[efuture]

Hello all, I am creating this thread to clear a bug that comes to my mind every time I cross an IT park in Chennai. There are lot of cabs - hatchbacks, sedans, SUV/MPV parked outside the parks and lot more cabs coming out of the gate.

I was curious how the business is working, who is making money out there, how much corporate companies are paying to transport the employees and why not big bus and van and why small hatchback or some 7 seater SUV's. I have may friends in IT, but none of them knows how it works even tough they avail the service everyday. Most common vehicles are Xylo, Tavera, Innova, Indica, Indigo, Etios and Xcent in Chennai. Also there is not much affordable diesel vehicle available in the market, with this how this industry future is going to be without affordable fuel efficient machinery.

I'm reaching out to the forum members to throw some light on the employee transportation in corporate sector with small cars and MPV's.

[am1m]

Originally Posted by efuture

...and why not big bus and van and why small hatchback or some 7 seater SUV's.

In Bangalore, usually the pick-up and drop is from/at the employee's house, so to better navigate the small side-roads and to better distribute the pick-up and drop in different parts of the city, I guess they opt for smaller vehicles. The bigger IT companies like Infy do use buses, and I guess for common pickup and drop areas on main roads, a bigger vehicle would work.

On rates- at one company I used to work at, the transport bill used to cost the company 10L a month.

[Everlearner]

Our company uses small hatchbacks and sedans for employee transport in Bengaluru since the BLR population is small compared to other locations. Sometimes I chat with the drivers on my way to office/home. Below are some pointers I heard from them.
1. The organization has tied up with a vendor who has an app to provide booking/cancellation and also live tracking of cabs.
2. The actual contract of the organization is with a large vendor who in-turn hires multiple individual cabs
3. Most of the cab drivers are owners as well and they get paid around 55k as monthly package for a 12 hour daily shift. So, the actual billing rate from vendor to the org will be more than this.
4. There is no separate fuel or maintenance allowance. The driver/owner need to take care of the expenses within this package. Most of the drivers say the fuel expenses are easily managed with this package.
5. Daily work load for a cab involves 2-3 pickup trips and 2-3 drop trips spread across the day. My very crude guess would be around 150-200 KM running per day.
6. Most of the cabs are either diesel or CNG.

Additionally, transport via small cars is more expensive for the company. Our Mumbai office provides only TT/mini bus type of vehicles with designated stops only on very major roads. Since the BLR population is small, larger vehicles may not get completely utilized. I have heard that BLR office will also follow Mumbai model once we reach substantial population.

[raptor_diwan]

There used to be an agency that partnered with IT companies to provide such services.

Even one of my friends working in IT bought a Toyota Etios car through EMI and leased it to the agency for use as a cab. They provided a driver, and the car was used extensively for about 3 to 4 years. My friend received monthly payments, which not only covered the EMI but also generated a decent profit. When the car reached retirement age ( According to IT companies, they generally do not use cars that are older than 5 years. ) my friend handed it over to another agency, continuing the cycle.

As mentioned by others, not every company is as large as TCS to afford and utilize big buses. Besides, they might lack sufficient parking space. Opting for smaller cars enables them to conveniently pick up and drop off employees even in narrow streets, while also reaching more locations efficiently.

[condor]

Many larger IT companies offer a free drop during night time - say, for people working in afternoon shift. Night shift folks get a pick-up and drop. 2nd shift folks will need to pay for the pick-up since it is in day time, and they often use public transport for this part.

In such cases, they can make do with smaller cars, like hatch-backs.

Others -esp larger companies - do a pick-up and drop for even day shift folks, and these companies would use the larger vehicles.

Pick-up /drop being at door-step, they often have to go into smaller roads - hence here again a smaller car will be better.

I guess it's all about logistics - number of people in the trip, & location that will decide the type of vehicles.

[efuture]

Originally Posted by am1m

On rates- at one company I used to work at, the transport bill used to cost the company 10L a month.

Thanks, just to understand - how many vehicles were operated and are they sedans or MPV's. 10L per month for transportation is like buying a car every month

Originally Posted by Everlearner

3. Most of the cab drivers are owners as well and they get paid around 55k as monthly package for a 12 hour daily shift. So, the actual billing rate from vendor to the org will be more than this.
4. There is no separate fuel or maintenance allowance. The driver/owner need to take care of the expenses within this package. Most of the drivers say the fuel expenses are easily managed with this package.
5. Daily work load for a cab involves 2-3 pickup trips and 2-3 drop trips spread across the day. My very crude guess would be around 150-200 KM running per day.
6. Most of the cabs are either diesel or CNG.

Additionally, transport via small cars is more expensive for the company. Our Mumbai office provides only TT/mini bus type of vehicles with designated stops only on very major roads..

Thanks, from simple calculations it is clear that paying 55K for a small car would add huge cost to company as they are paying more for manpower and machinery. Instead of a small sedan an SUV with 7 seat could cut down the cost by half, but still lot of sedans and hatchbacks are there in the market.

The payment also seems to be too low, fuel alone will cost close to 22k for 22 days work week with ~200km running per day averaging 18kmpl for diesel which is very optimistic. This eats away 40% of the drivers earnings, now on top of that car approximately 30% EMI for car loan and 10% for insurance and maintenance since insurance for commercial vehicles are twice that of white board cars to my knowledge. This leaves the driver with just 20% of 55k which is barely 11,000 per month after all expenses. I think this seems very less for someone who worked hard for 12 hours a day.

Originally Posted by raptor_diwan

According to IT companies, they generally do not use cars that are older than 5 years

Thanks, What is the reason for not using a vehicle for more than 5 years? - reliability or aesthetics and comfort?

[thanixravindran]

One important aspect is route selection and number of employees opting for the route in paid transportation during day shift. My previous company in Bangalore generally tries to fit in a route with certain minimum number of employees who form a route that max normal time taken by the farthest employee is 1 hour for the trip. So they mostly opted for TT and some cases hatchback also.

For night shift, it is door drop and with security guard. So it is always a car either hatchback or MUV.

And it depends on the company as well location. Bigger companies operate buses as well if the office is located far off like Siruseri or Mahindra world city in Chennai. Some companies like my current company doesn't provide transport even if you are willing to pay as there is poor demand.

[raptor_diwan]

Originally Posted by efuture

Thanks, What is the reason for not using a vehicle for more than 5 years? - reliability or aesthetics and comfort?

Safety also to ensure optimal reliability.

[xcentrk]

Well, I do know a bit about these as I work for one of the cab booking app in Chennai(Can't say name! NDA) and I interact with lot of vendors who has multiple cabs under them. They have tie up with couple of small firms and for other free times, they will take up trips from us.

So, let's answer one by one.

I was curious how the business is working, who is making money out there

Usually, a company that has a minimum of 10+ own cars and other cars linked to it, will approach the corporate to get their order. The B2C cab booking is not a profitable business and margins are around 5-10%. But by going B2B corporate rides, the margin can go as high as 40%! There are lot of companies like Fastrack, who used to run B2C cab booking but ended up converting into B2B space.

Also, cab drivers are one of the most unstable employees I have seen. So in order to keep them, you need to have at least 5 hours running time and trip worth 3000Rs everyday. So, B2B makes sense because idle time is a loss to them.

how much corporate companies are paying to transport the employees

Let's say, for a trip from Porur to T-Nagar which a B2C user pays 250 Rs. For the same trip, corporate will pay double the amount easily. And driver gets more with corporate rides. B2C trip will strip 30% off as commission. But if you join your cab with some firm that gives you corporate rides, you can earn 2x easily. This is why drivers are eager towards corporate rides.

One of the major customer, who is EdTech, was our major client and they would easily bill anywhere between 20-30L per month. This is for Chennai only. We have couple of other clients from media space and their monthly billing is around 10 & 15L. After all expenses and overheads, company can still make 15-25% profit off easily. So, 45L business means 7L profit at the worst.

[/quote]Most common vehicles are Xylo, Tavera, Innova, Indica, Indigo, Etios and Xcent in Chennai. Also there is not much affordable diesel vehicle available in the market, with this how this industry future is going to be without affordable fuel efficient machinery.[/quote]

Well, the firms who owns these cars are worried about the same. Most of them buy used, beat up cars and run it as long as they can. Some of them are in discussion about either go EV or used car route for next few years. But it still remains a question for these vendors!

[ike]

Originally Posted by xcentrk

Well, the firms who owns these cars are worried about the same. Most of them buy used, beat up cars and run it as long as they can. Some of them are in discussion about either go EV or used car route for next few years. But it still remains a question for these vendors!

My company (a large oil & gas company in with large offices in Chennai & Bangalore) is piloting EVs for pickup/drop. We have a fleet of MG ZS EVs in both locations.

I have also heard that in medium sized companies and in some Indian MNCs the people working in the transport dept. themselves register a company in the name of their spouse/family & lease cars out to their own employer.

[GeeTee TSI]

Reading from the sidelines, cars like Xylo, Tavera, Indica, Indigo aren't really deserving of fulltime duty in the year 2023; from safety, emissions, refinement and comfort standpoints. But for the 5 year rule by responsible corporates, it is sad that the average (sometimes paying) customer still gets treated to such relics

[argho]

I run operations in a large banking captive.

Some insights :

There are now government regulations we need to comply with. These are mostly aimed at safety for women.

What most banking captives offer is as follows :
- APAC shift (~6.30am start) : pick-up from home. Shift finishes early evening, so return by public transport.
- EMEA shift (~12 noon start) : come to office by pblic transport, will be dropped home when shift ends
- US shift (~ night shift) : both pick-up from and drop to home.

Neither us, nor any of our peer group companies own the vehicles or employ the drivers. We prefer to work with large transport companies which offer these services.

On an average, the cost of providing this transport comes to around Rs 10K per month per employee.

We are always lookign for ways to further optimise costs.

In many companies, male employees are allowed to opt out of company transport, and will get an additional allowance instead. This is quite popular with younger male employees who have a motorbike. This is a good deal for both employee and the company.

During COVID lockdown, the transport providers had a really difficult time.

[xcentrk]

Originally Posted by ike

I have also heard that in medium sized companies and in some Indian MNCs the people working in the transport dept. themselves register a company in the name of their spouse/family & lease cars out to their own employer.

Happens a lot. When transport manager sees how big of a margin these companies earn, they tend to go this route. But what they have not taken into consideration is the fact that there are loads of hidden fees involved and handling drivers is not as easy as it looks like.

The cab booking app company that I work for, they fiddle with the idea of purchasing 100 cabs and hire drivers. But after some research, team dropped the idea because of the hassle.

[am1m]

Originally Posted by efuture

Thanks, just to understand - how many vehicles were operated and are they sedans or MPV's.

Don't have the numbers, but the company at that time had about 700 employees and about 90% were using the cabs. Most were Tata Indicas, some bigger vehicles like Innovas.

Originally Posted by ike

I have also heard that in medium sized companies and in some Indian MNCs the people working in the transport dept. themselves register a company in the name of their spouse/family & lease cars out to their own employer.

Wow. Well, yet another great reason to return to the work from office model!

[blackwasp]

Originally Posted by efuture

I was curious how the business is working, who is making money out there, how much corporate companies are paying to transport the employees and why not big bus and van and why small hatchback or some 7 seater SUV's.

Allow me to add my 2 cents. Most times, the employee transportation is offered to those in the night shifts - i.e pickup drop that happens from 8 pm to 6 am. A small hatch like the WagonR will take 3 employees comfortably. However, many times, due to different locations, it might happen that only 1 or 2 staff use one car. Further, the shift timings are fixed, so all employees need to reach at the same time, and the furthest person might need to leave 2 or even 3 hours prior if there's a mini-bus or larger vehicle involved (Mumbai traffic).

I'm reaching out to the forum members to throw some light on the employee transportation in corporate sector with small cars and MPV's.

I'm into this business to I'll be frank. Most companies pay Rs. 10 bucks a km for WagonRs. Thats the rate the operator gets. These cabbies are usually attached by a main vendor who takes commission of 5-6 bucks or more per km. The main guy usually delays payments as well. We had 3 cars at Mindspace, Airoli and had to escalate the situation to the higher ups via personal contacts to get the payments cleared. The main vendor there had delayed our payout by over 90 days. And we had known that the company pays them every 45 days.

Now, 10 bucks a km might just about cover it if you are the owner/driver of the car, but with a larger fleet operator, it just doesn't cut it out. Hence we have moved on the other companies with much better rates and higher business volume.

At the end of the day, you get what you pay for. Most of such cabs are beat up, dirty, drivers are arrogant, etc.

Lastly, I'll just leave the rate comparison so you know. WagonR or a similar hatch will cost you 11-14 bucks a km on B2B rates in Mumbai. The same in Goa will command nothing less than 30 bucks a km. At times, it will go even higher than 40 bucks a km if going for an outstation duty.

So people do think that this transportation business is lucrative, but the operational headaches are high. To tackle that you need good rates.