4 ways to reduce the Transport Cost per Employee

On an average Transport cost per employee per month varies from Rs. 3,500 – Rs. 10,000 depending on the city and scale of operation. Irrespective of the size and scale, companies can take steps to reduce the per employee transport cost which ultimately reduces the overall transportation and administration expense. Let us look at 4 actionable items that can lead to a reduction in expense.

Automated Routing

picture1 In a manual operation, creation of routes consume several man hours and the output is not optimized for efficiency. Some transport managers may argue that our routes are evolved through years of experience and knowledge of every nook, corner and lane in the city. While that may be true, knowledge of geography does not translate into mathematical precision and efficiencies. After all, Garry Kasparov was beaten by Deep Blue in the mid 1990’s. In our engagements with 60+ companies, we have found that there is scope for at least 3% efficiency gains going up to 12% in some cases.How the routing produces optimized output is a topic for another day. But broadly algorithms construct a distance matrix identifying the distance between one employee and the rest and similarly among all employees and generates a combination of routes. These routes are further refined to the most optimal ones (least distance and maximum seat utilization) subject to various constraints such as max distance deviation, max time, and available fleet mix. With cloud computing, this complex task is executed in a couple of minutes and the transport supervisors can quickly proceed to deploy vehicles to the generated routes. This not only saves significant time but also reduces the number of trips, vehicles and overall KMs, thereby reducing the overall cost.

Renegotiation of Contracts

picture2 With automated routing transport managers possess an important arsenal to generate a myriad combination of routes by varying the applied constraints such as distance deviation, max distance, max time and available fleet mix and algorithm type – distance, zone and cluster. The output can then be analysed and compared with the past trips and expenses and the one that offers the maximum efficiency without sacrificing employee convenience can be narrowed down to. Armed with this insight transport managers can now go back to transport vendors to restructure and renegotiate contracts which offer them the most value and benefits.

Reduction of Manpower

With end to end automation, companies achieve significant efficiency in every step of the transport operation, be it Rostering, Routing, Tracking, Trip deployment, etc. Where several resources were handling routing, MIS, employee queries, vendor management, etc can be reduced to one or two resources as a result of automated system. In a large scale operation, up to 40% of manpower can be reduced generating reasonable savings for the company.

Reduce Stationary and Telephony cost

While these may not be as big an expense, any reduction achieved can augment to the overall efficiency and savings. With automated system up to 80% of the stationary and outgoing calls can be avoided contributing to the overall reduction in transport expense. From an organizational perspective, reduction of paper usage enables facility team to contribute to the organizations green policy and initiatives.

Monitoring Driver Performance for Safe Employee Transport Operation

The performance of drivers largely decides the success and stability of any transport operation. Recent years have seen the proliferation of GPS devices, and most cabs on the road today have GPS device fitted in them. However, whether the device generates the right data and whether those are tracked by the supervisors/managers is questionable. One can blame the cheap GPS devices in the market and poor tracking software as major reasons. A sophisticated GPS device can gather lot of important metrics regarding driver performance which can help in identifying potentially risky drivers enabling supervisors to warn them at the right time. Let us examine some of the driver performance metrics that can help in establishing a safe employee transportation operation.

Speed Violations

Overspeeding is an indication of lack of patience and discipline and makes the driver erratic and risky. The number of speed violations and duration of the speed recorded by the GPS device can help manager decide on the risk profile of the driver. Most fatal accidents are result of over speeding and it is prudent to be watchful on this metric and share the feedback with drivers to avoid accidents.

Average Speed

Most drivers are not conscious of the average speed and would be happy to learn and adjust their driving behaviours. An average speed must be measured along the duration of the day to be able to provide constructive feedback. A driver doing trips during peak times might have a low average speed, which should be benchmarked against the average speed during those hours. Similarly, a driver doing duty in lean hours should be benchmarked against acceptable average speed in those hours.

On time / Late Arrival

This metric assumes significance in the IT/ITES industry as even a 5 minute delay in arrival can lead to loss in productivity and revenues for a company. With GPS tracking, geo-fencing and trip management, it should be easy to track and stay on top of this metric.

Scheduled vs. Actual KM

The difference occurs when drivers deviate from scheduled routes or tamper the odometers. In either case it directly results in inflated KMs and overpaying the vendors.

Harsh Events

An advanced GPS device comes with 3-axis accelerometer and extra sensors which helps detect core inherent driving patterns such as fast lane change, harsh braking, harsh cornering, sudden acceleration and other potentially risky manoeuvres. These metrics help in creating a comprehensive and accurate driver scorecard enabling managers to provide precise feedback to drivers and vendors.

GPS device or Smartphone – which is best suited for vehicle tracking?

Most often we encounter customers asking which is preferable - GPS device or Smartphone for vehicle tracking. Each has its own advantages and disadvantages and what primarily determines the selection is the transport operation arrangement in a company. For some companies it could be either one of them and others both. Let us examine the capabilities and pros and cons of these options.

GPS Device

blog-banner-2 Fixed GPS device is an independent hardware unit whose primary function is to send latitude/longitude co-ordinates to the configured server. The device is inserted with a SIM Card, installed under the dashboard of the vehicle and wired to the vehicles battery for power supply. Most GPS devices come with a 4 – 6 hour battery backup so when wiring is tampered with by drivers - a common occurrence, it can still continue to track the vehicle as long as the battery lasts. It also typically comes with a 4GB memory card so when device loses cellular signal, the latitude/longitude is still tracked and stored in the memory card and beamed to the server when cellular connectivity resumes. The ports in the device allows integration with accessories like HID/RFID readers and Panic button, a common setup in the employee transportation industry. Since the device is hard wired to the vehicle, installation and deinstallation requires the help of an electrician and generally takes about 30 minutes per vehicles. GPS device can function on a 2G Sim Card with a plan that costs as low as Rs. 35 per month.


blog-banner-3A good 7 – 10K smartphone with a vehicle tracking app such as Safetrax’s driver app can act as vehicle tracking device. The app tracks the latitude/longitude and sends it to the server. Additionally, tripsheets can be sent to the app which helps eliminate paper tripsheets. Employees as they board can enter an OTP on drivers smartphone to confirm their boarding / alighting status. From the app, drivers can call employees whose numbers are masked using call forwarding. It is also easier to add new features to the app which can make the driver more productive and employees safer. Smartphones will require a 3G/4G Sim Card with a data plan that starts from Rs.150 per month.

Smartphone vs. GPS Device

Below is a neat infographic comparing both the options to help you decide on this fundamental component of employee transport automation system.

So which one should I go for?

If majority of operations is managed by dedicated fleet, it is practical to go with GPS device + HID Reader + Panic button setup. This brings in certain stability to the operations with the only con being companies will have to print and handover tripsheets to drivers. On the other hand, dedicated buses, shuttles, etc where dependence on tripsheets is minimal, can be installed with the fixed GPS setup.If majority of operations is managed by non-dedicated fleet, it is most ideal to go with Smartphones which can be easily swapped by vendor when the cab changes. Additionally companies can maintain a stock of phones to deploy when new or adhoc vehicle is assigned duty. Since, operations are usually managed by registered vendors, it is easy to manage the flow of devices and any loss/damage can be levied on the vendors.In large operations, which involves multiple offices in a city or spread across different cities, each site or citys' operations need to be considered before concluding the mode of tracking. We recommend a hybrid setup going with smartphones where there is a frequent churn of vehicles and GPS setup where major segment of fleet is dedicated.Further, if the drivers carry a capable smartphone (7-10k), as is the case often today, companies can leverage by insisting drivers to install the Driver app. With a clause that only GPS tracked trips will be considered for billing, companies can enforce discipline on the usage of smartphone for tracking and receiving trip duties.

Why do you need Employee Transport Automation?

IT Industry currently employees 10mn people and is poised to grow at an average CAGR of 8-9% in the next couple of years. Despite the automation wave threatening mundane jobs, the addition of new resources is likely to grow at in the same rate as in the past. Currently, about 30-40% of the employees depend upon the company’s transportation service. With spends ranging from Rs.3000 to Rs. 8500 per employee per month towards transportation, it assumes a significant expenditure for most companies.Cost aside, transport operations are inherently complex, dynamic and involves multiple stakeholders. With late night operations and erratic drivers, safety risks pose a threat to companies. Few rape incidents by cab drivers in the past have led to strict transportation guidelines from Nasscom, FICCI and local police authorities. Any delay or disruption in the transport operations can hurt the business significantly potentially resulting in loss of reputation and revenues. Hence, there is a definitive need for a comprehensive transport automation system to streamline operations, improve safety and achieve cost savings. Current challenges faced by IT companies
  • Manual billing and reconciliation
  • Lack of real time visibility
  • Manual co-ordination with high call volumes
  • Inefficient routing
  • Longer commute for employees
  • Employee safety
  • Excel report generation and maintenance
  • No in-depth analytics