United Airlines has signed a contract with Electronic Data Systems Inc. to open a customer call center in Nova Scotia next month that eventually will employ 200, a United spokeswoman said Wednesday.
Frank Larkin, a spokesman for the International Association of Machinists and Aerospace Workers, which represents roughly 11,800 customer service and reservation agents at United parent UAL Corp., said no United employees will lose their jobs as a result of the move.
It is the first time United has outsourced such work, an arrangement worked out through the company's bankruptcy proceedings. The Elk Grove Township-based carrier joins a growing number of airlines and online travel firms that are outsourcing customer-service jobs to other countries to cut costs.
Travelocity will outsource about 300 jobs to India over the next year in a deal with WNS North America, according to a filing that Sabre Inc., its parent company, made with the Securities and Exchange Commission. Travelocity said it expects to save $10 million in 2004 as a result of the change.
United, whose only formal announcement of the plan was made internally, declined to provide a similar estimate for "competitive reasons," spokeswoman Jean Medina said.
The outsourcing, while limited to a small number of jobs, worries labor groups that say it could harm their ranks, customers and, ultimately, the companies.
"Outsourcing takes the service out of customer service," said Larkin. "That's a concern we have for the future of the business, because while it may be good for short-term costs, the long-term quality issues aren't being considered or recognized."
Travelocity said in its SEC filing that it would close a call center in Clintwood, Va., by the end of 2004, cutting about 250 jobs, and make 50 staff reductions at an office in San Antonio.
The online travel company said it was at a competitive disadvantage to such rivals as Orbitz and Expedia that outsource customer service functions.
Delta Air Lines, which outsourced nearly 1,000 jobs last year to call centers in India, says it is aware of the potential pitfalls.
"There have been a few quality issues, as you would expect with any type of new venture," spokeswoman Peggy Estes said. "But the vendors continue to be quick to identify quality shortfalls, and they make corrections through additional training."
Estes said Atlanta-based Delta saved $25 million in 2003 after opening three call centers in Bangalore, Bombay and New Delhi.