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.”
