Date:20/07/2004 URL: http://www.thehindubusinessline.com/2004/07/20/stories/2004072001930700.htm

Back `IT firms can tap airline sector for maintenance deals'

Preeti Pandey

Mumbai , July 19

NEARLY 18 per cent of air travel bookings in the US are made online. In Europe, Internet travel vendors such as www.lastminute.com allocate nearly Ł22 million on IT-spends. Yet the Indian IT sector has largely ignored the potential offered by the airline industry, except for domain-focused firms such as Kale.

While a freeze on tech spending by most global airlines is likely to have precipitated this situation, IT vendors can still look at various outsourcing opportunities, according to Mr Partha Iyengar, Vice-President & Research Director, Gartner (India).

With several leading airlines currently in the survival mode, "operating on thin bottomlines and forced to reduce the cost of delivery, airlines are looking at technology to deliver more and become cost effective," explained Mr Neil Beck, Strategy Advisor, Kale Consultants Ltd.

However in the mid- to long-term period, airlines are unlikely to spend on implementing new technology. Most of them already have IT systems in place for work such as internal scheduling and ticketing. For the airline segment a sure way of cutting costs is to outsource the maintenance of these existing applications.

And these are the opportunities that Indian IT vendors can grab, besides the manually intensive processes such as revenue management, airline negotiated fares entry and processing and airline back-office process management services that could be offshored to the IT/ITeS segments. "Airlines can accrue cost savings of 15-20 per cent by outsourcing maintenance work," said Mr Iyengar.

. As for Kale, its focus on the airlines segment is starting to pay off, with the strategic business unit having raked in revenues of $7 million-$8 million last fiscal. Of the 42 companies on Kale's client roster, 34 are from the airline industry.

To complete its take-off, Kale has inducted Mr Beck to front-end the company's marketing efforts in the US.The recent acquisition of Cognosys would increase the product and service offerings of Kale.