United Airlines outsourcing call center to Canada

By Brad Foss
Associated Press

WASHINGTON — A growing number of U.S. airlines and online travel companies are outsourcing customer service jobs overseas to reduce costs, latching on to a broader economic trend as the industry strives for profitability.

United Airlines has signed a contract with Electronic Data Systems to open a customer call center in Nova Scotia next month that will eventually employ 200, a spokeswoman said yesterday. It is the first time United has outsourced such work, an arrangement worked out through the company's bankruptcy proceedings.

Meanwhile, Travelocity will outsource about 300 jobs to India over the next year in a deal with WNS North America, according to a Feb. 11 filing that Sabre Inc., its parent company, made with the Securities and Exchange Commission.

Travelocity said it expects to save $10 million in 2004 as a result of the change.

United, whose only formal announcement of the plan was made internally, declined to provide a similar estimate for "competitive reasons," spokeswoman Jean Medina said.

The outsourcing, while still limited to a small number of jobs, worries labor groups who say it could harm their ranks, customers and, ultimately, the companies.

"Outsourcing takes the service out of customer service," said Frank Larkin, a spokesman for the International Association of Machinists and Aerospace Workers, which represents about 11,800 customer service and reservation agents at United parent UAL Corp. "That's a concern we have for the future of the business, because while it may be good for short-term costs, the long-term quality issues aren't being considered or recognized."

Larkin said no United employees will lose jobs as a result of the Nova Scotia call center, but the union will "closely monitor the facility to make sure it doesn't encroach on our members' work."

Travelocity said in its SEC filing that it would close a call center in Clintwood, Va., by the end of 2004, cutting about 250 jobs, and make 50 staff reductions at an office in San Antonio, Texas.

The online travel company said it was at a competitive disadvantage to rivals, such as Orbitz and Expedia, that outsource customer service functions.

American Airlines, Northwest Airlines, Continental Airlines and US Airways said they do not redirect any calls from U.S. customers to call centers outside the United States.

Delta Air Lines, which outsourced nearly 1,000 jobs last year to call centers in India, says it is aware of the potential pitfalls.

"There have been a few quality issues as you would expect with any type of new venture," spokeswoman Peggy Estes said. "But the vendors continue to be quick to identify quality shortfalls and they make corrections through additional training."

She said the long-term goal is "to reduce distribution costs and improve the customer experience."

Estes said Atlanta-based Delta saved $25 million in 2003 after opening three call centers in Bangalore, Bombay and New Delhi.