Eight months into a program that cuts its costs in half by using a 40-seat call center in the Philippines, Casto Travel of Santa Clara, Calif., soon will market offshore fulfillment to other travel companies through a pending spinoff known as Casto Solutions.
With the notable exception of American Express, Casto is one of the only corporate agencies to service North American travelers from more economical offshore locations.
Although half are considering it, Amex is alone among the top 25 corporate travel management firms to have set up offshore call centers for handling either normal or after-hours service for corporate travelers based in North America, according to a poll conducted last month by BTN. Having heard complaints from some clients, Amex offers programs that guarantee calls stay in the United States
(BTN, Oct. 27, 2003)."Many of our clients have been very aggressively cutting their costs, but there comes a point where you cannot reduce the agency transaction fee without cutting into profits or operating at a loss," said CFO Marc Casto, noting that 25 Filipino agents now are handling 20 percent of the agency's roughly $90 million in ARC volume. "In the current pricing environment, the minimum you can go down to is about $20. Clients are consistently asking for lower prices than that, so we're providing an option, should they want to be in that type of environment. Casto will continue to offer services from the United States for those clients who are willing to marry the higher-cost environment with the local service."
Other large travel management firms that said they are considering offshore services included Carlson Wagonlit Travel, Navigant International, Total Travel Management, TQ3 Travel Solutions and WorldTravel BTI.
"We've taken some baby steps in terms of getting quotes from third-party providers," said TTM president Linda Garback. "The real cost savings might be 50 percent to 60 percent, but service is my biggest concern. More and more clients are going into a risk-reward kind of program, and a couple of them really wanted us to look at this. If it works out, it will be an option."
According to TraveLeaders senior vice president of strategic planning Jay Klein, a lack of qualified agents in the United States will be a growing problem this year as business picks up, which is a major reason he anticipates considering offshore agents for after-hours support.
Also a provider of travel fulfillment, WorldTravel BTI sibling company TRX just hired Vic Pynn, an Amex vice president responsible for launching offshore activities in India and the Philippines, to serve as vice president of global solutions. Pynn will support the company's global expansion, which TRX said will include India "in the coming year."
"In terms of offshore or near shore, we see it as more tactical in the sense that when you look at our network, we already have an operation in India and other places, so the issue is, 'Would we fulfill any call center activities in India?' and the answer is, we would look at it," said Carlson Wagonlit North America president Robin Schleien. "Some customers are interested in looking at it, whereas others look the opposite way."
Critics of offshoring cite concerns about data security and the shipping away of jobs—as well as clients who demand "high touch" service—as reasons they would not contemplate it. "Some of our prospects are unhappy with that as a solution," noted Garber's Travel Service executive vice president Joan Kaplan. Garber's joined Northwestern Travel Management, Omega World Travel, Travel & Transport, Travel Inc., Travel Management Partners, Tzell, VTS, World Travel Inc. and others in saying they are not considering using offshore agents.
While the interest in offshoring appears to have hit gold-rush status, rushing into such services is exactly what those most familiar with them warn against. That's what proponents said explains the customer service issues faced by Amex, Dell Computer and others that have moved call support to India and elsewhere. Those companies have adjusted their services in the face of complaints from customers about difficulty communicating with accent-heavy agents who use scripts.
"There is truth to what has come out," admitted Anish Nanavaty, executive vice president with WNS Global Services, an India-based business process outsourcing firm that was created by British Airways and now handles call support for airlines and one online travel agency, Destina.ca
(see story). "These issues should not be ignored."
Nanavaty argued that most service issues stem from the sloppy creation of such call centers. "It's not that people are not picking up phones, which is the biggest complaint about call centers on the U.S. side," Nanavaty said. "These are extremely polite agents, but the gap sometimes comes about in the innate understanding of what the customer wants to achieve. There could be gaps in that understanding if the agents are too young or not trained adequately—it's just the infancy of the industry. There are companies with very elementary call center programs in which scripting is useful, but not in travel. There, it's all free form. The accent issue is a reasonable one, but we all have gone through a lot of effort to neutralize accents."
Nanavaty downplayed the impact of attrition, which some others see as the key factor impacting service levels in the fast-growing call-center sectors of places like Bangalore, India.
"India built up so quickly that they are seeing problems with attrition and people moving across the street for $500 more," said International Monetary Fund senior transportation officer Caro Cook, who is exploring the offshore option for her ARC-accredited Corporate Travel Department. "So there's a groundswell of need for good people, but I think it will shake out and regroup. You just have to keep a tight grip on the operation."
Although Casto Solutions has yet to empirically measure customer satisfaction with the thousands of reservations so far processed by its Filipino center, officials said just one traveler has complained. "We had one traveler of one client who voiced a strong opinion about being served by a foreigner in a foreign land," said Casto COO Gus Vallejo, who has been named CEO of Casto Solutions. "In no uncertain terms, he wants a U.S. agent, and so that's what we're giving him."
When Casto told clients about the offshore operation, he said, "There was no negative perception, which is interesting because five years ago, when we set up the Rapid City, S.D., call center, the reaction was, 'How dare you?' " Now, Vallejo said, "it's more common and accepted for services to be provided out of state using 800 numbers." Moreover, many clients and other companies in Casto's Silicon Valley backyard are moving information technology work offshore.
For most travel buyers, the bottom line is still the balance between cost and quality service—as long as service is up to par or better than expected. "We gave the agents five months of training before having them take any calls or answer any e-mails," Casto said. "It's virtually impossible to have a scripted response for a travel inquiry."
Vallejo cited the Dell PC example: "For that, it's all formatted and there's a template—here's the nature of the problem, and here's the answer. Travel is multifaceted with a greater degree of sophistication and urgency. It took us quite awhile because we wanted to make sure the people were as conversant as possible, and we're excited because there is a very strong customer service orientation in Asia, and the Philippines has a command of English."
Vallejo and president and CEO Maryles Casto both were born in the Philippines, which helped them develop a presence there beginning in 1996 when the firm became the majority owner of Anscor Travel Corp., located in Makati/Manila. Casto began its offshore work by outsourcing back-office functions to Anscor more than a year ago.