Cathay Pacific: Doing More with Less
Cathay Pacific was one the most admired airline that flew to more than 90 destinations all over the world. They believed in providing service straight from the heart, encouraging product leadership and delivering superior financial returns. There were several important issues that led to Cathay Pacific to outsource its IT operations to IBM. Events that led to Outsourcing of IT operations
Cathay Pacific for long has been known as an Asian airline. Since its establishment, Cathay Pacific has been a profitable company with periodical growth. Cathay Pacific was one of the first to outsource its telecom networks to SITA to establish global linkages. This was a significant step that made Cathay more of an international carrier than a regional carrier. Cathay was highly vertically integrated and used to do so many things in-house which could have been outsourced. Due to this, Cathay initiated Operation Better Shape which identified outsourcing as a strategic approach to cutting costs. With the increasing costs to maintain its Data Center in Hong Kong, Cathay realized that it needed to assess alternate locations for its Data Center. Australia proved to be one of the most attractive options for Cathay as they offered Cathay an exemption from import duty tax. Cathay also used to retain its employees for a long time. The Australian government offered to provide free resident visas to Cathay’s staff. Finally, Australia was far cheaper in terms of location as well as IT costs. This led to the opening of Cathay’s Data Center in Sydney, Australia. This was more of an off shoring operation than an outsourcing operation. When the IT industry was growing at a fast pace, the business model for the airline business changed. Cathay had to change its business model to cater to the global IT needs. Cathay Pacific thus needed the right tools to help a centralized IT staff manage a global enterprise. This led to the Smartsourcing contract of...
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