Why Uber and Ola Drivers are Unlikely to Go on Another Strike Anytime Soon

Why Uber and Ola Drivers are Unlikely to Go on Another Strike Anytime Soon
Highlights
  • Some cab drivers used to make more than Rs. 1,00,000 a month
  • They now take home less than Rs. 30,000
  • Despite this, they won't go on another strike
Advertisement

For Kamal Kumar, a resident of Delhi, life isn't getting any easier. The 61-year-old Uber driver says he now drives more than he ever has, but his earnings continue to drop.

Kumar, who joined Uber in mid-2015, says he was taking home up to Rs. 60,000 every month when he started. But now, even as he drives for three more hours than before - up to 17 hours a day - he says he makes roughly half of the original amount.

Iqbal Hussain joined Uber last year, after driving exclusively for Ola for more than a year. His experience isn't much different from Kumar's. Hussain drives around the National Capital Region for more than 15 hours everyday. After the commission Uber charges -- which is around 25 percent, according to invoices reviewed by Gadgets 360 -- he says he earns around Rs. 35,000 in a month.

Kumar and Hussain represent tens of thousands of drivers in New Delhi who are partners with either Uber, or Ola, or in some cases, both. In conversation with Gadgets 360, over three-dozen drivers said that their earnings have dropped significantly over the years.

For these drivers, many of whom joined the company after getting calls from Uber and Ola representatives or chancing upon them at gas stations, their current financial situation is disheartening. When they were first approached by the companies - or in some cases, when these drivers approached the companies - monthly earnings of more than Rs. 1,00,000 were bandied about.

Today though, the numbers are far different, Kumar told us. He showed us his earnings for the previous day: it was under Rs. 1,600. Out of this, he said, roughly Rs. 500 was spent on CNG, while another Rs. 700 or so will go to Uber, because he's bought his car on the company's leasing program. This is in addition to the roughly 25 percent cut Uber charged on Kumar's earnings. "The car also needs maintenance expenditure," he says.

uber driver earnings gadgets360 Uber  Ola  India

This is how the math adds up: say Uber charges a passenger Rs. 85 for a ride. The driver will get roughly Rs. 70 for the ride and the rest will go to Uber. This is the case for drivers who haven't leased their car from Uber or Ola. If your car is leased - more on that later - the maths changes dramatically.

That's not to say that Uber and Ola have directly or through proxy misled the driver partners or made any false claims. During their initial years in Delhi, and other places in India roughly four years ago, drivers were able to make as much as Rs. 3,000 a day after taking care of either company's commission (which some drivers say was less than 5 percent at the time), and operating cost of the car.

This sort of figure was largely made possible because of the lucrative "incentives" both Ola and Uber offered as they aggressively tried to undercut the existing cab services and match auto-rickshaws on price. It's tough to pinpoint exactly how much incentive the companies were offering to the driver at the time -- it varied by drivers, their location, and how committed they were to Ola and Uber, according to drivers and Uber.

Understanding incentives
Some drivers we spoke to said Uber and Ola used to offer them as much as Rs. 30,000 in four days if they were able to do up to 30 rides in within that period. The goal metrics varied with each driver. To some, if they were able to make Rs. 2,500 in a day, the company would give them another Rs. 2,500. Then there were ludicrous offers to those drivers who were spending limited time with Ola and Uber. These incentives were to lure such drivers to drive more.

But as Ola and Uber started to gain ground in cities, the companies began to actively experiment with exactly how much money they needed to spend like this. Could drivers hit 40 rides in three days, and do it for less money? Uber and Ola both kept tweaking the figures.

Fast forward to today, and those incentives are largely gone, drivers told us, and new goal metrics introduced by both the companies are far less enticing, hard to fathom, and - often times - impossible to achieve. Again, the precise incentive varies with drivers, but at least two who are with Uber said they were on plans that offered them less than Rs. 1,500 additional cash if they were able to complete 40 rides in three days.

An Uber spokesperson confirmed to Gadgets 360 that incentive they offer varies by individual drivers.

"These incentives vary widely by individual drivers. They are dynamic, as is our business model, and we are constantly seeking to understand, assess, and improve both earnings from fares and our incentives structure."

Uber further added that 80 percent of drivers on its platform in India -- those who are online for more than six hours a day -- make between Rs. 1,500 and Rs. 2,500 net a day, after Uber's service fee. It's not clear if drivers who have leased the car from Uber are part of the study.

"Individual driver earnings vary widely and individual driver behaviour - where, when and how much or little drivers choose to drive - also vary widely," the company added.

The declining incentives are only part of the problem, drivers say. The other major factor at play here has been just how many drivers have enrolled themselves to either of the platforms.

More cars, fewer incentives
Over the course of past four years, both Ola and Uber have substantially increased the number of cars on their respective platforms. Tens of thousands of Ola and Uber cars have come on-board in the National Capital Region, according to drivers. The number remains unverified, and neither Ola nor Uber have clarified just how many cars they have in the National Capital Region.

In addition to accepting new cars on the platform, both the companies have also ramped up their efforts around their own leasing programs over the past years. According to Uber's website, it offers drivers a Maruti Suzuki Wagaon R through its Xchange Leasing program in the country. As part of this, a driver needs to make a security deposit of Rs. 27,000, and pay the company a weekly rental of Rs. 5,512 every week, for a period of three years.

ola banner official Ola  India

As part of the program, drivers will be able to avail a yearly vehicle insurance, and free maintenance of CNG system and audio system. Ola hasn't made such offerings public on its website. Ola refused to participate in this story despite multiple requests by Gadgets 360.

"We are very pleased with our progress towards this goal so far, and continue to lease out thousands of cars to our driver partners across the country," Uber told us.

The addition of new cars -- through leasing program or otherwise -- naturally reduces the number of rides drivers get in a day. The general consensus among the drivers we spoke to is that as the number of cars have surged in the National Capital Region (and elsewhere in India), the amount of money they made has dropped.

Uber, which expects to close its 500 millionth ride in India soon, acknowledges this, but adds that this was bound to happen as it moved from the startup phase to a more sustainable model.

"As more riders use Uber, drivers are busier and can earn more. This in turn attracts more drivers, which helps guarantee faster pickups for riders, and allows us to adjust incentives over time," a company spokesperson told Gadgets 360.

"With sustained high demand from both riders and drivers we can shift from startup 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," the spokesperson added.

How the changes crept in
These annoyances and frustrations become evident and visible when you talk to any Ola or Uber cab driver in New Delhi, and elsewhere in India. But these amendments weren't imposed overnight. Much like other businesses, the transportation space Ola and Uber operate in works on supply and demand model, explains Sanchit Gogia, chief analyst at research firm Greyhound.

As the demand of Uber and Ola surged in the country - more people became aware of the service and availed their offers - the companies ensured that supply was also growing in parity with it, he added.

Uber told Gadgets 360 that it has over 2,40,000 weekly active drivers in India. The company added that it saw a 60 percent year-on-year increase in driver sign ups in January 2017. The latest figure for Ola, as per company's website, suggests that the company has over 4,50,000 vehicles in the country. This means that Ola and Uber didn't have to worry as much about keeping their existing drivers happy, unlike just a few years ago.

As you would expect, drivers have furiously expressed their disappointment to both the companies in the past two years. There have been over a dozen strikes, the largest of which ended in the first week of March this year.

ola uber protest

Several demands were presented by the drivers, which included an increase in base fare, accident insurance, reinstatement of older incentive models, and some sort of fixed salary. But most of these demands weren't addressed by the companies, Ravi Rathore, vice president of Sarvodaya Driver Association, a taxi union that looks after the welfare of drivers, told Gadgets 360.

On the contrary, drivers told Gadgets 360 that they lost a significant amount of money by choosing - or in some cases, persuaded by other drivers - to not to work for two weeks. Drivers have also tried to approach the government, but they say that the government isn't helping because they don't find Uber and Ola guilty of any foul play. They are free to host more protests, but they can't encourage others to join them in the protest, the drivers say they were told.

"Neither Ola nor Uber are breaking any laws," analyst Gogia told Gadgets 360. "They are free to make amendments to their business models as they see fit." Uber says it is listening to drivers' feedback more than ever. It recently started 'uberSAMAAJ', an initiative under which it holds driver focus group discussions and open house interactions to better understand the needs of the drivers.

Uber told Gadgets 360 that it has also instructed drivers to make the most out of "peak hours", the intervals when the vast majority of working force of the nation goes to work and comes back home. This will enable them to earn more money, the company told us. Other tried and tested practices that have benefited the drivers in the past are willingness to drive through the entire city and taking close to all - if not all - requests, the company added.

In March, Uber India president Amit Jain acknowledged publicly that the earnings of drivers on the platform has dropped over time. But he added, "we believe that driver earnings in India are attractive for the majority even after reductions in incentives and drivers' costs are taken into account."

Strikes aren't sustainable, for drivers
In the months since March, some drivers have been trying to encourage others to go on more strikes. In the weeks leading to June 19, several drivers had pledged to go on another strike in the National Capital Region. But on the day, less than a dozen people showed up for the strike, according to two drivers who were part of the protest.

There's something different about how conversations about such potential strikes unfold and end between drivers these days, many told Gadgets 360. Several of them have just accepted the reality that neither Uber nor Ola are going to accept their terms.

They also know that everyday they spend on a strike, they are going to lose money and opportunity to work. For these drivers, many of whom are daily workers, every day's income counts.

That's not to say that all of them have just given up. Some have been exploring rival services such as Sewa Cab, a new ride-hailing service formed by a group of taxi drivers. Some are anxiously waiting for 'Jio Cab', a rumoured cab service that Reliance is supposedly working on. The company, however, says it is not exploring any such opportunities.

Most drivers definitely don't see any use of wasting their time bickering about their situation.

"The reality is that Uber and Ola have both given jobs to tens of thousands of drivers who were finding it increasingly difficult to get any other job. Uber and Ola aren't going to throw any more money. That period is long over," says analyst Gogia.

Many drivers told us that they are still grateful to Uber and Ola for providing a work opportunity.

"Drivers always have the option to quit Ola or Uber," Gogia added. For many, however, who have used all their savings and have taken loans from banks, or got their cars from Ola or Uber under their leasing programs, quitting isn't really an option. They find themselves "trapped."

Comments

For the latest tech news and reviews, follow Gadgets 360 on X, Facebook, WhatsApp, Threads and Google News. For the latest videos on gadgets and tech, subscribe to our YouTube channel. If you want to know everything about top influencers, follow our in-house Who'sThat360 on Instagram and YouTube.

OnePlus 5 Emergency Call Issue to Be Fixed via Software Update [Now Rolling Out]
Xiaomi Mi 5X Specifications Leaked Ahead of July 26 Launch
Share on Facebook Gadgets360 Twitter Share Tweet Snapchat Share Reddit Comment google-newsGoogle News
 
 

Advertisement

Follow Us

Advertisement

© Copyright Red Pixels Ventures Limited 2024. All rights reserved.
Trending Products »
Latest Tech News »