Cathay Pacific

Abstract

This paper analyses the current IT environment in Cathay Pacific, evaluate the progress of outsourcing, brings up the new opportunities for cost savings, propose changes that need to be implemented. In a company wide effort nicknamed “Operation Better Shape”, later to be called “Business improvement”, several cost reduction opportunities were identified and outsourcing of IT is identified as being critical to cutting costs.

Evaluating Outsourcing: What is going well?

The “Smartsourcing” is actually very smart and has helped the company in great deal. The cost savings that company was able to generate due to outsourcing were tremendous (See Exhibit 1). The overall implementation of outsourcing was started with “low hanging fruits” like building maintenance, lift maintenance, transportation etc. The IM department is right in identifying the non-core business processes as the first areas that need to be outsourced. When outsourcing the data center, the company was careful to make sure that the employees’ needs are looked upon as this probably helped the company in subsequent outsourcing efforts.

The concept of benchmarking also helped the company in ensuring the charges remain competitive on an ongoing basis.

The management was also right in bifurcating it needs into two fronts: Infrastructure and Airline applications. This helped the company in choosing the right partner in each area namely IBM and Sabre. By creating “Relationship Agreement” and “Framework Agreement” the responsibilities, legalities and goals are well defined with involved parties and chances of ambiguity are reduced to a great extent.