IT, pharma companies dominate business travel spending in India in 2015

Finding was part of a report by KPMG and FCM Travel Solutions

Indian information technology (IT) and pharmaceutical companies accounted for around 60 per cent of business travel spend in 2015, up from about 52 per cent in 2013, a KPMG and FCM Travel Solutions report on Wednesday showed.

KPMG analysed travel budgets of top 100 Indian companies that spent around Rs 20,000 crore in 2015 on travel, up from Rs 14,500 crore two years earlier. These account for around 11 per cent of total business travel spend from India. IT and pharma companies spent the highest and their expenditure was in line with their global expansion. 

This covers expenses on individual travel and meetings, conferences and events and includes air travel, hotel bills and ground transport costs both in India and abroad.  

Apart from IT and pharma, the lead spenders in travel are construction, automobile and metals and mining companies and together these sectors accounted for 82 per cent of business travel spend in India in 2015, up from 78 per cent in 2013. 

“We have also seen a high growth in travel spend from consumer durables, FMCG (fast-moving consumer goods) sector and from professional services such as consultancy and audit firms,” said Rakshit Desai, managing director of FCM Travel Solutions. Another growing trend amongst companies is a use of online booking tools and apps developed by travel companies. 

These collate itineraries from various sources and help in both compliance and cost control but are still largely in use for domestic travel.

According to Global Business Travel Association, India is the 10th largest business travel market with a spend of $29.6 billion in 2015. India is also expected to be the fastest growing market with 12 per cent growth till 2020, higher than 9 per cent growth reported between 2011-2015.

Business travel segment will also be impacted by good and services tax (GST) and demonetisation.  With the passage of GST, there is likely to be an increase in overall travel costs and the note ban is expected to hit business class travel and travel budgets of small and medium scale industries.

“Demonetisation will enhance the competitiveness of organised travel management companies to target smaller business travellers whose needs were otherwise not addressed by them due to price competitiveness offered by unorganised travel agents,” the report said.