Outsourcing Call Centers Pays Off For Delta

The airline is on track to save $26 million this year by outsourcing parts of its call-center operation to India and the Phillippines.

Mary Hayes Weier, Contributor

June 17, 2003

2 Min Read

Delta Air Lines Inc. has been losing money since the terrorist attacks on Sept. 11, 2001, and doesn't anticipate returning to profitability anytime soon. But the company is getting some relief from a decision to outsource parts of its call-center operations offshore, and is on track to save $26 million this year, said Gloria Richard, Delta's general manager of call-center partner relations.

Richard, speaking to about 100 attendees at a conference hosted by India-based IT services firm Wipro Technologies last week, said a portion of some 91 million calls per year are now answered by Wipro employees in India and Sykes Inc. employees in the Philippines. The company went live with offshore call centers in January and is preparing to sign up a third, undisclosed vendor in the coming weeks, Richard said. She added that offshore outsourcing is just one of many cost-reduction measures the company has taken--others include reducing head count by 13,000 people and cutting the number of flights by 14%. "It was time for us to fundamentally change our business," Richard said.

Indeed, despite the angst facing U.S. executives about moving jobs offshore, those who spoke at the conference predicted that more large companies will find they'll have to do so in order to stay competitive in the global marketplace. "Offshore outsourcing is going mainstream," Gartner analyst Rita Terdiman told conference attendees. "It's not a matter of if. It's a matter of when and how much."

Remarkably, Delta so far has avoided laying off any of its U.S.-based call-center employees, Richard said. Like most other companies that use call centers, the turnover rate is high for jobs that involve dealing with repetitive requests from the public all day on the telephone. The avoidance of call-center layoffs has helped morale at the company during the transition, and Richard said Delta hasn't seen any of the feared decreases in U.S. staff productivity due to offshore outsourcing. In fact, Delta has seen productivity improvements "as a result of a little bit of competition" from offshore workers, she said.

During the planning process, Delta categorized employee relations as the biggest and most potentially damaging aspect of offshore outsourcing, which it has tried to manage through "very matter-of-fact, honest communication" and an emphasis on management's commitment to avoid involuntary reductions, Richard said. Still, the largely nonunion company has earmarked money for union-avoidance campaigns.

Since call-center employees are often the company's first contact with customers, Delta includes "accent neutralization" as part of its call-center training to help reduce communication problems. But the company sees such efforts as worthwhile: The average salary with benefits and bonuses for a call-center employee in the United States is $46,000, compared with $6,000 in India and $7,300 in the Philippines. Richard said that having three locations helps the company mitigate risks and provides some competitive leverage with fees.

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