Consulting|Technology|International business

India Post/USPS – a comparison on how they fare in this recession/operational metrics

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The exterior of an India Post office

The exterior of an India Post office

Update: 8th September 2009

Today’s papers carried the news of Accenture being awarded the contract to operationalize and install a single software in all branches of India Post. India Post also says they have 9000 vacancies that would be filled by youngsters. Furthermore, India Post’s GPO at Bangalore has a brand new look and they have almost 4 planes catering to their needs.

Let’s see the net effect this would have on the financial equation of India Post this time next year when we do the revenue-cost analysis again.

I had written about this some years back on the road to recovery for the India Post and the efforts they are making in creating a new brand image. I had also written on how they compare with their US counterpart – the USPS. Coincidentally, I read up an article on the progress made by the USPS recently and even they are ailing due to the current economic recession in the US and are set to post a whopping $ 7 billion loss for the fiscal year.

Some of the problems plaguing the USPS are listed below:

1. Retiree healthcare costs (similar to the older GM that had the same #1 problem).

2. More and  more Americans corresponding via Email.

The # of people the USPS employs is a whopping 700000. It’s healthcare costs were alone a mandatory $5.4 billion to a retiree health benefit fund by 30th September 2009. The # of pieces it services were down by another 10 billion to 15 billion. It’s operating revenue was down at $16.34 billion (down nearly 8.8%).

Therefore, the loss per employee for the USPS as projected with a $ 7 billion loss for this fiscal would be $10000 per employee. Compare this to their profit of $1452 per employee exactly 2 years back when I had made a similar analysis.

Steps taken by USPS to curb this pounding it is receiving:

1. Capped executive pay.

2. Avoid layoff by encouraging attrition, early retirement.

3. Halted construction of new facilities and renegotiating contracts with major suppliers.

In comparison, let’s see how the India Post performance fares on the same metrics:

First of all, India Post has the LARGEST postal network in the world and majorly serving rural areas (89%) with 155035 post offices. This is up from 23344 post offices at the time of India’s independence.

The mail volume in India post as per below chart obtained from their annual report accessible at:

was down from 6.6 billion pieces (registered and unregistered) to 6.3 billion pieces. They are also planning to introduce RFID in 20 major cities across the country to track mail packages.

The # of people India Post employs is about 500000.

India Post is still incurring a loss.

The revenue versus expenditure graph is below:

From the revenue-expenditure graph, it is quite clear that India Post is performing no better than it’s counterpart USPS. It incurred a loss of almost $900 million for 2008-09 and about $400 million in the year before that (2007-08).

The loss per employee of India Post is about $1900 per employee for the fiscal 2008-09. This is up from the loss it used to incur per employee exactly two years ago on a similar analysis where it was a loss $520 per employee.


Written by Naveen Athresh

August 14, 2009 at 9:47 am

One Response

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    December 18, 2009 at 10:09 pm

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