Sabre Tests Strategic Offshoring with NIIT Technologies, Then Opens Captives Around the Globe | Article
In 2001, Sabre Holdings began evaluating options to reduce its sales and distribution costs. But the company also wanted to minimize the risk of having all its IT knowledge in one region, according to Ana Clark, vice president of host product development at Sabre. At the time, Sabre had more than 550 U.S.-based contractors supporting its IT staff.
“Previously, we outsourced only on a need-to basis and did not set up our own offshoring centers,” says Clark. Senior management decided that providing travel product development, support, and maintenance from different geographies was the best way to meet its business goals.
Sabre, whose mission is to connect travelers with the travel possibilities, provides products and technology solutions for the travel industry. Sabre developed the first global distribution system (GDS) developed in the early 1960s; 30,000 travel agents, 400 airlines, and 35,000 hotels currently use it. Sabre also owns the Travelocity Web site.
In 2002, Sabre issued an RFP for offshoring some of its product development functions to India. The objective was to find a partner that supported its cost reduction goals, demonstrated an understanding of the travel industry, and had the cultural knowledge to support its Asia-based clients, explains Clark.
Sabre invited 20 companies to participate. Five made the short list. For the final evaluation, Sabre asked two companies to develop a pilot project solving a business problem. “NIIT Technologies demonstrated the domain and technology expertise to develop and support the products we needed,” Clark explains.
Today, engineers from NIIT’s Delhi and Mumbai centers build and test products for PNR, pricing, and ticketing that Sabre’s travel agency clients use. As the relationship progressed, NIIT moved to end-to-end maintenance. This includes interface systems support between core reservations and down-line systems. “We have become Sabre’s subject matter experts, especially as they add product functionality,” explains Lalit Dhingra, president, U.S. operations, NIIT Technologies.
Currently, NIIT has more than 220 people working for Sabre, which is one of NIIT’s largest U.S. clients in travel and transportation.
Building an offshore relationship
Dhingra says communication, trust, and transparency are key to developing a successful relationship. “Understanding Sabre’s business needs is our priority. With extensive travel industry experience, we can build solutions to meet each client’s unique product specifications,” he continues. Adds Clark, “We encourage the teams in the U.S.and India to work as one. We can only be successful if we work together.”
Before the offshoring relationship, Sabre maintained its documentation according to internal standards, which is often the case with in-house operations. “In an offshoring relationship, documentation becomes the lifeline for knowledge transfer between teams,” says Dhingra. Clark adds, “We documented the product knowledge of our Japan and Singapore travel experts based in Texas to better enable the teams in India.”
Clark admits dealing with the cultural differences “was a journey. We all have different communication styles. But once we started working as a team, the issue resolved itself quickly,” adds the NIIT executive.
Travel helped the relationship. Sabre management went to India and NIIT executives spent weeks in Texas. Clark says the initial visits helped each side “understand each other’s style.”
According to Lalit, within six months both teams had built a comfortable relationship.
Why this relationship works
Dhingra says both parties are “up front in their communications.” Each side has been flexible when needed. “We try to understand their organization and business objectives so we appreciate their issues and concerns. Then we reconfigure our processes so we have a win-win situation,” he explains.
If there’s a dispute, a conference call generally resolves the issue.
Sabre’s original driver was to cut bottom-line costs and introduce new products more cost effectively. Dhingra says NIIT’s clients have cost savings of 30-35 percent over a five-year engagement period. “The savings increase as the relationship matures,” he explains.
“We helped modify their products and migrated some of their mainframe products to newer technologies, which cut cost substantially,” he continues.
Clark says the relationship has been really valuable for Sabre’s focus in Asia. “Our main driver was cost reduction. But it is great to have our developers close to our Asian travel agency customers,” says Clark. She adds Asia is Sabre’s fastest growing region, and growth in India “is one of our focuses.”
Time zones have made a difference here. Sabre is based in Fort Worth, Texas and its data center is in Tulsa, Oklahoma. “Our main operations are in the Central Time Zone. Having a presence in Asia meant there was development support available in the same time as our Asian customers. Our Singapore partners said they were more satisfied knowing they could reach developers faster and solve issues in a timely manner,” she reports.
Outsourcing to NIIT gave Sabre access to skill sets it had difficulty finding in the U.S., like Internet and TPF skills specific to the travel industry
NIIT was Sabre’s first deep dive into strategic offshoring. Once the travel company become convinced of its benefits, it “aggressively adopted a global sourcing strategy,” says Clark. “Our goal is to have up to 50 percent of our development globally sourced.”
Sabre has since opened its own captive centers in Krakow, Poland; Bangalore, India; Buenos Aires, Argentina; and Montevideo, Uruguay for strategic in-house development work. NIIT is its only strategic partner with offices in Mumbai and Delhi.
NIIT Technologies is a public company and the IT outsourcing arm of NIIT Enterprise. Last year it had $500 million in revenues. It employs over 10,000 employees across 44 countries. The company does multi-shore application development, remote infrastructure management, and business process outsourcing. Buyers in the travel sector include British Airways, Virgin America, United Airlines, Sabre, Emirates, and Singapore airport.
Lessons from the Outsourcing Journal:
- Sabre offshored to cut costs and reduce risk by geographically spreading its product knowledge.
- It tested its offshore strategy with NIIT Technologies in India. The results were so successful it opened its own development centers across the globe for strategic work.
- Having a presence in Asia helped Sabre improved its customer satisfaction with Asian travel agency partners and helped its growth in India.
- Benefits include lower cost, shorter time to market for new products, and access to hard-to-find skills in the United States.