With a view to cut down its operational costs, national air-carrier Air India today said it is planning to outsource some of its functions such as Information Technology in the near future.
"We may look at strategies what is known as outsourcing concept. Everything need not be done in-house. This (outsourcing) is an option," Air India chairman and managing director Arvind Jadhav told reporters here.
Outsourcing is common in financial sector, where companies award projects to other firms in the domestic or international geographies.
Air India has around 30,500 employees on roll and its annual salary expense amounts to Rs 3,100-crore. Salary payment is the second largest component in AI's operating cost after the fuel bill.
The proposed move to outsource some of its functions will help the airline, which is incurring huge losses, to reduce its costs and is part of the ongoing turnaround plan.
Jadhav said the move will help the airline to concentrate more on its core business--aviation.
Citing examples of Citi Bank and State Bank of India, which have successfully outsourced functions such as technology, Jadhav said this can be replicated in Air India as well.
"They (institutions like SBI, Citi Bank) stick to the core business and the IT solution is outsourced. Similarly, we can also look at this option," Jadhav said.
Moreover, a company whose core business is aviation cannot do justice to an IT professional when it comes to the employee's career progress, he said.
"For example, IT itself is one issue. We are in the aviation business, so we may not be able to give career progress to an IT person. So the best thing is to identify and make good service-level agreement," Jadhav said.
AI has also plans to spin-off its Maintenance Repair and Overhaul engineering operations business by April this year. This will help the airline to achieve optimum utilisation of its engineers, besides boosting revenue, he said.
"We can earn about Rs 3,000 crore annually (by spinning off the MRO business). Also, our engineers will be better utilised through in the MRO," Jadhav said.
The airline has already tied up with Sharjah-based Aerostar Asset Management for marketing engine overhaul facility for sale and repair services for Boeing and Airbus jet engines to other companies.
The Nagpur MRO, which the national air carrier is setting up with Boeing in Nagpur at an estimated investment of USD 100
mn (from Boeing), will be a part of the spun off unit, Jadhav said.
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