Qantas says offshoring is the answer to skill shortage woes

Airline may outsource mainline operations to Jetstar

Seven months after announcing an outsourcing deal which will axe some 340 IT staff, Qantas CIO John Willet has compared supplier confidentiality to a leaking ship.

Speaking at the Committee for Economic Development of Australia (CEDA) luncheon yesterday, Willet made the leaking ship comment while talking about success in outsourcing.

Part of this success, he said, is having a media strategy to manage the flow of information around outsourcing deals.

Willet said success also comes from adherence to a strict strategy formulated at the start of the deal.

Willet said even though Qantas outsources its desktop and network infrastructure to Telstra, internal applications support and maintenance to Satyam Computer Services and Tata Consulting Services, security and change management to IBM, and departure control and bookings to Amadeus, the company will still maintain governance of its 50 year old IT shop.

"Qantas outsourced all IT infrastructure three years ago, [however,] some aspects like application service is managed internally and externally, [and] we only outsource the doing, not the thinking," Willet said.

The airline's decision to ditch its internal build and run application policy for outsourcing was based on expense and agility, according to Willet, contradicting claims by the Western Australian Police which touted the benefits of internal IT ownership.

Willet said it kept tight control over its outsourcing deals by establishing costs in contracts, involving staff whenever possible, and by integrating technology refreshes into agreements.

"We have established a dedicated team to monitor outsourcing relationships and the outsourcing of departments, and we have outlined pay-per usage costs into the deals," he said, adding that regular costs associated with the airline's booking system have been abolished.

"Informing all levels of staff about the progress of outsourcing deals as soon as possible, whenever possible, shift a level of accountability from IT to the business because they are aware of costs and project drivers."

Qantas' outsourcing strategy is based on the Project Management Body of Knowledge (PMBOK) standard governing architecture and decision-making, while all other IT operations are based on strict COBIT-based ITIL.

Outsourcing provides better access to skilled workers, according to Willet, who said the skills shortage has hit Qantas hard, particularly in sourcing employees with legacy IT skills.

Only this month the Immigration Minister Kevin Andrews announced an additional 5000 places to the Skilled Migration Stream bringing the 2007/08 quota to 102,500 places in a bid to address continuing skills shortages.

The airline plans to migrate from fixed to variable-priced contracts, continue deployment of cell-phone functionality in its planes, and develop and standardize technology such as self service HR and payroll on Oracle's e-business suite.

Willet said the plans coincide with the company's shift towards a federated organization, which includes merging IT further into business, localizing the IT shop, and the recruitment of new IT skill sets such as architecture, business analytics, and service management.

There is media speculation Qantas may outsource its mainline operations to Jetstar.

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