TMCs Export Support: Going Offshore To Improve Costs, Service

Travel companies are exploiting regulatory liberalization, cheaper communications and a general shrinkage of the globe to maintain or improve service and cut costs. For travel management companies, opportunities include the shipment of contact center jobs to such locations as Costa Rica, India and the Philippines, as well as the creation of regional centers using multiple languages to service multinational corporations.

One component of a recent deal to consolidate nearly all of Armonk, N.Y.-based IBM's global card and travel needs with American Express involves handling IBM travelers from a pan-European Amex center in Nice. Other recent developments include American Express' movement of standard 24-hour operations to the Philippines, TQ3 Travel Solutions' establishment of a four-language, six-nation call center near Brussels, the expansion in India and Panama of operations by Rosenbluth International subsidiary Upstream and the impending opening of a regional Carlson Wagonlit Travel center in Poland.

Travel management companies clearly are trying to slash labor expenses, presumably without reducing service quality. American Express' Travel Related Services division cut 15 percent of its workforce—or more than 11,000 jobs—between the beginning of 2001 and 2003.

"At TRS, the most significant reductions occurred within our Corporate Travel business," American Express chairman and CEO Ken Chenault said in remarks prepared for a financial presentation last week. CFO Gary Crittenden said Amex, during the fourth quarter, "geared up for the movement of additional jobs to a service site in India" as part of an effort "to optimize the cost of our infrastructure around the world by moving jobs to low-cost wage environments. Those actually don't eliminate people, so the headcount stays the same, even though the cost to produce actually goes down." The TRS division earned record profits for the company both in the fourth quarter and for the year 2002.

An Amex spokesperson said she was aware of only one corporate travel service that is moving offshore in this fashion, Amex's basic Emergency Travel Service, which is in the midst of a six-month transition to the Philippines from Houston. "We have operations still in the Detroit area that do the bulk of our ETS support, including the gold-level service," she said.

Through a Mumbai, India-based joint venture in which it holds a 50 percent stake, Rosenbluth's Upstream is drawing a college-educated workforce that costs it "anywhere from 30 percent to 50 percent less," depending on many variables, said vice president of sales, marketing and client services Joe Terrion.

The center, which Terrion said will expand from 100 to more than 500 seats, began with support from Upstream client Orbitz. Reflecting the large