How logistics companies like DHL and FedEx utilized IT offshoring to cut down their operating costs?

In today’s competitive business landscape, logistics companies are adopting new ways to keep their business afloat. Recent insights from Gartner predicts that logistics companies are increasingly adopting strategic partnerships with offshore software development companies for the execution of their day-to-day IT operations, allowing their onsite employees to concentrate more

on core and strategic assignments. Offshore software development is a commonly overlooked variable cost strategy and hiring resources from offshore software development companies is a tried and tested approach that allows logistic businesses to tackle their shortage of programmers, balance cost, and keep pace with the latest advancements in the logistics industry.

FedEx, DHL, Union Pacific, Kenco Group, C. H. Robinson Worldwide, Knight Logistics, Penske Logistics, Americold Logistics, CN, Landstar, etc are a few of the examples for logistics companies that outsourced their workloads to offshore teams. In this article, we will show you how these companies leveraged IT offshoring to cut down their operating costs.

• FedEx
• DHL
• Union Pacific
• Kenco Group
• C. H. Robinson Worldwide
• XPO Logistics
• Penske Logistics

1. Offshore Development Team Helped FedEx to save $80.96 Million in Annual Revenue

FedEx is a global leader in the logistics business and is having an annual turnaround of nearly 70 billion US dollars. Headquartered in Memphis, Tennessee, FedEx relied on nearshore programmers for their high-cost IT functions. But now, most of their IT operations are done offshore.

The company has witnessed its competitors gaining significant cost benefits by offering their IT operations as a service to offshore software development companies. So they decided to give it a try. In 2017, FedEx hired an offshore development company to manage its IT processes. Integrating their onsite team with the offshore team was challenging at first, but later proved to be a wise decision as it allowed them to increase their annual revenue by 40% while at the same time reduced costs by 60%.

2. How DHL increased their cost efficiencies up by 60% via Offshore Software Development?

DHL is one of the world’s largest logistics companies which employs approximately 522282 employees with the parcel, courier, and express mail services delivering to more than 220 countries globally. By outsourcing their end-to-end IT operations involved in their warehousing, shipping, and delivery to offshore software development centers, the company increased its cost efficiencies up by 60%. Offshore development helped DHL to bypass the increased expenses associated with the development and maintenance of their logistics software and opened up new methods to improve their operational effectiveness.

3. Union Pacific unlocked financial gains worth almost $5.3 million by Offshoring

Union Pacific is the second biggest freight hauling operator in the US and is having an annual turn over of almost $7.8 billion. By outsourcing the development and maintenance of their freight brokering & freight management systems to an offshore vendor, the company saved a whopping $5.3 million in the fiscal year of 2019. Union Pacific’s strategy is arguably one of the best IT offshoring examples.

4. How Kenco leveraged Offshore Development to cut down its IT Overhead?

Kenco is the second-largest logistics company in the US that churned significant business benefits from offshoring. Kenco mainly concentrates on transportation management, and fulfillment and distribution, warehouse management, material handling services, and real estate management. Kenko was in need to overhaul their warehouse management system by modernizing it and incorporating futuristic technologies so that they can equip the system to be future-ready. Kenco initially planned to revamp its software by relying only on their in-house teams. They were in need of scaling up their in-house resources to revamp their warehouse management system. However, Kenco soon realized that relying only on onsite developers was not best suited for developing a modern WMS on time within their budget. For this reason, Kenco decided to hire its required talents from an offshore software development center. This move helped them to save a significant amount of money that will be otherwise spent on recruitment, and onboarding processes.

5. C. H. Robinson ramps up hiring Offshore Developers for their tech operations

C.H. Robinson is a US-based 3PL logistics and transportation provider that specializes in warehousing, freight, and transportation management. In an attempt to cut down costs and divert the attention of their onsite team to core business processes, they decided to outsource their IT operations to an offshore software development company. The benefits they got by outsourcing were huge and they were able to save $20 million as annual cost savings.

6. Knight Logistics Relies on Offshore Development Team

Knight Logistics manages the supply chains of nearly 50,000 customers in and out. The company managed to save 50% of their development cost by outsourcing to an offshore software development company. Outsourcing their IT workloads proved to be one of the best decisions for them as they were able to save a significant amount of cost in less amount of time.

7. How Penske Logistics Utilized Offshore Development to Cash in $40 million?

Penske is a Logistics and supply chain provider for leading businesses around the globe. Penske always relied on offshore software developers for their tech operations. They preferred outsourcing as a way to increase their savings, productivity, and get access to skilled global talents. By partnering up with an offshore software development vendor, Penske managed to save $40 million from its total development cost. They wouldn’t achieve this If they hired onsite resources and developed their software inhouse.

Why more Logistics companies adopt offshore software development?

Significant savings in cost is the major reason that attracts logistic companies to partner up with offshore software development companies. Apart from that advantage, offshoring delivers other competitive advantages such as access to a global talent pool, faster turnaround time, high ROI, access to best-in-class technology, hasslefree hiring, infrastructure savings, scalability of resources, etc.