With massive investments finding their way into the Indian market, it's imperative to consider if there is as much demand in India for app-based taxi services to match the big bucks.
Uber Technologies Inc has said that the company will pump in $1 billion in India over the next nine months to increase its business by five times. The app-based taxi service currently ferries two lakh customers a day, and it wants to increase it to 10 lakh by March 2016.
Homegrown Ola Cabs, which has been the leading this new wave of technology start-ups in India so far, was recently valued at Rs 29,000 crore and is currently ahead of Uber as far as market-share is concerned.
But with these massive investments finding their way into the Indian market, it's imperative to consider if there is as much demand to match the big bucks.
Let's take a look.
Uber and Ola have been rapidly expanding in India over the past few years. The two companies have been advertising the benefits of their services, and claim that a driver can earn up to Rs 1 lakh a month if they register with the respective companies.
Average per capita income in India is currently at a shade over Rs 3 lakh a year.
Moreover, an average private sector car driver in India earns no more than Rs 20,000 a month, or Rs 2,40,000 a year.
With these stats, Uber and Ola's offer was seen like a dream come true for the youth from hinterland, who look at driving private cars or cabs as a viable sustainable job option.
Many small fleet owners who were previously into servicing outstation taxi needs, have completely diverted their private cabs into Uber and Ola columns. They now hire drivers for around Rs 15,000 a month, and corner the lion's share of money that these app-based taxi companies offer, in lieu of running the app to remain identifiable when a customer looks for a cab.
An Uber-driver Santosh Kumar (name-changed) said that his phone has both Uber and Ola installed in his private taxi. He says he's not the only one who does this; the idea occured to him after he saw many private taxi drivers doing this successfully, thereby multiplying their already venture-capital-inflated incomes.
Another driver said, "I usually get no more than six bookings a day. Sometimes I have to wait an entire day to get a single booking." By registering on both the networks, he tries to find more work everyday.
But this isn't the only way that these drivers are making money.
An Ola Cabs driver said, "We get Rs 3,000 a day from the company to be accessible on the apps for eight hours a day."
Uber has also introduced a similar scheme to ensure driver and cab availability round the clock.
Santosh Kumar said that driving for Uber and Ola is easier as the money is more. He, however, lamented that the exponential growth in the number of app-based cabs plying on the roads means that the supply has exceeded demand.
"I start my day at 7 am, and end at around midnight with maximum 4-5 bookings a day," said another driver with Uber who rents a taxi.
The supply of private luxury cabs, hence, has clearly outstripped the demand.
But with the two companies looking at expansions at a rate faster than before, more and more private drivers are going to find their way into the sector; more customers will be pleased with the discounts that these companies offer, and more private money will flow into the segment to garner a bigger market share.
But will India's app-based taxi service market mature first or will the free flowing money from venture capital spigot run out before that? Only time will tell.
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