Ola & Uber Reduced Driver Incentives by Nearly 40% in Q1 2017; More Attrition Soon?
A lot of driver partners have begun to leave Ola and Uber because of a drop in incentives and lower than the average cost of a ride. The drop in compensation from last year to now is drastic and the drivers are not happy with that.
Even the cabs now on the road are 25% lesser in the March quarter, which points to the fact that attrition is high and the drivers are not ready to earn such low incentives after long work hours in India.
Now, according to a report by RedSeer Consulting, Uber and Ola have further reduced incentives for drivers by 30-40%. The drivers usually used to get complete amount from the fare, with a deduction of the commission for Uber and Ola. Now, the companies have started increasing that commission.
“If we look at the state of developed nations where cab markets have matured, we find the incentives offered are in the range of 15% to 20% of the gross booking value (GBV), thus giving an indication that the incentives might further go down. Declining incentives might be decreasing the driver satisfaction and incomes, but the monthly take-home income of online drivers is still more than that offered by offline sector,” the report noted.
The point to be noted is that Uber and Ola are in the cab-hailing business and want to make profits from this. They are simply providing a connection between drivers and riders, and are not offering any incentives. However, the report also noted that these companies are offering more take-home as compared to offline booking.
Under Ola and Uber, these drivers have to work an insane number of hours, from 10-14 hours every day to earn a meagre Rs. 1,000 – 2,000 everyday. Earlier these same drivers used to get almost Rs. triple the amount.
Moreover, these drivers have purchased the cars from these companies on EMI, and it is very difficult for them to pay back their loans while still carry on with their day-to-day expenses. Especially in cities like New Delhi, Mumbai and Bengaluru, low incentives tend to rip the drivers off their actual paycheck.
Ola and Uber should know of these consequences of such low incentives. A lot of driver partners are leaving these platforms to go back to offline cab-hailing companies or corporate vehicle providers. The peak time for the companies is over, and we’re soon going to see surge pricing on the platforms.