The Hindu Business Line : ‘IT spend in logistics may touch Rs 1,000 cr in 5 years’

The ‘Technology Survey for the Indian Logistics Industry - 2008’ has stated that the IT spends in the Indian logistics industry would grow to approximately Rs 1,000 crore from the present Rs 400 crore in the next 5 years (CAGR of 20-22 per cent).

The demand is expected from the western region of the country followed by the northern and the southern regions. It noted that 46 per cent of the IT investments, currently made, are towards capital expenditure and the remaining 54 per cent in operational.

10 locations

The survey was conducted by Kale Consultants Ltd, in partnership with Feedback Business Consulting Services Pvt Ltd.

It was conducted across ten cities in India — Delhi, Bangalore, Chennai, Mumbai, Pune, Kochi, Vizag, Kolkata, Paradip and Hyderabad.

Over 500 respondents across the organisations participated in the survey.

Market dynamics

Mr Sumeet Nadkar, Head Logistics SBU, Kale Consultants, sharing details, said that the key objective was to assess market dynamics and highlight technology adoption trends in the logistics industry.

“Small and medium family owned enterprises are growing in stature in the integrated logistics space.

Global majors have committed to huge investments for their Indian operations. PE funds are increasingly eyeing the sector.

The sector has already attracted investments of over Rs 20,000 crore in the first half of 2008,” he said.

India spent around 13 per cent of its GDP on logistics, higher than the US (10 per cent), Europe (11 per cent) and Japan (10 per cent).

Mr Sumeet said the technology spend in freight forwarding is expected to grow by 160 per cent.

It presently constitutes 14 per cent of the IT demand and is expected to rise to approximately Rs 170 crore (17 per cent of overall IT spend by FY 2013). The market size is currently at Rs 11,000 crore and is expected to reach Rs 21,180 crore. He said current IT spends by airports are estimated at approximately 1.1 per cent of the overall revenues. New investments of Rs 28,525 crore are expected in the next four years to boost the IT requirement. This is one of the segments where IT utilisation is maximum compared to other segments in the logistics space.

In warehousing

Technology spend in warehousing is expected to increase from the current Rs 48 crore to about Rs 120 crore by FY 2013. It required end-to-end solutions to improve efficiency in supply chain management.

Tech buyers

The market size is presently Rs 3,000 crore and is expected to reach Rs 7,380 crore in five years. He said express and courier services segment would continue to remain the highest technology buyers constituting to 33 per cent of the technology spend by 2013 from the present 29 per cent. Radio frequency identification is expected to grow rapidly with nearly 80 per cent of the respondents, indicating that they will be adopting the technology (in spite of cost concerns). The demand would primarily be driven by their overseas customers and the domestic retail boom. The ICD/CFS market size together is currently at Rs 6,500 crore and is expected to reach Rs. 7,700 crore and Rs 12,515 crore by FY 2013.

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‘IT spend in logistics may touch Rs 1,000 cr in 5 years’