By using IT outsourcing in India (Tata?), Poland, BA and its parent is revealing some important information: They are cutting corners to the point of risking airline operations. The question is, where else are they unnecessarily cutting corners? Are they cutting unnecessary corners on airplane maintenance?
Other quality airlines have outsourced IT or part of their IT operations, but they are careful about choosing their IT vendors.
For example, Israel's national carrier, El Al, which also has extremely good security against hijacking, outsources at least its ticketing as a cost savings move, but this it does to Lufthansa the German national carrier, which uses the Amadeus Ticketing platform. El Al is saving money over running their own operations, but still using a reliable vendor.
Quantas, the airline of Australia, outsources its IT operations to IBM. They did not choose the cheapest alternative, but a reliable one.
Contrasting with Israeli and Australian flag carriers El Al and Quantas, BA the British flag carrier made some extremely unwise choices trying choose a "cheapest" solution, instead of a money saving cheaper solution.
Compared with El Al and Quantas, BA management has shown us that quality of operations is not their top priority. The question is, where else in their operations is this a problem?
BA management is revealing to customer and shareholder alike that customer service and shareholder value is not their highest priority. They are signaling to shareholders that it is time for a change before they further harm the BA brand and before some serious accident happens.
Step 0. Well functioning and balanced company.
Step 1. Why these engineers are so expensive? We can hire 'ten for one' in 'country A'.
Step 2. Cut local IT budget twice, put goals to have *zero* local IT budget in 2 years. Outsource everything to 'country A'.
Step 3. People are fired, everything is outsourced, operational knowledge accumulated over the last few years is lost.
Step 4. Why everything is broken and we loosing millions? The service is of a quality like we live in 'country A'!
Step 5. We need to hire high quality local team that can take *ownership* over product. We are willing to pay a fortune.
Step 6. Well functioning and balanced company.
Not sure, if airplane maintenance is being treated the same way.
>The airplanes that U.S. carriers send to Aeroman undergo what’s known in the industry as “heavy maintenance,” which often involves a complete teardown of the aircraft. Every plate and panel on the wings, tail, flaps, and rudder are unscrewed, and all the parts within—cables, brackets, bearings, and bolts—are removed for inspection. The landing gear is disassembled and checked for cracks, hydraulic leaks, and corrosion. The engines are removed and inspected for wear. Inside, the passenger seats, tray tables, overhead bins, carpeting, and side panels are removed until the cabin has been stripped down to bare metal. Then everything is put back exactly where it was, at least in theory.
>The work is labor-intensive and complicated, and the technical manuals are written in English, the language of international aviation. According to regulations, in order to receive F.A.A. certification as a mechanic, a worker needs to be able to “read, speak, write, and comprehend spoken English.” Most of the mechanics in El Salvador and some other developing countries who take apart the big jets and then put them back together are unable to meet this standard. At Aeroman’s El Salvador facility, only one mechanic out of eight is F.A.A.-certified. At a major overhaul base used by United Airlines in China, the ratio is one F.A.A.-certified mechanic for every 31 non-certified mechanics. In contrast, back when U.S. airlines performed heavy maintenance at their own, domestic facilities, F.A.A.-certified mechanics far outnumbered everyone else. At American Airlines’ mammoth heavy-maintenance facility in Tulsa, certified mechanics outnumber the uncertified four to one.
Maintenance facilities are usually certified by the local aviation authority
Aviation is also "regulated" by two extra entities: plane lessors and insurance companies. Both won't be happy if the maintenance done at these facilities is not correct
Step 5. We need to hire high quality local team that can take ownership over product. We are willing to pay a fortune. But we can't hire anyone local, because we did step 3 for too long or too often, and that knowledge is locally gone.
What country are you talking about? In India I don't know but in China the living costs are skyrocketing and are in many occasions more expensive than in major western cities. 2 for 1 (if the team lives in a big city) or at most 4 for 1 is what I believe would be the upper bound.
Well if you truly talk about "third world country" then sure, 10 for 1 but what kind of country and IT operation would that be?
The problem is (and I've seen this happening) for many managers or C-levels, it's really hard to see the distinction between high- and low quality. They just can't tell.
So if all offers look the same quality to you, you obviously buy the cheapest.
Or you delegate to people who can? Or at the very least don't change anything you don't understand!? The root cause of course is the MBA type without the technical background being put in charge of engineering teams in the first place.
Quantas, the airline of Australia, outsources its IT operations to IBM. They did not choose the cheapest alternative, but a reliable one.
I believe IBM was responsible for the Australian census debacle in 2016. Hardly a ringing endorsement of their reliability, and not the only high-profile instance of them messing things up.
While I can't speak to the exact circumstances, IBM when it takes over operations often hires the IT staff of the firm it is taking over operations from and runs systems on multiple-year contracts.
At any rate, I believe few would contest that IBM in general is a more reliable vendor than Tata, other Indian suppliers or say, offices in Poland.
It's pretty funny how in this thread IBM is conflated with decent quality IT outsourcing and Poland with poor quality, while IBM's outsourcing is done out of Poland (among other countries).
IBM has the resources and infrastructure others firms don't have. It can afford to pay higher rates for the top IT people and it has the software and management and the backup in the US to ensure that projects are performed properly.
But as a rule, Poland, India, ...other cheaper locales don't offer the quality of the US, Israel, ....look to the places where the world's top software/computer chip design/hardware is being designed and built. There is a correlation.
For example, Israel has a population of only 8 million yet creates more original software and startups (purchased by developed nations) than all of India. India buys hi-tech military technology from Israel (and the US).
If you're going to down vote, please state the reason. The truth is that tiny Israel has more high tech software/hardware than any other nation except the US. There is definitely a difference in software quality.
> IBM when it takes over operations often hires the IT staff of the firm it is taking over operations from and runs systems on multiple-year contracts.
And typically has them laid off in 3 - 5 years and replaced by IBM offshore resources or subcontractors.
How can they do that and save the client money at the same time?
Because the staff they transferred over are used to train cheaper replacements then laid off after 2 years. That is the plan all along, tho' the staff will never be told it upfront.
And presumably short term too, so even if they did hire the whole hierarchy, if they replace it with one having a quarter of the cost in a couple of years then they profit long term?
> IBM when it takes over operations often hires the IT staff of the firm it is taking over operations from and runs systems on multiple-year contracts.
I've seen this happen many times and it's always been successful. They can replicate the business processes they've honed over time whilst keeping that important business knowledge. It's also often better for the staff as they can hand off that knowledge and move internally within IBM to new and more challenging roles without switching employers.
I've seen this happen too. But people who wanted to work for company X for whatever reason, not for IBM (or whoever).
Now they work for IBM, and all the things they did above-and-beyond their job description are now billable. Now their incentive isn't to help company X that they wanted to work for, but to screw company X for every nickel-and-dime because that's where their new employer's revenue comes from. And they know all the skeletons in the closet and all the pain points.
Stab good people in the back and you make powerful enemies, the managers of all the company X's out there never learn this lesson.
Interesting. In IT circles IBM is generally regarded as "worst of class", due to continual waves of firing competent employees, outsourcing, and many other dodgy practises. A recent example (there are many, many more):
Pretty convenient that IBM's size lets them remain trusted for things that would disqualify random companies for a given outcome. Why pay so much more for the same problem?
What is the conversation that makes this happen? "Yeah, let's go with IBM. The same problems might crop up, but they're a larger company."
I wouldn't. IBM have made it a strategic goal to move their staff to "low cost locations" and are even now getting rid of staff in higher cost locations.
IBM can mismanage projects and deliver subpar results and people will keep giving them millions of dollars for it "because"
The smaller shop have more reasons to try harder and deliver a better result. IBM will just hire the cheapest people they can find and put them under 5 levels of management and good luck with that!
People in this thread talk about IBM like they're the only well known vendor that does this - far from it. All of IBM's enterprise competitors doing professional and managed services such as HP do this as an industry practice. This has everything to do with their customers treating IT as cost centers. I very much believe in hate the game, not the player.
I live in Atlanta - and as someone mentions below there have been pretty big IT outages at Delta etc too.
But - without any evidence whatsoever wholesale blaming of Indian and Polish companies seem somewhat unfair. Until, we have a postmortem and know this in more detail - it appears that you just have a axe to grind.
We don't know yet what failed, let alone why. What sense does it make to jump to conclusions so quickly?
And what difference does it make whether the error -- if indeed the root cause was an error, which hasn't yet been established -- was made by someone in India vs. someone in Poland vs. someone in the UK?
I think you should not put IT specialists from India and Poland in the one bag. Polish engineers are sometimes a bit late when it comes to the new technologies, but are very good compared to ones from, for example, Ireland.
Polish engineers are sometimes a bit late when it comes to the new technologies, but are very good compared to ones from, for example, Ireland.
It doesn't matter. They are no smarter than BA's original British engineers, but with decades less experience on those systems. Even if they were smarter - and in general the talent prefers to work for real companies, not bodyshops, so that's unlikely - they can't compensate for the lack of real experience.
Only a person who believes experience doesn't matter would sign an outsourcing deal.
> They are no smarter than BA's original British engineers, but with decades less experience on those systems
Wow you really believe Poland is some third world country where we ride horses to our farms? They have experience, in some ways Poland is way ahead of UK in digitalization of many services. In great part because of thriving economy, great schools and excellent developers.
Wow you really believe Poland is some third world country where we ride horses to our farms?
No, I was in Poland just last week in fact.
But my point stands: BA's own staff have been operating its systems for decades. No matter how good you are solving made-up puzzles on Hackerrank, you can't match that experience of those systems overnight. There would have been people at BA who'd been working on say the reservation system for 30+ years - and you're claiming your "hacker rank" can beat that. And THAT is why outsourcing always fails, that kind of belief.
Apologies if that seems a bit harsh, but the assertion that "we do well on Hackerrank therefore we are as qualified to maintain legacy systems as their original authors" just doesn't make sense.
Decades? We are talking here about 2-3 years lag due to conservatist approach. You seem to know nothing about what you write.
You think the core systems of major airlines or any other large org turnover every 2-3 years? You think knowing the syntax of a particular language is comparable to decades of domain knowledge? You think that ANY 20-something, anywhere in the world, has decades of experience of anything??
> Quantas, the airline of Australia, outsources its IT operations to IBM. They did not choose the cheapest alternative, but a reliable one.
Actually, Qantas has a huge 'workforce' of Tata onsite as well. Of course all the newer and 'more exciting' stuff is ran either by in-house resources or 'digital agencies' - the more expensive kind of outsourcing.
(FWIW, it's Qantas - Queensland and Northern Territory Aerial Services)
>Quantas, the airline of Australia, outsources its IT operations to IBM. They did not choose the cheapest alternative, but a reliable one
And where do you think that work awarded to IBM is being done? Chances are it's India. As for IBM being reliable - are we talking about the same company known for its brazen incompetence in Australia?
Other quality airlines have outsourced IT or part of their IT operations, but they are careful about choosing their IT vendors.
For example, Israel's national carrier, El Al, which also has extremely good security against hijacking, outsources at least its ticketing as a cost savings move, but this it does to Lufthansa the German national carrier, which uses the Amadeus Ticketing platform. El Al is saving money over running their own operations, but still using a reliable vendor.
Quantas, the airline of Australia, outsources its IT operations to IBM. They did not choose the cheapest alternative, but a reliable one.
Contrasting with Israeli and Australian flag carriers El Al and Quantas, BA the British flag carrier made some extremely unwise choices trying choose a "cheapest" solution, instead of a money saving cheaper solution.
Compared with El Al and Quantas, BA management has shown us that quality of operations is not their top priority. The question is, where else in their operations is this a problem?
BA management is revealing to customer and shareholder alike that customer service and shareholder value is not their highest priority. They are signaling to shareholders that it is time for a change before they further harm the BA brand and before some serious accident happens.