Traditional methods versus technology – The Financial Express

The New Wave: Eishita Puri | Verve Magazine
The New Wave: Eishita Puri | Verve Magazine
05/15/2018
Head: Politics of exclusion
05/15/2018

Traditional methods versus technology – The Financial Express


technology, agriculture, dell technologies, IoT solutions New technology players like Uber and Ola have revolutionised the taxi market in India. (Reuters)

The overall size of the taxi market in India is approximately $10 billion and is expected to reach $40 billion by 2030. The corporate or B2B space, such as employee transportation, bus services, car rental services or inter-city travel, is the largest segment of this market. There are more than 2.1 million registered taxis in the top 100 cities in India, out of which 80-90% vehicles operate in the B2B space.

New technology players like Uber and Ola have revolutionised the taxi market in India. Both companies have deployed over $2 billion in the Indian market and have created an inventory of over seven lakh cabs. They have achieved combined a run rate revenue of $1.5 billion, catering to three million trips per day. It is expected that the number of trips will increase to 10 million in next 12 years in the taxi segment alone, mainly due to rising urban population, rising disposable income and increase in per capita trip rate. However, these players are still trying to establish a foothold in the B2B space and devising new strategies to modify their services.

In India, more than 95% of mobility solutions in the B2B space for services are largely handled by regional players, which are highly fragmented and relationship-driven, leading to inefficiencies and leakages in the system. Corporations are looking for smarter solutions rather than just a dedicated vehicle with a driver. The future of mobility in the B2B space will transition to companies that can offer tech-enabled customised solutions for corporate customers.

Companies that adapt technology quickly, and offer shared and connected services that are efficient, cost effective, transparent and safe will eventually see their businesses growing at a faster rate than others. Eventually, four to five large players will emerge that will have a larger share of the pie depending on the segment they focus on. Some radio taxi players like Meru are shifting their focus on the corporate sector as the profitability matrix is better and competition is less in the organised space. Business models of companies like Uber and Ola are not carved out for corporate mobility solutions. In order to service corporate customers, they will have to carve out a separate fleet with different terms for drivers, and that could lead to confusion and dissatisfaction amongst them. Due to these constraints, it might make sense for them to focus on the retail segment as that is a much larger opportunity and also their strength now. In the initial phase, local players with better technology platforms shall gain, but will require investment in technology to maintain their edge.

A customised tech-based solution that meets corporate customers’ requirements on various parameters will have a better chance of scoring over their traditional and regional counterparts.

By Jaspal Singh  

The author is partner, Valoriser Consultants



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