blog Remember how embattled airline Qantas revealed plans in late February to cut some $200 million out of its technology budget over the next three years? It seemed at the time like an impossible dream that the company would never be able to achieve. Well, The Australian has published what appears to be Qantas’ comprehensive roadmap for hitting its goals. As the newspaper writes (we recommend you click here for the full article), the solution is … outsourcing everything to IBM:
“The seven-year agreement will result in up to 400 employees from [Tata Consultancy Services] and Tech Mahindra working on the Qantas contract transition to IBM to continue their current duties.”
Now, obviously it’s going to be pretty hard to judge at this point whether this is a worthwhile initiative at this point. On the one hand, most CIOs would probably argue that the days of this style of comprehensive IT outsourcing contract, with all of an organisations’ eggs in one basket, are over at this point. Most organisations have moved to multi-faceted outsourcing arrangements, with best of breed players taking over individual elements of an organisation’s needs. On the other hand … if IBM can do the work at a significant discount, then Qantas should definitely be pursuing this kind of deal.
But yo my mind it’s not the financials involved here that’s interesting, or the nature of the work to be done. It’s the sheer number of staff being transferred around between suppliers, if The Australian’s report is correct. 400 staff transferring from TCS and Tech Mahindra to IBM? And, if you read Qantas’ original announcement, further redundancies among its in-house staff?
That’s a lot of corporate change with respect to Qantas’ IT operations, and really signals a total upheaval in terms of the IT resources which Qantas will be using. I haven’t seen this kind of massive change in an organisations’ IT departments since the banks starting offshoring large chunks of their IT work to countries such as India, or since the early days of the major IT outsourcing agreements signed by the Federal Government in the late 1990’s and early 2000’s.
To be honest, it continues to make me very nervous, when I think about the massive potential this kind of thing has to undercut the stability of Qantas’ IT operation. There are some very critical systems in there. You don’t want a safety-conscious business such as an airline to be going through revolutionary internal change in terms of its staff. But that is definitely what we are seeing here.
Image credit: Qantas