Ondrilla S Sarkar
Two of the country’s largest taxi aggregators, Ola and Uber, which together had over 11 lakh drivers on their platform in January, have started to lose them in large numbers as incentives dwindle. According to a report by research firm Redseer, almost 20% of the drivers have deserted the two companies since January this year. The two cab aggregators together have 8.9 lakh drivers now, down from around 11.12 lakh in the beginning of the year, after the companies revised their driver incentives. While Uber has 2.4 lakh drivers registered with them now, Ola has an estimated 6.5 lakh drivers working for it.
Redseer says that this fall was precipitated by a 27% drop in incentives since January. Disgruntled drivers have been finding it difficult to achieve targets set by these firms to receive additional incentives. Analysts at Redseer said, “In the immediate aftermath of reduced driver incentives, the industry struggled to keep hold of the existing supply of drivers as the overall supply fell.” Both Ola and Uber have now increased efforts to hire more driver partners and are trying to optimise supply in major cities of operation in Q2.
Uber driver Hanumantha speaking about the developments said, “Earlier I had to earn a minimum Rs 650 to qualify for incentives, but now this minimum base fare has become Rs 1,000. They have raised the slab. In January I would be taking home something around Rs 35,000, depending on the number of rides, but that has been falling gradually and I am lucky if I take home something around Rs 20,000-22,000.”
“’The company owes me Rs 2,200 if I can make trips worth Rs 1,000. Out of this Rs 2,200, the company deducts 30% as commission and 10% as Uber fees. The remaining money is mine,” he added. Under the earlier incentive structure Ola used to reward its drivers Rs 3,700 if they completed 12 rides in a day. This rose to Rs 4,700 for 15 rides and Rs 6,700 for 18 rides. The drivers are now earning as little as Rs 2,200 for 12 rides. Uber too had a similar structure but the incentives depended not just on the number of rides but on the amount of money earned. Uber has a rate slab and each driver needs to choose the amount of money he wanted to earn. He can make as many trips needed to earn that amount.
An Uber spokesperson said that they are not seeing any “significant” or “unusual patterns” in the churn. “Because Uber is a two-sided market, we need to balance the needs of riders and drivers… With sustained high demand from both riders and drivers we can shift from start-up mode to a more sustainable business model and begin reducing higher levels of incentives, and invest more in drivers and our products for the long term,” a company spokesperson said.
“Individual driver earnings vary widely and individual driver behaviour — where, when and how much or little drivers choose to drive — also vary widely, which makes averages difficult. Currently, 80% of drivers across India who are online for more than six hours a day make between Rs 1,500 and Rs 2,500 net, after Uber’s service fee,” the spokesperson added.
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According to Sreedhar Prasad, partner, KPMG India, the targets for drivers have gone up, which means that they need to perform more to get the same incentives that they could get earlier by performing less. “It is an evolving model and the incentive metrics have evolved with time with the variable pay model being different based on performance, rides and total utilised time, so the driver who has given more time has a probability to earn more incentives along with more revenue. So the three variables here are number of rides he does, total revenue per day, total incentives per day,” he said.
SP Singh, president, Indian Foundation of Transport Research and Training, said, “Cab aggregators are applying different formulas and rates in different cities arbitrarily without any transparency. They must give genuine categorical reasons about the issues that are putting a strain on their balance sheets.”
“The cab aggregators must be asked to file quarterly returns — how many vehicles they are running and their list of drivers should be available to the government. These drivers must be registered with the labour department but these companies tell us that it is contract labour and keep away from the labour laws,” he added.