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The Rediff Business Special/ Business of exec travel

Saving Rs 25 billion for corporate India

If you are an executive in any corporate house, you must be familiar with the business of travelling. And if your venture is business related, the employer has to shell out the dough. Briefly, travel and entertainment or T&E expenses are inevitable, being inherent and indispensable features of any executive's job profile.

With the opening up of the Indian economy and the resulting competitiveness, corporates are sensing the need to be close to their customers and suppliers, both domestic and international. Result: T&E expenses are multiplying, becoming a major cost headache. This is where another set of corporates -- the transnational banks -- come in, promising to save their customer's money by as much as 25 per cent per annum. And, actually doing it.

But how? Through corporate cards, which free corporate houses from dealing with major headaches like cash advances to the executive and auditing. To add to that are the obvious benefits of bulk purchases. The market-savvy banks are also offering attractive incentives to their clients in the form of value-added services.

Atul Mathur, head of American Express Travel Services Group, says, "We're using the 'savings' proposition. That's our USP." What he means, in simple terms, is that they are helping clients save money. Behind this claim is a market survey of India's corporate T&E management practices. Based on a report covering over 600 senior management contacts in 400 companies across India, AmEx makes recommendations for better T&E management.

Commenting on the survey findings, Gregor Lochtie, director, Consulting Services, American Express, Asia Pacific & Australia, says: "Although the majority of companies agree that T&E expenditure is an extremely critical cost, there is limited implementation of proven business travel management practices that can control and manage these costs better."

The banks seem to have hit upon a really bright idea that does two things at one stroke: make money for them and save the client's too. The potential of this market can be judged from the following facts:

• Business travel is worth US$ 400 billion worldwide today.
• One out of every 12 jobs is travel-related.
• In India, too, corporate travel business is growing at 10 per cent per annum.
• The market could be worth US$ 3 billion by 2000.

The survey reveals that T&E is ranked the second-largest controllable expense after salaries. This means the average annual T&E expenditure is higher than annual spending for data processing, taxes, or advertising. On an average, the amount spent on it per year is Rs 16.5 million, though a dramatic increase of 66 per cent is a realistic possibility.

While one-third of it is on international travel, many companies are not implementing proven business travel management practices to manage and control T&E costs better.

The survey findings confirm the belief that corporations in India are not fully leveraging the process and purchase savings opportunities on their T&E expenses. In the light of the findings, AmEx has drawn up several recommendations and a disciplined approach which can result in savings of up to Rs 25 billion annually for corporate India.

"And that's a conservative estimate," adds Mathur. Banks are now donning the role of a consultant, product and service provider: a three-in-one package deal for corporate travel management.

Unusual positioning strategy of business travel management

Kind courtesy: Sunday magazine

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