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Pros and Cons in Outsourcing Travel Management

It can be a challenge trying to balance being fiscally responsible with being efficient. Corporate travellers need to have certain travel requirements fulfilled because their needs are not the same as someone travelling for leisure. But then the finance managers and corporate executives need to have accurate financial statements and it all has to be done quickly.

Fortunately, outsourcing business travel arrangements is not only easy, but smart. There are some drawbacks which have to be considered but for many, if not most, companies, outsourcing travel management is the right business option. 

Travel is one aspect of a business that involves many components, and they all have to function together. It not only has to work properly for the businessperson taking the trip, it has to be fiscally responsible, and that involves having the finance manager review the process. Many larger companies employ travel managers who can oversee both halves of the task. 

For companies who decide to handle travel arrangements themselves, there is the question of who will oversee each trip to ensure that it meets all of the company’s needs.  It can be hard for a finance manager to grasp the complex language of travel and still maintain the business needs. He or she then ends up looking to the various travel providers for help. But what is the best way to wade through all of the advertising to find out the details?

Travel management companies, or TMCs, can take over the stress and strain of travel bookings for a given company. The use of TMCs has been steadily rising over the last five years for many reasons, not the least of which is taking the burden off of the finance manager and giving it to a group that understands and can do what is needed effectively. It also means that the basic oversight processes are also handled by a firm that has the expertise to understand the language and has the ability to negotiate with the providers for the best rates possible.

Another benefit to using an outsourced company is that it is a fixed cost, and not subject to additional costs like fringe benefits. Because some companies employ a number of people who travel, it becomes especially cost-effective to outsource as one travel agency can handle the full account, and it stands to reason that a company may end up realising a cost savings by using a travel management service.

It’s easier to measure the performance of one single company through the use of service level agreements, or SLAs, than by using a series of matrices across a variety of companies. Those SLAs allow the company doing the hiring to ensure the quality that it desires is met. This can even include an expectation of when a given report will be produced for review. They are becoming quite common, and a travel agency specialising in corporate travel will be used to a client expecting an SLA.

Some companies fight any sort of outsourcing, however, believing that only they know what is best for their company. They utilise corporate travel managers to handle all aspects, from booking through compliance to financial reporting.

To be certain, it can be a bit harder to do a review of the quality of the work of a TMC because it is not an employee subject to regular reviews and feedback. At a time when “corporate culture” is a growing topic of discussion, it makes things more culturally difficult to handle keeping those goals and values in mind when travel is not being negotiated by the company itself.  Plus, in companies that have multiple offices across the country and around the world, not everyone may be as receptive to using a TMC and taking suggestions or directions from someone outside the organisation.

One may not always realise a financial savings by outsourcing, but at the minimum it should be a very similar cost per annum. That said, it is entirely possible that the rates the TMC can negotiate with various vendors will not be the same as the ones negotiated directly by the company.

Read also: The Strengths and Weaknesses of Corporate Booking Tools

It is possible to use online booking tools like Expedia to evaluate airline prices and find the best deals, and then pair that flight with a hotel near where the business meeting will be. But one trick is that there are actually sale times on travel search sites and what may be a great deal one day may no longer be there once the travel authorisation has been issued.

Business travellers might be being asked to fly coach more often in order to save money, but the business needs remain the same – arrive refreshed, able to have gotten some work done thanks to onboard WiFi. They need a comfortable place to stay that has the office away from the office amenities that they need, and ground transportation that gets them where they need to be on time.  This is why TMCs make sense.

Japan is an interesting case study in the success of TMCs. For a country that once so heavily focused on in-house travel arrangements, to the point that some of the largest corporations had sub-companies devoted to travel, it is interesting how many companies in the last few years have opted instead to utilise TMCs to save money.

It should come as no surprise that for a tech-savvy nation like Japan, many companies first looked at online booking tools and other self-service programs.  But what they have found is that TMCs are like a virtual personal assistant, able to do immeasurably more for the business traveller than he or she could do alone.

A somewhat unexpected benefit is that the international abilities of TMCs are helping Japan.  Several organisations are offering ways for all partners – industry leaders as well as the up and comers – to be able to meet and discuss various best practices.

As we’ve seen, TMCs are able to relieve a lot of stress on the part of both corporations and their employees who travel for business.  Outsourcing travel management is a smart way for companies to serve the competing bosses of time and money management, not to mention the bosses known as business travellers and corporate executives.

2017-08-25T13:56:57+00:00 March 21st, 2016|Categories: Blog, Corporate Travel|

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