Uber is having a tough year, what with one controversy following the other. The month started with UberPOOL and Ola Share services being termed illegal in Karnataka, followed by driver strikes in Hyderabad, Bengaluru, and Delhi over the issue of incentives, allegations of sexism in the company, and worsened with Uber asking its SVP of Engineering, Amit Singhal to step down over failure to disclose prior sexual harassment charges against him. And if this wasn’t enough, to add fuel to the fire, a video of the cab aggregator giant’s CEO Travis Kalanick arguing with one of his own drivers surfaced, further adding to the negative publicity around the company.
Amidst this downward spiral of news, Uber India Head Amit Jain has tried to set the record straight through a blog post, where he clarifies issues around driver earnings and incentives and reiterates Uber’s commitment to the driver community and India for the long term. Amit begins by saying that,
“We don’t want anyone to have questions about where we stand when it comes to our commitment to drivers. We stand with driver partners and are absolutely committed to India, and to continuing our investment in people, our product, and programs that drive positive change.”
Then, touching on the issue of driver protests, he states that it is a “smaller numbers of individuals, who do not represent the majority of the driver community” who have been behind the protests.
However, contrary to Amit’s statement, strikes have badly disrupted services in Delhi and Bengaluru. According to a report by ET, on February 10, 2017 about 3,000 drivers had gathered at Jantar Mantar in Delhi, to protest against the Uber and Ola. After 13 days, the strike by the Sarvodaya Drivers’ Association of Delhi (SDAD) was finally called off after the Delhi Government intervened in the matter.
“Earnings Are Not One Size Fits All”
Further touching on the contentious issue of driver earnings, Amit stated that “Driving using the Uber App is very different to working as a private driver, taxi driver or even, for example, a shop assistant, where people have set hours and set hourly wages.”
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He added that: “Uber is, at heart, an entrepreneurial activity. Earnings are not one size fits all.” Thus, he justified that 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 calculating averages difficult.
However, he added that “Currently, 80% of drivers across India who are online for more than six hours a day make between INR 1,500 and INR 2,500 net, after Uber’s service fee.”
“Striking A Balance Isn’t Always Easy”
Addressing the issue of incentives, he stated, “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.”
That being said, he added that because Uber is a two-sided market, it needs to balance the needs of the riders and drivers. “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, “ he explained.
On whether drivers were earning more or less now, his stance was:
“Driver earnings have evolved over time and while some drivers do earn less than three years ago, we believe that driver earnings in India are attractive for the majority even after reductions in incentives and drivers’ costs are taken into account.”
Amit conceded,“Striking a balance isn’t always easy, but without attractive earnings for drivers the service simply wouldn’t work.”
The reduced incentives and earnings have been the major cause of unrest for the drivers. Amit added that Uber was “watching carefully to ensure drivers do not get into difficulty with vehicle financing, especially after the recent violence and intimidation which prevented many partners from using the app.”
Meanwhile, the fate of some of these protests still remains undecided. This week, some 20 drivers attached to Ola and Uber began an indefinite fast in Bengaluru to protest against the cab aggregators not meeting their charter of demands.
Whether Amit’s effort to set the record straight will help Uber tide over the protests is a question for the ages. However, as per him, Uber is “seeing sustainable earning opportunities for driver partners and sustained interest in driving with Uber, with a 60% year-on-year increase in driver sign-ups in January 2017.”