Uber raises the stakes in India

Nandini Balasubramanya’s office on the southern edge of India’s technology capital Bengaluru does not look as if it would play a key role in the world’s most valuable start-up’s plans for global conquest.

On many days, the tiny space has no electricity. So Balasubramanya keeps the door open, the noise and dust of traffic-choked streets streaming in. On one wall, next to a table where she greets a stream of neighbourhood job seekers, is a large menu of the documents she asks of each applicant — driver’s license, proof of insurance, vehicle registration permit, proof of bank account, and a half dozen other chits to pass through India’s bureaucracy.

There is also a framed photograph of a smiling Travis Kalanick, chief executive of Uber.

Balasubramanya does not work for Uber, though. She is an “UberDost” or “friend of Uber,” an independent recruiter who is paid by the company for each driver she brings on. The work is rewarding but often difficult, she said.

After all, this is India, and some drivers have little actual driving experience. Balasubramanya has trained people who have never worked before, and those with little experience managing money or interacting with middle-class customers.

Many also don’t know how to use a smartphone app — the beating heart of the Uber ecosystem — or they struggle with basic map reading. “I show them how to use Uber, teach them about how to use navigation, or how to use a phone,” Balasubramanya said.

She has a team of recruiters constantly out scouting for new drivers. And she recently hired a few more employees to call those drivers, making sure that the ones she has found are sticking with Uber, not quitting the service out of apathy or confusion.

Balasubramanya’s is just one of hundreds of UberDost offices that Uber has set up across India, where the ride-hailing company now operates like a military division bent on subcontinental conquest. After last year’s bruising retreat from China, where the company was outgunned by local incumbent Didi Chuxing, Uber is diving fully into this nation of 1.3 billion people, pouring money, engineers and logistical expertise into dominating what could one day be the world’s largest market for transportation services.

Uber is famously aggressive, and that trait shines through in its ambitions for India. Relatively few people own cars here, so Uber’s long-term goal is to leapfrog Western-style car-ownership culture and move directly into a society where people don’t buy cars, they hail Ubers.

India is also where Uber’s vision of itself as a lean software company has come crashing into the sobering realities of analogue life in a rapidly developing country. Its aim of blanketing the world in hail-able cars remains complex and daunting.

“The way to think about it is that India is a super-important place in the world that has huge cities, with huge transportation needs, that we want to serve,” Kalanick said. “We want to be there, and want to be there in a big way.”

That interview, in which Kalanick was by turns combative and charming, took place in mid-January, just before Uber descended into a sustained series of corporate crises. The company is dealing with a sexual-harassment scandal and greater scrutiny of its freewheeling culture.

The troubles have cast a shadow over any plans the privately-held company, which is valued at nearly $70 billion, might have had to launch a public stock offering. The particulars of its operation in India also highlight the fact that, for a business dependent on global domination, Uber still has a long way to go.

Uber, which hung up a sign in India in 2013, now operates in 29 cities, including some of the most congested on the globe. Throughout the country, the roads tend to be terrible; clogged with traffic, potholes and pedestrians, marked by ever-shifting routes and a freewheeling interpretation of automotive rules that is almost balletic in its lawlessness.

It’s not just the roads. India’s cellular networks can be spotty and slow, and banking, credit cards and other financial mainstays cannot be taken for granted. More than that, vast differences in education and wealth create a social dynamic between riders and drivers that cannot be smoothed over by improving an app interface.

Not only are many of Uber’s drivers here unfamiliar with smartphones, some are illiterate. Often, drivers and riders don’t speak the same language. Many drivers need financial help to purchase or lease cars, and then require continuing help to manage their finances and other details of their small businesses.

On top of all this is competition. Uber faces an aggressive and well-funded Indian rival, Ola Cabs, which operates in 100 cities and offers a wider range of services than Uber does.

Both Uber and Ola argue that the long-term payoff for their efforts in India could be transformative. Ride sharing is changing Indian urban life; getting around cities has become cheaper and safer, especially for women.

Yet Uber’s quest toward remaking transportation in India, which the company sees as a template for other developing nations, is bound to be long, expensive and complicated. Uber lost $2.8 billion in 2016. The company did not break out losses in India, but Kalanick said the company’s investment here is “an order of magnitude lower” than the spending on its misadventure in China.

“We are not profitable in any of the cities we’re in now,” Amit Jain, president of Uber India, said. “We have a path to get there, and we are confident we will.”

Both Uber and Ola thought technology would enable them to provide rides that were cheaper than other forms of transportation and more accessible to a wider swath of Indians.

“Before we existed, getting a cab in most Indian cities was expensive and difficult,” said Pranay Jivrajka, a founding partner of Ola. “You’d have to call one day in advance. We started booking cabs with 12 hours notice, then four hours, and then we started on-demand.

“And today, if an ETA is more than five minutes, people start complaining.”

Uber had a grander goal. Kalanick has long said Uber’s primary competition is private car ownership; if Uber can give you a cheap ride instantly, it could conceivably beat the cost and associated hassles of owning your own vehicle.

In developed countries like the US, car ownership is entrenched, but not in India. There was a chance, then, for ride-hailing companies to vault over private car ownership entirely.

“You can’t have every resident of Delhi driving a car — that just wouldn’t work,” Kalanick said. “They just don’t have the infrastructure to support it, so why build it out? So that will be a big deal.”

The leapfrogging of private car ownership remains far off. At this point, Uber has 200,400 active drivers on its platform in India. Ola said it has 640,000. Those numbers sound large, until you consider that nearly 400 million people live in India’s cities.

Still, citizens of a certain professional class — tech workers, frequent travellers — said Uber and Ola had become part of the fabric of Indian urban life.

Well, sometimes. Often in India, you open the Uber app, press a button, and then — nothing. The app selects a driver, but the driver does nothing. His car’s icon just sits there, unmoving.

This is something of a cultural mystery. “Drivers in India take forever to start, and we are still trying to figure out why,” said Apurva Dalal, Uber’s head of engineering. “We’ve tried to do research on it, but we don’t know why it happens.”

One reason may be the drivers: Many are unaccustomed to smartphones and may not trust the digital notification that comes in over the app. Most Uber rides in India involve riders phoning drivers to confirm that the ride is for real.

On top of that, Uber’s digital maps sometimes don’t match India’s ever-shifting road patterns, so riders may have to tell drivers how to find them.

Uber has made several adjustments to its practices to get along in India.

Cash is king here because credit cards and other digital payment systems aren’t widely used. It was an issue for Uber’s just-get-out-of-the-car-when-you’re-done payment method. So in 2015, in a move that Kalanick said took him “a little time” to get used to, Uber began accepting cash payments for the first time in the city of Hyderabad. Soon it started accepting cash across India, as well as in Southeast Asia and South America.

By fall, when the Indian government began a plan to cut down on the use of cash in the economy, about 80 per cent of Uber’s Indian rides were paid for in cash.

An even bigger change came in how it recruits drivers. In the US, sharing economy companies depend on untapped labour and capital: You’ve got a decent car, a phone, and you need money? Why not spend your weekends driving for Uber?

But the dynamics of untapped supply don’t line up in the same way in India. Lots of people need work, but relatively few have cars or know how to drive. Drivers must also secure a commercial driver’s license and special registration status for their cars.

Most of Uber and Ola’s losses in India stem from their vast operations used to attract drivers — for example, the network of UberDost contractors. Both companies have also set up leasing deals with banks and car manufacturers to get special terms for drivers in need of vehicles.

— New York Times News Service