Gurgaon: One of India’s largest call centre operators, Convergys Corp., just couldn’t nail the formula to its unwieldy transportation problem.
400 managers, each sending in their own spreadsheets of who needed to be where and when.
(EFFECTIVE MEASURES)The number of people to manage the process?
“It was so complex it could easily qualify as a question on a GMAT exam,” says the company’s logistics director Gaurav Kalra, who was part of a team deputed to automate Convergys’ transportation programme and bring it under control. Since many employees had a new schedule every five days, he says, someone was spending half the week just converting timetables into routes.
Kalra and Convergys are far from alone in facing and trying to cut spiralling transportation budgets. And in the wake of rising petrol prices, efforts are intensifying among companies that pick up commuting costs for workers.
Transportation carries an average cost of 8-9% of a company’s operating budget in India—a larger expense than even real estate for some companies not sitting on prime land. With fuel costs set to increase, logistics directors are turning to a mix of technology and planning to keep the expense as low as possible.
“What’s good today is not good tomorrow,” says Yash Kapila, who heads the facilities management group in West Asia for the real estate consulting firm Jones Lang LaSalle Meghraj and consults on transportation projects. “You look at the need, and you challenge the requirements.”
The firm recently did that for an international financial services company that clocks 17 million km each year in employee transport, according to Kapila, and helped the company cut its annual transport budget by Rs1 crore. He declined to name the company citing a confidentiality clause in the client’s contract.
Part of the savings came from rationalizing the way people were picked up, and trying to pick up as many people as possible in the same area, he says, but the bulk of the savings came from something even morebasic.
“What would traditionally happen: the car picks you up at 7am, and you ride back at 8 pm,” says Kapila, “but you would have that car for 13 hours and the customer is paying for idle time.” In part by telling its vendors it would no longer pay for idle time, the company brought its costs per employee down from around Rs300 per day it was paying last January to Rs170 per day this April.
Other approaches to cutting transportation costs involve less wholesale options and more fine-tuning. The Hinduja Group’s back office services unit HTMT Global Solutions Ltd, which spends more on transport than its office rentals in Bangalore and Mumbai, tried to squeeze costs out through combining pick up and drop locations, according to Narashima Murthy, who led the company’s India operations, and just moved to the North Americadivision.
The goal—ensuring that most seats in the 15-25 capacity coaches it sends around are full—helped bring the company’s per employee cost down to around Rs150 per day.
For Convergys, with 20,000 daily pickups and drop offs to plan, coordinating hundreds of schedules was only part of the problem. Transportation managers also had to coordinate with human resources. “There was no centralized place where we could get a hold of employee data,” says the company’s technology director Ipininder Singh. “There were instances where employees left the organization, and we would keep sendingthe cab.”
The company used some common tools such as streamlining routes and increasing occupancy, but it also turned to its IT department to create software and scale the whole process up. The overhaul, which started three years ago, resulted in things such as automated scheduling, routes selected by digital maps, audited financial controls to track bills and bar codes in each of the vehicles.
Companies also point out long-term possibilities for cutting transportation costs, such as using the Delhi Metro, buses in Mumbai, working from home, or networks of offices rather than mega-centres that currently house most outsourcing operations. “We do see some room (for these),” says HTMT’s Murthy, “and have moved certain operations to places where we have strategic advantage.”
The company chose a new location in Vashi, Mumbai, for example, partly due to its proximity to a railway station. HTMT is also experimenting with home agents, and Murthy envisions a future of small format interconnected BPOs that would wipe out large transport budgets.
“There is lots of innovation. Some (formats) might fail after five years of strong growth but (it’s) still on the drawing board,” says Murthy, “and it will lead to discreet innovation that will directly or indirectly affect costs.”
Cutting costs and streamlining a system, though, can have some unintended side effects. When Convergys’ Singh came back from a recent trip to the US, he received an SMS with his route details, and responded to get an exact pickup time. His SMS was logged directly into the system, which others could access.
“The driver got my info,” he says, “and my boss knew I was there.”