The survey conducted by Kale Consultants Ltd in partnership with Feedback Business Consulting Services. IT spend is expected to increase in the western part of India followed by the north and south. 46% of the IT investments are currently made toward capital expenditure and the remaining 54% in operations said the report.
India spends around 13% of its GDP on logistics, higher than US (10%), Europe (11%) and Japan (10%). This translates to around Rs 150,000 crore in operating costs for the economy and therefore loss in capital formation. India risks missing out on 1 to 2 per cent GDP unless significant strides are made to bridge this gap and improve supply chain efficiencies by effectively using technology.
The key objective of the study was to assess the market dynamics and highlight the technology adoption trends in the logistics industry. There is a lot of activity happening in this highly fragmented market and the trends are quite revealing. 3PL players are growing at over 25%. 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, said Sumeet Nadkar, head - Logistics SBU, Kale Consultants Ltd.
Key findings:
Freight Forwarding: Technology spends in freight forwarding is expected to grow by 160%. This industry presently constitutes 14% of the IT demand and is expected to rise to approximately 170 crore (17% of overall IT spend by FY 013). The market size is currently at Rs 11,000 crore and is expected to reach Rs 21,180 crore by FY 013.
Airports: Current IT spends by airports is estimated at approximately 1.1% of the overall revenues. New investments of Rs 28,525 crore are expected in the next 4 years to boost the IT requirement. This is one of the segments where IT utilization is maximum compared to other segments in the logistics space.
Warehousing: Technology spends is expected to jump from the current Rs 48 crore to about Rs 120 crore by FY 013. This industry is fast emerging as a strategic function, thanks to rapid growth in retail and expansion by domestic and international players This requires end-to-end solutions that improve efficiencies in supply chain management. The market size is currently at Rs 3000 crore and is expected to reach Rs 7,380 crore by FY 013.
Express & Courier Services: Industry will continue to remain the highest technology buyers constituting to 33% of the technology spend by 2013 from the present 29%.
Radio Frequency Identification: RFID is expected to grow rapidly with nearly 80% of the respondents, indicating that they will be adopting the technology (inspite cost concerns). The demand will 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 7700 crore and Rs 12,515 crore by FY 013.
More than 500 respondents participated in the survey that was conducted across ten locations in India Delhi, Bangalore, Chennai, Mumbai, Pune, Kochi, Vizag, Kolkata, Paradip and Hyderabad.
