Outsourcing & tech, ‘key to curb Rlys people cost’

The Railways should take a leaf out of the experience of major ports to rein in its people’s cost, which stand at a staggering 65 per cent of the total revenue today, recommends its planning arm.

At the current rate, human resource expenses will become unsustainable for the public transporter; its cost of operations has to be lowered to attract more traffic, warns a note compiled by the Railways Planning Directorate.

Ports were in the same unenviable position two decades ago with 65 per cent of their revenue going to meet staff costs. Since then, many of them have sharply slashed their spend on human resources — to 45 per cent today — by adopting the (public-private partnership) and outsourcing routes. Other players have been roped into design, build, finance, operate portions of infrastructure and transfer the facilities back to the government.

Attractive segment

For the Railways, staff and pension cost together account for over 95 per cent of the working expenses, as per fiscal 2017 data. “Long-term sustainability of the Railways is linked to lowering of unit costs,” says the note. The Railways earns over 60 per cent of its revenue from freight, and a lower unit cost can make this business segment attractive but today it overcharges freight clients to subsidise its passenger business, losing out on potential freight business.

Also, to lower unit costs, the national transporter needs to slash its disproportionate manpower and create a sustainable manpower strategy, it adds. This comes at a time when the Railways is on a drive to recruit over one lakh people for its immediate needs. After receiving the advice, the Railways has asked its Zonal General Managers to update staff requirement in their regions factoring in what they can outsource, how they can multi-skill existing staff and use technology.

In the last few years, the Railways has embarked on a path of modernisation by investing in capital expenditure — in new lines, which connect areas that do not have rail connectivity yet; building extra set of tracks where the present set of tracks is congested; and investing in wagons and locomotives. In this backdrop, the staff requirement of the newly-created capital assets need to be strategised, says the note.

The planning arm says that there are more vacancies in the Railways than the present manning requirement permits. And even existing employees in essential services are not utilised optimally.

So, all the essential category staff working in headquarters should be sent back to the fields, it reckons.

Dubbing the current staffing yardstick as outdated, it adds: “They do not reflect technology upgradation, outsourcing and multi-skilling”. The Railways needs to update manual machinery handling such as statistical and traffic accounts office using IT tools.

Tech upgradation

It has also asked railway zones to reassess staff requirement based on activities they can outsource and technology upgradation. “There is a need to re-deploy non-safety category staff across zones,” says the strategy note.

The need to rework the staff requirement was arrived at by studying the Konkan Railway Corporation, the Dedicated Freight Corridor Corporation, and the Delhi Metro Rail Corporation.