India Post will spend more than Rs6,000 crore on technology as part of a five-year, national restructuring exercise that aims to turn around the loss-making postal department and eliminate its dependence on budgetary support from the Union government in fiscal 2008.
The department has been supported by the government for decades now to make up for losses running low-priced and inefficient services. Postal revenues last year were Rs1,400 crore short of the department’s expenses in 2005-06, the latest data available showed.
The technology plan is part of a strategy that the postal department’s brass is finalizing with an aim to leverage the world’s largest network of around 155,330 post offices to sell new financial services and unrelated merchandise.
A bulk of the proposed expenditure will be on radio frequency identification or RFID, a new system for tracking shipments and mails; an enterprise resource planning (ERP) or business software for automating and integrating human resources, marketing and finance operations; a national data centre for creating and updating records; and a national call centre for providing round-the-clock support to all its customers.
In 2006-07, the department had budgeted Rs1,000 crore on technology, of which about Rs700 crore was spent.
Consultant KPMG International, which advised India Post officials for almost a year-and-a-half, said the department needed to find new streams of revenues. “Technology is central to transformation of organizations such as India Post, as it can not only help in integrating the postal systems, but also integrate back-end processes and establish a customer interface,” said Arvind Mahajan, the firm’s executive director.
These initiatives are aimed at creating a “leaner organization, as the department has already reduced its manpower by around 10% in the last few years, thanks to increased automation”, said I.M.G. Khan, director general, department of posts and chairman of the Postal Services Board, an apex body that runs India Post.
“We have also been able to reduce the budgetary deficit from almost 50% last year to around 23% now, and should be able to bring that down to zero with the help of technology this year.”
Khan said computerization and the use of technology in the around 133,000 rural post offices, often situated in remote villages that lack even basic connectivity in terms of proper roads and electricity, will be a challenge.
“But the department needs to connect them for greater access and also deliver more services such as e-payment and e-post,” he added.
Around 10,000 post offices in rural India will be networked by the end of the year.
One of the areas where post offices have been lagging behind courier companies, such as DHL and Elbee Courier, has been the speed of delivery and customer perception because its private rivals offer features such as real-time consignment tracking on the Internet and through text messaging.
“Around 60,000 sacks of mails move across the country and there’s no way we can track them manually. RFID makes sense,” said Khan. “We really want to compete now, and we cannot do without technology.”
India Post is conducting an RFID pilot on the SpeedPost service between Mumbai and Delhi currently.
Its two technology centres at Mysore and Hyderabad are re-engineering the software for sorting mails and electronic money orders, but the department is “seeking to partner with an external consultant for developing enterprise resource planning solutions, which will be too complex to be done in-house”, said Khan.
India Post, which has planned a national call centre to serve Indian and foreign customers in the government’s 11th Five-Year Plan that runs from April 2007 to March 2012, said it was in the process of adding more such service facilities in the states. “We already have call centres functioning in the states of Tamil Nadu and Uttar Pradesh. More call centres will be rolled out within three months,” said Khan.
He said the ministry of communications, to which the department of posts reports, is exploring the transformation of India Post on the lines of Deutsche Post by “establishing a Post Bank of India by either forging an alliance with existing banks or even buying out a small to medium bank”.
The department already has a base of around 162 million savings account holders with annual deposits exceeding Rs1.6 trillion. Khan declined to elaborate.
India Post’s massive network of post offices could be used as a front-end for other government services, said Subhash Bhatnagar, a professor at the Indian Institute of Management, Ahmedabad, who consults the World Bank on e-governance projects. “India Post is uniquely positioned to offer banking services in rural India because of the trust villagers have in the post offices,” Bhatnagar added.