BANGALORE/MUMBAI: Government-owned airline Air India has, after much hemming and hawing, found a business process outsourcing partner in Sutherland Global Services even as many other potential bidders avoided the five-year contract because the terms were exacting.
Air India postponed its tender by six months to December-end and introduced three amendments to the first draft around November before sealing the about $100 million (Rs 535 crore) deal with US-based Sutherland early this month, according to sources with direct knowledge of the development.
Major BPOs, such as Servion, Serco Global Services, Aegis and WiproBSE 0.92 % BPO that Air-India invited to bid for the contract, had hesitated to take part in the bidding after going through the terms and conditions, said the sources.
Among other things, the BPOs were put off by the thin margins on offer, the financial condition of the loss-making airline and risks associated with taking up government-related contracts, especially after the recent Commonwealth Games in New Delhi, where all contracts are coming under the microscope to check for potential fraud.
"In this space any business that brings less than average margin could pull down the company's performance," said Sanjay Dhawan, executive director of PwC India. "So, in a typical $100 million deal, where the vendor is making half the average margin, they would need to grow the business four times to reach the level."
The five-year contract with Sutherland, which recently bought the healthcare BPO of Chennai-based Apollo HospitalsBSE 0.32 % for 1,000 crore, will replace a three-year deal with InterGlobe Technologies-part of the group that runs Indigo Airlines-that ran its course. AI was said to be looking for a partner that did not have a close link to a rival.
"A lot of times, companies get concerned about the security of passenger data and efficiency in the system," said Dhawan. "Also, a new contract with a new vendor gives an opportunity to the client to evaluate the existing contract by bringing cost-savings and efficiency."
According to the sources, the new deal is on a full-time equivalent basis of up to 600 seats.
Chennai airport upgradation: Govt may privatise cargo operationChennai, Feb. 10:
The Government could give the entire air cargo operation to a private company in the proposed second phase of the Chennai airport modernisation plan, said a senior official of Airport Authority of India (AAI).
“We are open to the idea of outsourcing the entire air cargo operations in the second phase when a new cargo facility is to be built in the old terminal,” said G.K. Chaukiyal, Member (Operations), Airport Authority of India.
Last week, the first phase of the modernised terminal was inaugurated by Vice-President Hamid Ansari.
“We will give the land while the build, own and transfer operator will take care of the construction and operation of the cargo terminal,” he said.
The outsourcing plan has been recommended by the Centre for Asia Pacific Aviation. “We will look at the report in a couple of weeks. If approved, we will go ahead with the outsourcing plan,” he said. AAI will also review the master plan of the Chennai airport, he said.
The Chennai airport’s capacity is to handle 11 lakh tonnes of cargo per year. However, only one third of it is being utilised, he said.
When his attention was drawn to the availability of only two parking bays for freighters, Chaukiyal said with the introduction of the Automatic Storage and Retrieval System, the Authority plans to have more bays.
G. Raghu Sankar, Chairman, SICCI Shipping and Logistics Committee, said that the AAI recently dedicated both modernised airport terminals at Chennai and Kolkata. This is a great opportunity to showcase their capabilities in terms of attracting passengers and cargo.
As of now, the trade, the industry and users feel that the scope for improvement in the service level is high and that these airports are way off from reaching their potential.
In 2006, an exercise was undertaken by AAI Chennai involving the Chennai Customs House Agents Association, Air Cargo Agents Association of India (southern region) and Board of Airlines Representatives (southern region).
The exercise was to benchmark and fix responsibility with a time frame for each activity commencing from landing of a flight to delivery of cargo. The study distinguished a time frame for passenger and freight operations. This study could be revisited to align with the present day changes and requirement and can be made as a public document, he said.
http://www.thehindubusinessline.com/industry-and-economy/chennai-airport-upgradation-govt-may-privatise-cargo-operation/article4400611.ece
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