British Airways will be the first of many blue chip companies to contract out their accounting operations to the Far East in the rush to cut administrative costs.
BA said the move was part of a u1bn global efficiency drive that will result in 5,000 job losses overall. Other international companies, according to outsourcing adviser PA Consulting, want to chop a third of the cost of support services. At the moment, few consultancies or services firms can offer a global support operation which can achieve this level of savings.
John Little, head of strategic outsourcing at PA Consulting, said companies were increasingly looking for the best deal outside of their home country.
But, he added, it was likely to be a short-term measure before the international services firms such as EDS and Andersen Consulting offer deals providing access to the cheap labour markets of the Far East.
BA currently employs 2,000 accounts staff. Initially, 10% of the accounting function will be transferred to Bombay, where qualified staff can be recruited for u4,000 compared with u20,000 in the UK.
The company said it would transfer more work if the experiment proved successful. It experienced a 12% increase in its salary bill in the first half of the year. ‘This is not sustainable,’ according to the airline’s chief executive Robert Ayling.