India Business Travel

Big 4 firm appoints ProKonsul, business travel consultant for India. Saves 9.8% YOY

A case study on ProKonsul’s lifecycle optimization approach as a business travel consultant

This case study represents the details of a project that ProKonsul delivered as a business travel consultant to one of the Big 4 consulting firms in India. To maintain customer confidentiality, we will refer to the client in the article as John Doe India (JDI). 

Background 

John Doe India is the India arm of one of the largest consulting firms globally. They operate from 8 locations in India. Total employee strength of 12000 employees directed by  400+ partners. 

The India travel program generates over US$ 50 Million in air, hotel and car spend with the operations being managed by incumbent 2 travel management companies (TMC’s) One of the incumbents is the India arm of a global TMC major while the other is a major Indian TMC. The program generates 100000 air transactions annually and an additional 25000 hotel room nights. They have a global hotel program which is booked centrally on their intranet. 

JDI has its internal team of over 8 employees who would manage their travel and BT MICE operations supported by the two TMC’s who have 14 resources implanted within the various offices nationally. The 2 TMC’s have a common Self Booking Tool application that had been deployed. Adoption was limited to less than 10%. The predominant booking mode was “ call to the book “ or “email to the book” 

Problem statement 

JDI and their project leadership, lead by their India COO and CFO commissioned ProKonsul, as their business travel consultant.  The initial  objectives were

  • Analyze & present a gap analysis of their India business travel program
  • Recommend steps to bring it in line with best practice. 

JDI leadership had a general unease with the current TMC’s support, technology & financial processes relating to business travel. The operations were largely legacy with limited technology usage.

They were also challenged by the absence of strong data and insights into their program, with lots of gaps in the TMC reporting. Data was not adequately consolidated across national locations. Further, the two incumbent TMC’s followed different reporting protocols. 

Step One – Program & Process Analytics™ by ProKonsul 

ProKonsul initiated the mandate by conducting its tested Program & Process Analytics™ (PPA). This involved an evaluation of JDI’s India business travel program across 16 program & process parameters. 

The resultant report presented by ProKonsul gave JDI’s leadership with a 360° assessment of their national business travel.

The PPA presented JDI with 

– Program maturity modelling v/s industry & global best practice 

– Identified what was “right” and “what could be better” 

– Benchmarked all program parameters v/s industry baselines 

– Identified specific recommendations and action plans to improve program ROI 

Primary findings from the PPA were 

– Major gaps in 12 of the 16 parameters assessed from the standpoint of program maturity 

– Direct financial saving opportunity of 6% 

– Extremely high cancellation charges on account of improper supplier contracts & questionable TMC operational practices. 

– Need for immediate change in the incumbent Self Booking Tool (SBT ) platform 

– Need to conduct RFP for the introduction of single TMC with stronger SLA & commercial terms 

– Complete review of the airline & domestic hotel program. 

– A total absence of the Duty of Care program despite subscribing to a global  Travel Risk & Security agency 

JDI was given the option to take the PPA report conclusions & implement the changes recommended directly. JDI declined that approach as they felt their teams lacked adequate industry expertise. JDI appointed ProKonsul as their business travel consultant for the project. ProKonsul was asked to lead their various teams & determine the best solution fit. 

Step Two – Business travel lifecycle optimization by ProKonsul

A. 5-year business travel strategy defined 

ProKonsul commenced the project with an initial definition of the 5 year Business Travel Strategy for JDI. This required multiple sessions with JDI leadership. The objective was to ensure direction & continuity in the corporate mandate for the medium term. This was the first time JDI leadership had spent any time on their business travel strategy!

B. Travel Policy refined & aligned to strategy 

The second step was to reset the travel policy to align policy parameter’s with the overall strategy. As with many corporations, the travel policy had actually never been truly reviewed and optimized. This brought up several uncomfortable truths that JDI leadership were confronted with . This generated a lot of discussion on corporate ideology ,  financial & business objectives , safety of travellers & employee satisfaction.

The primary objective of the exercise was to ensure that the policy translated the corporate strategy into reality.

C. RFI & RFP for TMC & SBT solutions 

One of the most shocking things that came out in the Program & Process Analytics™ (PPA) was that JDI had an extremely poor contract framework with their existing TMC’s. The contracts were essentially a single page MOU with service charges listed. None of the due diligence clauses that were required to protect JDI’s interest from a commercial / legal standpoint, were mentioned. 

As an immediate action , addendums were executed to plug these gaps, in the interim, while the RFP was concluded. 

All Self Booking Tool (SBT ) solutions that currently available in India, were invited for the RFI. ProKonsul developed a 30 point RFI document to evaluate all Self Booking Tool (SBT ) providers from different technical and operational factors. 

Consequent to the RFI & the review with JDI leadership, a shortlist of Self Booking Tool (SBT ) providers who had relevant capabilities was drawn. Concurrently an RFI & RFP project was initiated for the travel management company (TMC) selection. 

These finalists were called for detailed presentations with JDI’s operational leadership and finally asked to submit an RFP response. The RFP was scored on commercial & technical  parameters. 

A new TMC and SBT partner was identified in consultation with the JDI. A structured contract & SLA framework was built with financial penalties for shortfalls in program delivery. Incentives were also built in to ensure that the business partners were rewarded for enhanced service levels. An operational process document was built to prevent abuse, in view of current malpractices that had been identified. 

Most importantly, the contract structure was revised to ensure adequate operational, financial and legal governance to protect JDI’s long term interests and business continuity program(BCP).

D. Very high cancellation charges – Operational abuse by incumbent TMC’s 

JDI experienced extremely high % of cancellations and related charges. Annually, this approximated to over $350,000 in cancellation penalties alone. Far  higher than the industry average in India. 

This reflected two major challenges

  •  Airline contracts had been structured sub-optimally.
  • Incumbent TMC’s tended to avoid using the designated corporate rate program. They preferred to use non negotiated market rates. When probed the incumbent TMC’s indicated that they chose the market rates based on the fact that it was lower. However, when canceled, there were severe penalties for such fares. This was a clear area of concern with incumbent TMC’s integrity of operations. It seemed apparent that the TMC’s were using market rates to secure direct incentives from airlines based on productivity linked bonuses. 

As an aside,  ProKonsul found multiple instances of creative ticketing, incorrect management of refunds/credits & billing integrity concerns with both TMC’s.

Much of this was perpetuated due to ineffective SBT implementation and faulty payment systems for TMC settlement. This resulted in a separate project to conduct a full-scale business travel audit of both TMC’s. This will be covered in a separate case study.

E. Consolidation & review of all airline contracts 

All airline contracts  – domestic & international , were reviewed and re-contracted. 

One clear principle followed was selecting airline networks that addressed then primary travel destinations and service requirements of JDI. Contracts were simplified and fewer fare levels were selected so administration/ control were more effective. 

The further process was set up to prevent any leakage in case of preferred fare with a unique process implemented to aggregate all national ticketing on preferred airlines. Quarterly reports & review meeting were built into the contract to ensure that program goals were met.

F. Domestic hotel program reconstructed 

The domestic hotel program originally had over 500 hotels. JDI’s travel team believed that if they had all possible hotels in their program, they would secure every possible benefit ….. obviously an erroneous assumption !! 

When ProKonsul started the review, almost every hotel came back stating that JDI never delivered the committed volumes. There was tremendous leakage in the program . Importantly hotel reservations were not routed exclusively through the official TMC’s. A lot was booked directly by the traveller or their assistants. Since so many multiple channels were used m, hotels were not reporting any data to JDI travel

As the business travel consultant, ProKonsul approached this problem differently. We initiated a chain-wide consolidation so fewer chains that offered multi-segment inventory were shortlisted. Further, the number of hotels in the program was slashed from over 500 to only 160 hotels nationally. 

Again a common RFP document with pricing required for a standard set of inclusions was built. This resulted in the standardization of the rate program. Rate audits post the RFP award was done to ensure that the correct rates were loaded and bookable through the SBT & TMC operations. Direct hotel bookings were strongly discouraged through travel policy directives.

G. Duty of Care integration

Though JDI’s global operations were subscribing to a global travel risk & traveler tracking solution, the program had never been implemented in India. 

A few partners had been issued with program access cards but no one really knew how to use the program. The TMC’s did not integrate ticketing reservations into the global duty of care tool. 

This required multiple discussions with the global travel team of JDI as also their duty of care partner. As a second step, the incumbent TMC’s were provided with an orientation on processes to consolidate all ticketing data  to the global duty of care partner. 

From an almost nil tracking, within 4 months JDI had 100% tracking of air ticketing nationally on the duty of care platform. 

Summary of results delivered by ProKonsul 

The overall project lasted for 7 months. As JDI’s business travel consultant, ProKonsul delivered the following results 

  1. 16 step Program & Process Analytics™ that identified a 6% direct saving opportunity
  2. Stopped operational abuse of the business travel program by the incumbent  TMC’s 
  3. Conducted the RFP resulting in appointment of new Self Booking Tool (SBT) &  single national travel management company (TMC). 
  4.  Reconstructed their domestic hotel program. Brought down preferred hotels from 500 to 160. 
  5. Reconstructed their airline preferred partner’s
  6. Implemented 100% integration of all air transactions into the global travel risk & traveler tracking system
  7. Delivered an actual financial saving of 9.8% YOY v/s the initial estimate 6% direct saving. 

This case study illustrates ProKonsul’s  approach as a business travel consultant

 

      Want to set up your 30-minute FREE consultation with a ProKonsul business travel expert?

                            Drop us an email prokonsul@prokonsul.in or call +91-9873196115. 

                                             We would love to work with you! Call us now !! 

ProKonsul ® optimizes the business travel lifecycle of its clients. It delivers domain expertise in enterprise business travel. Established in 2014, we are the pre-eminent business travel consultant in India, Asia & emerging markets. We are located in Gurgaon, India. ProKonsul ® advisory services are supplier agnostic & governed by a robust integrity policy.

                                                        2019 © ProKonsul – All Rights Reserved 

 

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Indian CXO’s – Waiting for a Black Swan moment ?

5 reasons why Duty of Care in Indian business travel programs is non-existent !! 

Business Travel Duty of Care is largely ignored by Indian CXO’s who pay scant attention to this aspect, given their exclusive focus on cost/ fee minimization. As the premier business travel consultant in India and emerging markets, ProKonsul has evaluated over 250 programs in the last 5 years. With some exceptions, there is very little CXO oversight to managed travel programs.

Despite being recognized worldwide for their talent and business acumen, it is surprising how shortsighted Indian CXO’s have been when it comes to their business travel programs

Most of CXO’s regard business travel as more an act of fulfillment and purchase. Priorities like strategy, technology best practice & due diligence to limit corporate liability, are largely ignored. In addition, the effective cost rises due the opacity of legacy operational models. 

CXO’s have ceded total control to their travel gatekeepers, who have limited ability to introduce best practices and ideate innovation internally. The approach hence becomes one targeted at perpetuating the status quo.

Overall program hygiene is a low priority. Indian business travel programs focus excessively on the lowest ticket cost / lowest fees. 

There are some exceptions, but honestly, they are still few and far between. These include Global MNC’s who have a globally consolidated travel program in India & some Indian transnationals. These organizations have evolved their travel program to include traveler risk & duty of care.

1.Working with Travel Agencies V/s TMC’s 

Most companies in India execute their corporate travel programs with “Travel Agencies “ and not “Travel Management Companies (TMC’s”). 

“Travel Agencies’ – are generally non-specialists in the business travel domain & generally win business largely on price/location & relationship attributes. They don’t deliver the full range of managed business travel services. These agencies could also be ticketing consolidators or tour operators for whom corporate ticketing is a useful add-on.

2.Highest focus on lowest fees 

The most important  KRA of most Indian travel administrators & travel sourcing departments is fee & ticket price minimization. Travel agencies / TMC’s are appointed based on the lowest transaction fee pricing or the highest levels of discount. Many of our travel managers & procurement professionals place a far higher value on fee pricing rather than the qualitative aspects of their vendors’ capabilities like 

  • Technology 
  • Strategic account management 
  • Cost optimization 
  • Risk management 
  • Management reporting 

3. Managing travel using the “IT/ ITES Industry ” model 

The IT / ITES industry, who should be leaders in best practice implementation, have sub-optimal travel programs. They follow a very unique business travel operating model. They put each travel request out to “bid” amongst multiple travel agencies / TMC. In this situation, the lowest bidder wins the ticket and fulfills it. 

This places in question, how they ensure data consolidation of all tickets purchased through different vendors & track their employee, amongst multiple other areas.

4. Hotel reservations disaggregated 

Another very unique situation seen in India, is that travel programs don’t consolidate their hotel reservations with their preferred TMC or Self Booking Tool (SBT),  if implemented. 

Bookings for hotels especially international hotels are done in multiple forms 

  • through room aggregators
  • through OTA’s and public websites
  • directly with the hotel concerned on call/email 
  • through secretaries and administrators 
  • on reaching the destination from the airport by the traveler 
  • by the overseas office staff 

Tracking and consolidation of booking information on hotels booked is a major grey area. Consequently, there is limited or nil visibility on where an employee is staying. Such dis-aggregation also impacts data analysis and optimal sourcing of room rates.

5. “Per Diem Advances” for foreign travel 

Many Indian firms give their employees a “per diem” – The employee is expected to arrange their stay in their destination country using this per diem. This can vary from $25-$60 per day, generally. 

The employer may not mandate receipts for the stay from the employee. IT / ITES companies actually regard such a practice as being “employee-friendly”. This is presented as a staff incentive, since the employee could technically stay with friends & family, retaining the per diem. 

However, what is completely ignored is the fact that the employer has little or no information on 

  • where the employee is staying 
  • the quality of the accommodation 
  • the health & safety standards 
  • risks to employee  

Overseas medical travel insurance is still not a mandatory part of Indian business travel programs. Implementation is erratic. Hence the overall approach with some exceptions in largely reactive – The overall motto can be summed up as  “Let something happen, the travel team will firefight the issue”. 

As a business travel consultant, ProKonsul believes the approaches outlined above, create corporate liability, generate traveler friction &  negative employee CSAT. They directly & indirectly impact the cost of the program. The resultant inefficiencies inflate indirect costs, creates complexity in processes & reduces the ability of the enterprise to reduce overall spend.

Wake up before its too late! 

 

Business Travel Duty of Care is defined as the corporate obligation that an employer has to secure the welfare of their employees when the employees travel on official work. The concept of Duty of Care emerged and become a major component of business travel policies worldwide post the incidents of 9/11. 

In many parts of the world – like USA / Canada & Europe / Australia, this is a legal obligation of the Directors & management of the company. There have been many instances where the courts have found the officers of the company legally & financially liable for negligence. The negative impact of a brand & hiring standpoint is incremental negative liabilities.

This is not yet a legal obligation in India and in most emerging markets. Which is why there is limited or nil CXO visibility or focus amongst most Indian companies. 

Modern business travel is not purely about pricing and fee minimization. It is built solidly on the principles of program optimization. There are multiple aspects that have to be accorded priority to build a program that protects enterprise and employee interest while optimizing spend. Partnering with a supplier agnostic business travel consultant like ProKonsul, can bring objectivity in decision making & allow program maturity to leapfrog to the best in the industry. 

There is an innate desire, when it comes to Indian business travel, to keep the head buried in the sand. The approach here is that what is not seen or heard or recognized will not impact the business! 

India is targeting to be a $5 Trillion Economy by 2025. It’s business travel market is the fastest-growing worldwide. Ranked 7th largest globally. 

For a business to scale and become efficient, Indian CXO’s have to spend time understanding and strategizing business travel. They need to take advantage of external business travel consultants like ProKonsul, who can simplify this complex domain, prioritize goals and deliver global best in class business travel programs. 

Don’t wait for a Black Swan moment to happen, before you wake up !! 

               Want to set up your 30-minute FREE consultation with a ProKonsul business travel expert?

                            Drop us an email prokonsul@prokonsul.in or call +91-9873196115. 

                                                 We would love to work with you! Call us now !! 

ProKonsul ® optimizes the business travel lifecycle of its clients. It delivers domain expertise in enterprise business travel. Established in 2014, it is the pre-eminent business travel consultant in India, Asia & emerging markets. We are located in Gurgaon, India.

ProKonsul ® advisory services are supplier agnostic & governed by a robust integrity policy.

                                             2019 © ProKonsul – All Rights Reserved

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Global VAT Reclaim – An opportunity missed by Indian & Asian Business Travel buyers?

Global VAT Reclaim – An opportunity missed by Indian & Asian Business Travel buyers?

Recoverable Global VAT Reclaim can constitute up to 20% of your company’s overseas T&E spends in designated countries. Surprisingly there is limited understanding & negligible focus on recovery of this significant expense category in India and Asian countries…… Why??

Global VAT Reclaim is today the single largest saving’s opportunity inherent in Asian & India business travel programs that has yet to be fully exploited.

ProKonsul represents Taxback International, Ireland. Taxback is one of the world’s largest processors of Vat Reclaim and an app center partner of SAP Concur. Their seamless integration with SAP Concur delivers unmatched technical and operational convenience to enterprise customers.

While domestic VAT reclaim on travel-related expenses are still largely recovered, Global VAT recovery is largely ignored or swept under the carpet!

There are many reasons for this inertia 

  • A lack of recognition of this extremely important cost-saving opportunity amongst the corporate & travel leadership
  • KPI’s of the business travel buyers/managers do not recognize this as a primary deliverable
  • Absence of clarity on who owns this activity – business travel operations/ procurement/ finance/ accounts payable. As a result, the ball falls between the cracks as no one takes ownership!
  • The travel management company’s & BT MICE agencies lack understanding and hence do not educate their clients on this opportunity.

Indian & Asian buyers need to engage an independent business travel consultant like ProKonsul, who can link the dots and help facilitate recovery of such significant savings inherent in their business travel program.

1. How much money is at stake?

Generally, Western Europe has the highest rates of VAT with rates going up to 27%. Overall VAT rates vary between 5% – 27%, depending on the country in question.

A simple way to calculate your potential Global VAT reclaims

Total spend on international air ticketing to the designated countries  $100,000 p.a.

Your overall reclaim potential – 20% of your air travel spend US$20,000 p.a.

The reclaim potential will vary with the destinations to which your employees travel …. More travel to Western Europe will mean higher potential recoveries being possible.

That’s a very handsome income generation by a traditional cost center like business travel …. Wouldn’t this be music to your CFO’s ears?

2. What is the scope of the opportunity?

When a company resident in India / Asia sends its employees overseas to designated countries in Europe/ Americas and Asia, they are legally entitled to recover the VAT component of expenses that their employees incur overseas during travel on expense categories.

Additionally, there are some direct corporate overseas spends that are also eligible for recovery.

The countries from which you can claim is dependent on the country in which your company is a resident. If a company pays tax in a given country and can prove this through a tax residency certificate, it is deemed to have residency in that country.

Important – This enterprise VAT reclaim is very different from the individual VAT reclaim that travellers may do to recover VAT on certain purchases overseas at airports.

The eligible expense categories for Global VAT Reclaim can be segmented into three broad groupings

A. Business Travel related expenses

  • Accommodation of any type
  • Meals & Business Entertainment
  • Fuel Taxi & Transport

B.  Expenses related to overseas marketing & BT MICE

  • Participation in Conferences/ Exhibitions/ Trade Fairs
  • BT MICE groups that are sent overseas for education, training, incentives, etc
  • Marketing & advertising
  • Printing and stationary

C. Direct corporate expenses overseas

  • Expenses for professionals appointed overseas – lawyers/ consultants/ advisors/venture capital firms etc.
  • Inter-Company charges
  • Account payable invoices

3. How easy is it to recover Global VAT?

 All you need to recover your overseas Global VAT is to call ProKonsul. We will need

  • Your tax residency certificate
  • Original invoices

That’s it !!

If you don’t have the original invoices or invoices in the correct format, don’t fret – ProKonsul & Taxback International will arrange an invoice retrieval & correction service so the maximum number of eligible invoices can be filed for recovery.

If you work with SAP Concur, life becomes even simpler due to the seamless integration that SAP Concur has with Taxback International. This allows for a no-obligation no-fees VAT Reclaim assessment & eventually simplified reclaim filing process.

Further, there are no upfront fees payable !!!

The customers’ liability for fee payment arises only when a successful VAT Reclaim is processed in their favor, by the tax authorities of the respective countries.

We will handle the processing, invoice retrieval, and correction, filing of paperwork with the respective country tax authorities. Normally it can take between 90-180 days for the process with the tax authorities to complete.

4.  So …………What are you waiting for?

 Act now to exploit this massive saving opportunity inherent in your program.

VAT Reclaim’s are governed by strict annual deadlines, which if missed will mean that your entire reclaim becomes void.

Further, if your claims are structured, claims can be filed every quarter which means that there is a regular inflow of cash from this activity.

For business travel buyers in India & Asia, this is the single most important way for their corporate leadership to take notice of their ability to positively contribute to the company’s P&L and profits …..

What better way to build a positive perception of the business travel team within your company?

Act now, recover your Global VAT reclaim, today !!

 

Want to setup your 30 minute FREE consultation with a ProKonsul business travel expert ?

Drop us an email  prokonsul@prokonsul.in or Call +91-9873196115.

We would love to work  with you ! Call us now !! 

 

ProKonsul ® optimizes the business travel lifecycle of its clients. It deliver’s domain expertise in enterprise  business travel. Established in 2014, it is the pre-eminent business travel consulting firm in India, Asia & emerging markets. We are located in Gurgaon, India

ProKonsul ®  advisory services are supplier agnostic & governed by a robust integrity policy. 

2019 © ProKonsul – All Rights Reserved

 

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