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Outsourcing Case Study: Air Canada's Airline Industry

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Air Canada has faced many issues for the past 20 years. The company was surrounded with issues such as centralizing and decentralizing IT and financial difficulties. The past 20 years was a great challenge to Air Canada airline but they manage to accomplish on many fronts for Air Canada. It started off with fuel spike price in 2008 followed by the economic downturn in 2009, they encountered many major issues that were hurdles for their company. The first issue to Air Canada airline was fuel price went up which they couldn’t afford to manage it. The organization is concerned about the cost reduction in other parts of the business because there was no control on the fuel costs that increased for years. Cost reduction was a very important that …show more content…

Air Canada outsourced 95% of their IT services to multiple suppliers. This caused problems to the airline because if there is any problem with the outsourced system, it cannot be solved quickly. To deal with this problem, Air Canada assigned IBM to act as an integrator in which they had to integrate new applications with the existing applications. Even if IBM acted has an integrator, they were unable to fix major problems quickly. Some problems were very complicated to be identified which depends on the number of vendors involved in developing the system. Besides the issue mentioned above, the team from the airline were not able to build a relationship with outsourced suppliers.
Finding a solution to the issues in pursuing multiple vendor sourcing strategies, the airline centralized IT department. This did not end there because the procedure of collecting information on IT needs and passing to IT for implementation was done in the same way for both local and spanned different branches IT requirements. This has caused the IT to work slowly in implementation and they were unable to respond according to the real business needs that were collected by the business

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