Drivers suffer as Ola cuts losses by reducing expenses

The ride hailing company is gearing up for an Initial Public Offering (IPO).

Drivers suffer as Ola cuts losses by reducing expenses

Ola, the ride hailing company, has reduced its expenditure towards rewards and benefits for its drivers. The Company is preparing for an Initial Public Offering (IPO), for which it has dramatically cut down on net losses per year. This has been possible only with a reduction in expenditure, including driver expenses. Not surprisingly, as a result, its drivers are not doing too well.

Primarily it was advertising, promotional and driver-related expenses which were cut to reduce net losses. When the cab aggregator first came on the scene, it had promised high salaries and attractive rewards and benefits for it workers. This was the major draw for those who rushed to be a part of it. Over time, however, the rewards have decreased and the commissions have become steeper, now nearing 30 per cent of total income.

Media reports in September this year documented a bunch of drivers in Mumbai, buried under debt and unaffordable car loans. Those drivers were struggling to feed their families. Ola cut down its driver-related expenses from Rs 2,400 crore to Rs 1,700 crore in the previous fiscal. With the conditions as they are, Ola is certainly risking driver backlash, as is clear from the number of protests in the past.

However, drivers can seldom go on strike without affecting their day’s earnings. Absence of benefits or insurance makes matters worse. On the other hand, the Company itself is facing a hard time trying to look after its drivers and also get listed. Learning from its rival Uber, which suffered massive first-day loss at the US IPO on the day of its debut, it realises that reducing its losses is a must if it hopes to get listed in India.

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