Ola, Uber drivers’ strike a sign of more to come?
BENGALURU: Many of the protesting drivers at Ola and Uber in Delhi and Bengaluru may have called off their recent strike, but the flaws in these companies’ business model mean commuters should be prepared for more such disruptions in the future, analysts say.
While the asset-light model of these cab hailing services has merit, the strikes by drivers over falling incentives, their key attraction to list on such platforms, mean that these businesses cannot afford to rub the dissenters — car and fleet owners — the wrong way.
Thousands of cars affiliated to Ola (ANI Technologies Pvt Ltd) and Uber Technologies Inc went off the roads for more than 10 days in Delhi and Bengaluru beginning February 12. While Delhi has limped back to normalcy, protesters in Bengaluru are holding out.
The protesters’ major grouse was a drastic cut in incentives, which has impacted their monthly earnings, and the constantly changing incentive structure of the companies. While Ola pays incentives based on the number of rides per day, Uber’s incentives depend on the total value of rides in a day.
“The question here is who blinks first? But this has been the case across industries, where workers try to ensure they are not getting squeezed when the organisation is making money. The irony here is, Uber and Ola are not even making money and still they have to ensure that they have to pass on enough to the drivers to make themselves lucrative. It is not that this will not happen again but we have seen this across all labour intensive businesses,” said Vinod Murali, MD at InnoVen Capital India.
While Ola and Uber did not comment on the loss in business from the protests, RedSeer Management Consulting Pvt Ltd estimates that Bengaluru, Delhi and Mumbai together account for 60% of both firms’ overall business in India. This implies that suspension of services for close to two weeks had significant impact on their businesses.
“A small numbers of individuals, who do not represent the majority of the driver community, have been preventing drivers who want to work from doing so. Drivers’ individual concerns vary. We care deeply about their concerns and we can and will do better in our communications to reduce confusion,” Uber India president Amit Jain said in a blog post on Friday.
Jain, who claimed that there has been a 60% year-onyear increase in driver sign ups in January this year, however, said that “earnings are not one size fits all.” About 80% of the drivers across India, who are online for more than six hours a day, make ₹1,500-2,500 after paying Uber’s service fee, Jain said.
According to experts, there is no way to immediately put an end to such strikes as both companies were forced to cut incentives in order to reduce cash burn. On the other hand, increasing the supply of cars and ensuring a loyal driver-base are of paramount importance to the rival companies.
To be sure, both Ola and Uber has set up car leasing businesses – Ola Fleet Technologies Pvt Ltd and Xchange Leasing India Pvt Ltd – over the past 18 months to ensure a supply of cars over which they have strict control.