Client Case Study 2: STA Travel
Outsource Partner: LPM
Todd Supplee,
Managing Director,
Global Centres of Excellence,
STA Travel
Questions:
1. What was the business requirement that made you consider moving processes offshore? Please give some context
We needed to find a location to centralize our operations from 14 countries into one or two central operation centres. India was the obvious choice, but after visiting there on our initial visit, I was uncomfortable with their growth rate and with their cultural understanding. I knew about South Africa and have spent much time there so I visited one of our RFP vendors’ operation in Cape Town to see what it looked like. I found it very different to the India environment and it affirmed all of my concerns about what India could not offer. South Africa had the cultural understanding/alignment, language with easy accent, time zone to Europe, legal system, and the political stability that was greater then India. Moreover, the government appeared to be more in line with a 1st world economy whereas India was still struggling through the old school kickbacks and corruption. It really provided us a more comfortable place to entrust our core strategic processes. We were also looking to centralize activities and not first off, save money. We wanted an operation that would add value to our organization not just do it. We felt that the increased cost of South Africa, was far outweighed by the offering. In the 1.5 years of operation in South Africa, all of these assumptions were confirmed by our operation.
2. What locations did you consider other than South Africa?
India, Philippines, Australia
3. Within South Africa, what other locations did you consider?
Johannesburg
4. What made you pick Cape Town as the location for your process?
It was easier because our chosen partner already had an operation there. In hindsight, we realized we made the better decision as we attract a certain work force that seems to have a more neutral accent and also more ethical and upstanding employment pool. It seems to be more Cape Malay community which hold ethical values very high, and this transcends into their employment.
5. What was the size of your initial investment? (total funds invested in SA over period of investment)
R10 million in the first year
6. 1 year on, describe your operation – what processes are happening, how many seats, staff etc, what are the people doing?
100 staff: Airline Revenue Accounting processing for 14 countries and greater then 30 airlines. Constructing simple and complex ticket itineraries for UK customers. Loading air product into our product database for our E-Commerce site for UK contracts. Loading land product into our land product database for all of our hotels and land product globally for all countries we do business (84 countries). Technical Support desk as a second line support team serving 14 countries for IT related issues.
7. How was the operation performed relative to expectations (please split between the different types of activity you are doing)?
Airline Revenue Accounting: met 95% of our expectations. Ticketing: met 85% of our expectations. Loading air product: met 110% of our expectations. Loading land product: met 110% of our expectations. Technical support: met 150% of our expectations.
8. How does the labour force compare to the UK?
SA is much better. Strong attention to detail, care in what they do, love to solve problems, want to help, a joy to work with, have fun in what they do, good strong work ethic. Love them, they are my family!!!!
9. What cost savings have you achieved relative to your UK business?
30%-40% reduction.
10. What were the biggest challenges you faced?
Issues with the outsourcing partner who assisted us in establishing our operation (Lufthansa Process Management)
11. What are your comments on the level of Government support you received?
A lot of assistance in the beginning, but nothing in terms of financial support that ended up being substantial. Received most of help, support and guidance from Calling the Cape.
12. With the benefit of hindsight, is there anything you would have done differently?
Found the correct partner or done it myself. Unfortunately, I do not think Cape Town or SA have the right outsourcing provider there yet that can really take this to the next level. I believe the ingredients are there to be taken advantage of, but I don’t think any of the BPO players I have seen, really have an idea of how to mix the ingredients and exceed customer expectations similar to the maturity of India.
13. What would be your advice to other companies investigating Cape Town?
Build a captive and do it yourself. No one knows your business as well as you do, and Cape Town is so similar to most 1st world legal systems, that you can do it yourself. The vendors/partners sometimes cause a bit of a struggle.
