Top Reasons to Outsource Logistics Services For Businesses

The Indian and global logistics market present a significant opportunity, with direct spends on logistics in India expected to grow at a CAGR of 15% to approximately US$365 billion by Fiscal 2026 from Fiscal 2021 and globally expected to grow approximately to US$ 13,189 billion by 2025 from 2020 (Source: RedSeer Report). Moreover, the COVID-19 pandemic has further made organizations realize supply chain complexity. As a result, there is an increasing trend toward end-to-end outsourcing, and organizations are looking forward to engaging supply chain companies to manage their supply chain and logistics requirements and offer additional specialized services.

Increasing outsourcing of operations and the need to focus on core competence has led to high demand for integrated logistics services; and the increased importance of digital technology incorporation in the value chain, increasing the demand for integrated logistics.

The rapid growth pace and the reliance on technology make it difficult for many companies to provide consistently high levels of service while handling logistics in-house. Increasing outsourcing of operations and the need to focus on core competence has led to high demand for integrated logistics services.

Increases in supply chain complexity have driven many companies to engage the help of third-party logistics providers as logistics and regulatory specialists. In turn, third-party logistics providers with expertise in international transportation management, warehousing, and distribution provide economies with the operational ‘backbone’ supporting global trade. In addition, the COVID-19 pandemic has made companies further realize the complexity of supply chains. As a result, the demand for end‐to‐end outsourcing continues to rise. Organizations are increasingly open to engaging third-party logistics providers to manage their logistics and supply chain requirements.

Structural shifts in the industry have made supply chains increasingly complex, necessitating an increasing reliance on technology to ensure high service levels. Sub-scale and predominantly manual operations have led to under-investment in technology and data capabilities by most traditional Indian logistics players. This has prevented companies from responding to changing customer needs, optimizing networks, efficiently utilizing capacity and improving customer service. As a result, technology is critical and creates differentiation by increasing outsourcing to supply chain providers and customer stickiness, allowing customization at all scale levels and upgrading customers’ logistic costs into supply chain insights.

The rapid growth pace and the reliance on technology make it difficult for many companies to provide consistently high levels of service while handling logistics in-house. Increasing outsourcing of operations and the need to focus on core competence has led to high demand for integrated logistics services.

Developed countries with longstanding transportation and warehouse contracting practices have the most significant 3PL revenues. Developing countries are growing at faster rates but have lower total 3PL revenues. The numbers reflect the greater outsourcing of functions to 3PLs in developed and more economically sophisticated countries.
Through varied in-house expertise and strategic acquisitions of businesses with differentiated domain expertise, TVS SCS has evolved into a provider of value-added solutions with a robust technology ecosystem.

TVS SCS has focused on moving up the customer’s value chain with various technology-based solutions. TVS SCS has helped its customers seamlessly run operations by solving supply chain complexities using a technology platform. Solutions also involve customers outsourcing their complete supply chain on an end-to-end basis. TVS SCS developed partnerships with customers across diverse and high-growth industries, which offer various outsourcing opportunities.