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Indian Logistics Sector Gearing up to higher IT Spending

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Logistics play an important role in any economy and the growth prospects of the sector are closely linked to the economic growth and to some extent even foreign trade of the country.

Gradually, small and medium enterprises in the logistical industry are growing in stature. Even PE firms are eyeing stakes in some of the bigger companies in the fast emerging logistics sector to benefit from the fast growing story of this Indian industry.

Given that, the higher operating costs associated with the Indian logistics players on account of relatively lower embracing of technology in order to fasten their supply chain efficiencies has been a major dampener for the industry in general.

However, off late, the logistics industry is combating hard to establish its feet into the fast growing market of India by controlling its costs by increasing its investments in Information Technology (IT), in order to cut its transaction costs by streamlining the process of their operations, reports an online survey on ‘Adoption of IT in logistics’ by a logistics software provider Softlink.

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Out of total of 700 Logistics companies surveyed by Softlink, number of larger players spending towards technology investments up to Rs.1 crore has doubled to 14% in 2010 compared to proportionate 2009 figures. At the same time, a drop is witnessed in the number of companies investing less than 10 lakhs and between 10-25 lakhs in IT by 6% and 3% respectively.

The report further reveals that improving Customer Service (66% respondents) and Direct Customer Request (74% respondents) are the key driving factor which has tilted the decision of logistical players towards increased IT spending.

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The research shows that Customer Service is the main aspect that has driven 97% of the SMB respondents who considered it to be important for their business. However, 39% respondents from SMBs and 34% respondents from large companies felt that their existing IT systems do not match up to their customer service requirement.

The survey undertakes to set-aside the misconception that the Indian logistics sector is increasingly averse of adopting technology and technological up gradations.

In this era of outsourcing, it is but logical for the logistics industry to tap the benefits from IT spending and lower their costs to compete effectively in this fast emerging economy with incremental growth prospects from newly emerged retailing sector.

Finally, the Indian logistics industry is on track to attract significant IT spending due to overall growth among its players.

  1. Tony Kemp says

    Investing in IT is one of the important things to be considered by a company in the commercial warehousing and logistical industry. BPO companies for example are the ones who are taking IT investment seriously by improving their tools and system to provide excellent service to their customers. Logistics companies on the other hand also deal with the same thing. And it will definitely help smaller players in this industry as well.

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