planning or integration. One cannot expect outsourcing to deliver where expectations are unrealistic.

Travel outsourcing can bring important benefits to travel suppliers and agents, but realizing these benefits demands careful, ongoing planning, diligent oversight and more than a little skepticism.