When thinking of soaring demand for international travel, we visualise
selfie stick-wielding visitors bustling through crowded markets and
snaking queues of excited and weary travellers at airport counters.
A
record five billion people are expected to take to the skies this year,
according to the International Air Travel Association, up from an
estimated 4.49 billion in 2023.
For some associated sectors of
the industry, the impact of this boom is felt early on, before
travellers begin the actual journey, as the queues are getting longer at
visa processing centres amid the growing hunger for leisure, business
and migration travel.
For VFS Global, one of the world`s top
outsourced visa, passport and consular services provider, all
indications point to a year of healthy profitability, according to its
founder and chief executive.
“I would say we expect double-digit
growth on the top line, double-digit growth on bottom line, and
double-digit growth on applicants [numbers],” Zubin Karkaria told The
National about VFS Global`s income and revenue expectations this year.
“[It’s]
huge growth, especially 2023 was still controlled, people were still
coming in, 2024 is doing well, even China as a market is almost 70 per
cent of 2019 numbers [and] by the end of the year, they could become 80
per cent. So, there is a huge potential.`
The company processed
24.1 million applications in 2023, about 88 per cent of 2019 levels,
when it dealt with 27.4 million applications. VFS expects to overhaul
the pre-pandemic mark and set a record this year.
Between January to May 2024, it has processed approximately 100,000 applications a day.
Countries
such as Russia and Ukraine were also major markets for the company
before Moscow’s invasion of Ukraine in February 2022.
Outbound
travel from the two countries accounted for some 3 per cent of global
spending, or about $14 billion in 2020, according to the UN World
Tourism Organisation.
However, the war has severely dented both inbound and outbound tourism.
Since
February 2022, Ukraine’s culture and tourism sectors have accumulated
lost revenue of $19.6 billion, representing an increase of 30 per cent
in one year, Unesco said in February.
“More than half of this
loss - $10.6 billion - has been incurred by the city of Kyiv alone,
mainly due to the fall in tourist numbers and the sudden slowdown of the
creative industries,” it said.
But Mr Karkaria is confident that while the market has been hit hard, it could start to pick up once the tensions ease.
“I
am still very hopeful that things will settle down and we will still
have the CIS producing a huge volume of around four to five million
applicants a year,” he said.
Overall, the company expects
business to grow at a compound annual growth rate of 18 per cent to 20
per cent over the next three years.
“We have multiple routes,
multiple products, multiple categories of visas in multiple geographies …
so if one goes down a little bit, another one picks up,” he said.
“I`ve got a very nice hedge. That is the advantage that we have.”
The beginning
Mr
Karkaria spotted a business opportunity in the market more than two
decades ago, at a time when global travel was neither as affordable nor
as trendy as it is today.
Working with Swiss travel company Kuoni
in India, he realised that a key hurdle for many visitors was
uncertainty about getting a visa on time. Seeing first-hand the long
queues outside embassies, with some applicants forced to travel
domestically and stay overnight in different cities, Mr Karkaria was
keen to find a way to make the process more efficient and systematic.
“I
approached the US Embassy because that had the longest lines … I went
to the head of the visa section at that time and I explained to him that
‘let`s work out a process where you still remain in control of the
decision making. But the way we do it is we scan everything and do all
the administrative part of your work before, your visa officer gets the
documents one day before, we do appointment scheduling that means you
know who`s coming at what time … so you spend 90 per cent of your time
in decision making.”
The proposal worked, and VFS began
operations in 2001, still a part of Kuoni, to support embassies with
their administrative tasks including collecting documents, scheduling
appointments and managing the logistics of delivering passports.
The
company did not charge the embassy for its services but created a
business model of receiving a service fee from individuals to make the
entire process more efficient.
It took time and the process was
far from easy or smooth due to the complexities involved in terms of
security, privacy and government approvals.
But having the US
embassy as client helped VFS bring other governments on board - in some
cases even needing legislative changes to permit the use of their
services.
VFS currently works with 68 governments around the
world, through 3,450 centres in 151 countries and has more than 12,800
employees. It has processed more than 290 million visa applications in
the past 22 years.
It is now the service provider for all UK visa
and citizenship application centres overseas - operating across 142
countries and is estimated to manage 3.8 million applicants every year.
It plans to open UK application centres in 84 countries this year.
The
company also has a contract with Australia for global biometric
collection service across seven regions - Americas, Mekong, the Middle
East and North Africa, North Asia, Pacific, South Asia and Southeast
Asia.
Headquartered in Zurich and Dubai, VFS is mainly backed by
Blackstone, the world’s largest alternative asset manager, with
Swiss-based Kuoni and Hugentobler Foundation and EQT also holding
minority stakes.
The company decided to launch an initial public
offering in Zurich in 2020, and even conducted roadshows and final asset
presentations, but Covid-19 hit and the plan was put on hold.
“We
always keep our mind open, on the opportunities, on the timing.
Finally, it will be up to our shareholders,” Mr Karkaria said.
“It`s not out of our eye line, but it`s not something that is going to happen tomorrow.”
Security and privacy
VFS is also investing heavily in data security, considering the nature of its business.
It
spends around 40 million Swiss francs ($44.36 million) on IT and IT
security a year and also has partnerships with companies such as
Microsoft and Fortinet.
It also runs “one of the biggest bug
bounty programmes” in terms of the number of business applications
deployed for testing due to the large volumes it handles.
Bug
bounty programmes offer ethical hackers compensation for finding and
reporting a vulnerability or bug to the application`s developer.
At
VFS, after the person at the counter collects the documents from the
applicant, there’s a huge process that takes place at the back end,
explains Mr Karkaria.
“We have to make sure that every passport
goes with the right documentation. Every upload that has happened has to
be 99.9 per cent accurate because there cannot be a mistake - even if
your passport number, there’s a slight mistake, when you`re entering a
country, you might be asked to go back. So, we can`t take a single
risk,” he explains.
To de-risk operations, the company does not
hold or store any data - all the biometrics are directly sent to the
respective embassies.
Other data is also kept only for a brief period of time, as decided by each embassy.
“When
the country does a contract with us, there are purging rights. So they
tell us three days, four days or five days, so everybody has this thing
and … somebody doesn`t have to go and do it, the system automatically
purges [all information],” Mr Karkaria says.
Dealing with customer complaints
As
the front-facing business, VFS receives complaints ranging from issues
with long delays for appointments to questions on why a visa was not
granted.
Customers on Reddit threads complain of poor service, high fees and lack of transparency.
But Mr Karkaria stressed that VFS is completely removed from the decision-making process, which rests solely with the embassies.
The
company is unaware about details regarding the visa approvals -
whatever comes back from the embassy is directly sent to the applicant.
Mr Karkaria said it advertises heavily to inform visa applicants about the areas of the process it covers.
But
the executive stressed that the company invests in training to ensure
front-line staff are equipped to handle all the queries.
“We do
skill set training, you know, customer service, attitude, and then we do
actual training on the operations. They have to pass with a certain
rank before they are put on the ground,” he said.
If specific staff receive customer complaints, they are pulled out of the counter and sent back to training, he added.
VFS
also operates premium lounges, which cost more, but offer personalised
attention and shorter queues. The platinum lounge, which costs Dh750 per
person, also offers a chauffeur service in the UAE, valet parking and
privacy.
Middle East focus
The company, which relocated its
headquarters to the UAE in 2013, is significantly boosting its
operations in the country. It is currently investing in expanding its
main centre in Wafi City in Dubai. It will be much bigger and have all
visa centres under one roof.
VFS is also planning to launch a new academy in Al Ain, which will focus on training Emiratis.
This
week, the company is rolling out a new ‘Medical At Your Doorstep’
service in collaboration with AMH, allowing expats to do medical tests
for visa renewal without visiting a designated medical centre.
It
is also investing significantly in artificial intelligence and is
setting up a new AI hub in the UAE next month, joining one in Mumbai,
with two more - in Berlin and Silicon Valley - in the pipeline.
“We
have 16 digital products already being used currently with
governments,” Mr Karkaria said. VFS has also teamed up with the
Responsible AI Institute to focus on “ethical AI”, he added.
Organic growth
Looking
ahead, Mr Karkaria is confident that the market potential is massive -
citing industry reports, he said 65 per cent of the visa processing
market is not yet outsourced.
At this point, outsourcing visa services is “no longer an option” for governments.
“That`s
huge organic growth for us. Then we are looking at, similar to the size
of the visa business, there’s the passport business for expats living
abroad who want to renew their passports,” he said.
“It`s the same infrastructure that I can build on. So, there is less costs. And then the third is the medical part.”
VFS
has already been working with the Qatar government and has signed up
with Oman to do medical tests at the point of origin to make it easier
once expats arrive.
Such ancillary services will help the company diversify its offerings while not being capital intensive, he said.
While
more and more countries have revealed plans to secure visa-free travel
for their citizens, Mr Karkaria said the trend was not yet picking up
pace on ground.
“Over the last two years, we have seen more
governments wanting to outsource - and with visas. Will visa-free
increase? Not to what I see, in my experience,” he said.
“In
fact, the borders are getting stronger around the world. Migration is
becoming a big issue around the world. So, you know, people want the
right type of people to come in, the right checks and balances. So,
security, migration, the right people coming in, economics, they all
factor in, and the way it is factored in, it looks like there`ll be more
visas than no-visas.”