https://www.safetrax.in/wp-content/uploads/2018/09/Web_blog_ST-ETO.jpg 321 800 Krishnan Rangi https://www.safetrax.in/wp-content/uploads/2018/12/Safetrax-01-1.png Krishnan Rangi2018-09-11 08:26:222018-10-18 08:15:37ETS Outsourcing Dilemma – Should you outsource entirely or select specialists for different parts of the Solution
Companies are on the constant look out for opportunities to improve efficiency across all functions and save costs across all items of expenditure. The costs of transporting employees range from ₹ 3000 to ₹ 9000 per employee per month, based on different types of vehicles and company policies. Agreements with fleet providers also provide for cost escalations due to fuel and with the current diesel price at ₹ 73 per litre the rates are bound to go up.A company that transport 1000 employees in individual cars is likely to spend around $1.5mn a year on transport costs.Most companies, by now, have understood the benefits of implementing a robust transport automation system. In addition to improving the quality of commute for their employees, reducing commuting time and enhancing the safety during travel, Companies can also obtain insights for optimizing routes, rationalize use of different types of vehicles provided by the fleet operators and automate and streamline billing. Transport automation systems also ensure implementation of fairness across multiple vendors based on their SLAs and ensures 100% transparency in operations in additions to meeting all regulations and addressing safety of employees.However, while choosing the type of “outsourcing” model, there are many options available in the market today. Some companies prefer to outsource end-to-end fleet operations (fleet, personnel, automation) while the others prefer to have different vendors providing fleet, automation software, BGV services and Escort Security.Organizations who choose an end-to-end service provider do so as they do not find adequate management bandwidth or lack specialized skills required for transport management. They also believe that this is not core to their business and are willing to sacrifice various benefits by choosing “convenience” over “operational efficiency”.On the other hand, there are discerning companies who are obsessed with Operational efficiency and will leave no stone unturned to get the best transport management solution for their employees. They are conscious of the conflict of interest between these vendors and do not want to take chances by selecting one vendor to provide all these services. Thus, these companies meticulously identify “horses for courses” who specialize in providing fleet, transport automation software, BGV services and Escort Security.As a result, these companies benefit from the following advantages: -We are noticing recently that large facility service providers with ‘risk management competencies’ such as JLL, ISS, CBRE are providing end to end transport in partnership with Fleet vendors and technology partners such as MoveInSync, Routematic and Safetrax. With large capital and managerial resource pools behind them they are well positioned to capitalize and grab market share with large companies.Some Technology providers such as MoveInSync as well as Routematic are also offering end-to-end transportation services and it will be interesting to observe how these offerings perform after a couple of years given the fact these startups have constraints in capital and resources. Technology providers offering end-to-end transportation can result in conflict of interest and may require third party audits on routing and size of vehicles from time to time.Pureplay SaaS technology companies will have to live with the fact that the technology stack in the costs of transportation are not likely to exceed 2 to 4 percent of the total transportation costs and hence the revenue market opportunities are likely to be small, not attractive to be funded by VC firms. Such companies may have to expand their markets vertically and horizontally via different offerings. There is also no scope for these players to compete with Ola or Uber as the B2C market is likely to be dominated by these two players.The choice of outsourcing model is a strategic decision and is entirely dependent on a combination of factors such as an organization’s risk appetite, cost consciousness and availability of management bandwidth. Thus, companies based on their sizes and needs are expected to choose an integrated provider to provide end-to-end transport management with SLAs and risk management or deal with all the individual providers of services for better control and cost efficiency.