Transport outsourcing catching on in India

Thursday, 18 March 2004, 08:00 Hrs
Printer Print Email Email
NEW DELHI: Step into any bank and ask for a car loan to buy a Toyota Qualis or Tata Sumo car and the predictable query would be whether it is for a call centre.

The trend of outsourcing for transportation needs can account for upward of one-third the cost of most call centres and big companies, an industry study has revealed.

As LeasePlan India, a subsidiary of Dutch global major LeasePlan Corporation, will vouch, the trend of outsourcing for transportation needs is catching on in the country.

"We saw the potential and moved in before the market really opened," said Guido Schouteet, senior vice president, business development, of LeasePlan Corporation N.V., an arm of ABN Amro Bank.

In less than five years of starting operations in India, the company offering a range of transport solutions globally, has over four dozen multinationals and big conglomerates like Reliance Industries keen to hand over the burden of maintaining and operating a large fleet of vehicles for their employees.

"We would be completing five years in October but as targeted we were able to break even last year. India is a huge market, yet it is still to fully open," Schouteet told IANS.

In India to help chalk out the strategy to enable the Delhi-based Indian subsidiary to chart bigger growth from 3,000 new cars per annum, up from 1,000, Schouteet admitted, "Clients here are still not availing our full services. We still have to convince the market the benefits of total management."

"It is only companies that believe in outsourcing non-core activities like pharmaceutical, chemical and IT companies that are using our services increasingly," said Schouteet.

According to him, globally only one-fourth of the cars maintained by a large company are used by managerial staff, while the rest is utilised by the technical and other employees.

Of the companies' current fleet of 6,500 cars around 65 percent are on management contracts while the remaining 35 percent are leased vehicles.

Though the pattern is the same in most of the 26 countries where the company has operations, Schouteet admitted that India is not yet ready for the total outsourcing of driver and car contracts, including insurance and other services.

While keen to grow in size, the official ruled out going out solely for numbers.

"Typically a tie-up can require a couple of months to adapt to a customer's needs. We are looking for profitable clients and so are not interested in just jumping to addition of 10,000 cars annually," said Schouteet.

The company is currently trying to educate the market and targeting more international companies.

On competition, Schouteet admitted that currently it is very limited with competitors currently offering very limited services like financial leasing and services.

"Their services is nothing like ours. There is definitely need for more healthy competition as sometimes competition can help to open up the market," said Schouteet.

According to him, retaining customers is as important as getting new clients.

Of its fleet of 110,000 cars in Britain, 135,000 cars in the Netherlands and 290,000 cars in the US, the pattern of services is very different. Overall the company manages 1.25 million vehicles and a consolidated lease portfolio of euro 9.6 billion.

In the US, the annual service contract comes with various options for customers.

Unlike a typical car owner who puts off regular servicing and maintenance, Schouteet said their company puts it as a top most priority not only with an eye on cutting down break down costs but also for resale value.

Typically, LeasePlan sells off its vehicles after three years and has any number of buyers seeking them even cross border in Europe. In India, LeasePlan is disposing of some of the four year old vehicles and has so far sold around 30.

Source: IANS
Ola raises Rs 400 cr for electric
Leading ride-hailing cab aggregator Ola on Friday said it raised Rs 400 crore from its early in..
SpiceJet plans aggressive
Budget passenger carrier SpiceJet plans to aggressively expand its international networks to fl..
GST rate cut to spur Bengaluru
The realty market in India's tech hub is set to grow as lower Goods and Services Tax (GST) rate..
Fossil Group sells smartwatch
Global watch and accessories maker Fossil Group has announced to sell its smartphone technolog..