Editor's column by Louise Driscoll

Talking point: why ‘outsourcing’ isn’t to blame for Virgin Blue’s IT systems failure

The Sydney Morning Herald article causing a stir

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Talking point: why ‘outsourcing’ isn’t to blame for Virgin Blue’s IT systems failure

Outsourcing has become a mega trend.

Outsourcing has become a mega trend.

Who can blame Virgin Blue’s passengers from catching a dose of holiday blues this week after over 50,000 were stranded across Australian airports when the airline’s IT system crashed on Sunday 26 September, causing bumper delays.

The airline also had an anxious 21-hour wait before its check-in and bookings system was kick-started back to life. Meanwhile confused staff resorted to manually checking in frustrated passengers, but even that process couldn’t stop the cancellation of over 100 flights.

Still, the airline blames Navitaire, the company it outsources the technology to – for taking almost two days to fix the glitch – a matter we can expect to play out through the courts in the coming months as the airline looks to recoup losses.

Naturally, the incident led the media to ask a pack of questions – including Andrew Heasley, reporter for the Sydney Morning Herald who used the event to shine the topic of airlines outsourcing jobs into the spotlight.

His piece, headlined, “the secret life of airlines”, projected the glitch as an example of where “outsourcing can fail spectacularly”.

The article left many online readers feeling hot-headed, with multiple postings accusing the writer of suggesting the incident could have been avoided had Virgin Blue kept its IT system in-house.

A few commenters summed up the mood: “To say that Virgin doesn’t staff its entire operation is akin to saying that McDonalds doesn’t bake its own hamburger buns”, said Peter Hinton from Sydney. The view is echoed by reader ‘Paul T’: “Virgin Blue’s problems would have occurred irrespective of outsourcing and the response would have been no different.”

Nevertheless, the big question Heasley asked and answered himself was why an airline would want to ” entrust mission-critical systems and customer liaison to outsiders? It saves money, opens the airlines to new skills or ways of doing business, and because rivals are doing the same thing,” he wrote.

My reaction is – what makes the nature of airlines outsourcing ‘critical systems’ different to the big banks who have for years been managing our telephone banking transactions through call centres in India?

Without trying to defend or attack the practice of taking jobs offshore, outsourcing has become critical to the survival of airlines, and is widespread among public and private sectors as they tap into a global marketplace and the cheaper labour that brings down prices of goods and services.

In the UK, outsourcing is even changing the face of local councils today. Just look at the massive public sector cuts that have been enforced at the top by the new coalition government.

The bottom line is that Virgin’s IT disaster was attributed to poor contingency planning and not outsourcing.

The London Borough of Barnet as an example hopes to become Britain’s first “easyCouncil” – a model of easyJet’s budget approach to services, by charging extra for services and outsourcing others.

And over in Suffolk, the Council plans to create a “virtual council”, bumping most jobs off abroad. It’s been branded by the Guardian newspaper as a measure of “inspiration and desperation.”

Low-cost airlines: You get what you pay for?

Going back to Virgin Blue’s case, writer Andrew Heasley also raised the point that perhaps the passenger should be accepting a share of the blame, if the ticket bought was “at the lower end of the price scale”. He adds: “You, knowingly or unknowingly, have bought in to the low-cost world of the outsourced, unbundled airline. Is there anything to complain about or did you get exactly what you paid for?”

Indeed, the difficulty for airlines is that as price-sensitive travellers, most of us want to fly from A to B as cheaply as possible. This leaves airlines scrapping to undercut each other – and inevitably is part of the reason why outsourcing has helped (for the better or worse) to keep airfares lower.

The bottom line is that Virgin’s IT disaster was attributed to poor contingency planning and not outsourcing. Why? There was no business continuity plan in place to allow Virgin Blue to bounce back quickly from an IT crash on this scale, but there’s no doubt that the airline will prioritise one now.

Clearly IT is not fool proof, even if it’s in-house, just as human error only seems avoidable with retrospect.

Going forward, an airline’s ability to handle a crisis is perhaps what most passengers will remember the most. For those who wish to openly blame Navitaire for the delays, we should be mindful that its other airline customers, including Tiger Airways and Jetstar continued filling up their planes without a hitch in their systems this week.

Some let up – after all, Navitaire is already in enough hot water.


What others have said

  1. Personally I would rather the ticketing system to go down and be late than cost cutting on plane maintenance and end up in an emergency situation which seems to be plaguing another Australian airline at the moment (a service is generally considering to be premium and at a higher price point).

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