Congestion ahead, Uber looks to reroute in India

For Uber, India isn’t top priority any longer. Unable to move the needle on overall profitability and growth in what was once its fastest-growing emerging market, all that the cab aggregator wants to do now is keep the lights on

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By 

Aditi Shrivastava

August 19, 2021

12 Min Read

India is a great global narrative to sell. It represents 18% of the world population, deep technology penetration, and an aspiring young demographic. For Uber, it seemed a no-brainer to invest in a market so full of promise. 

But ask the old guards at the company and they’d tell you that founder Travis Kalanick admits he might have overestimated the market opportunity, and underestimated the competition and work needed to make the India operations a feasible business.

“He would probably take a more conservative view now,” said a person who worked with Kalanick during the launch of the India operations in 2013.

Kalanick’s sentiment resonates with the new guard, with CEO Dara Khosrowshahi and team raising pressing questions on the viability of the India business, according to company executives, investors and analysts The CapTable spoke with.

“Dara was bullish about India’s emerging market story adding to the overall global mobility business. To that extent India has been a good test market,” said a person directly aware of the company’s thinking. “But beyond that it’s been a sub-par 7-year run, with the regulations being a setback and no business beyond ride-hailing to cash in on the flywheel effect.”

The CapTable sent a detailed query to Uber on its India plans. A spokesperson for the company, while not responding to specific questions, said: “Uber has never been more committed to India. The country holds a valuable place in the company’s global portfolio—as a source of growth, a source of tech innovation and a rewarding place to do business. Our focus now is on helping drivers and the community get vaccinated, and investing in new products and services to meet rapidly recovering demand.”

Sources say these new products include Uber Bus, but the pandemic has forced the company to delay these plans.

Uber sold its India food delivery business, Uber Eats, to Zomato in January 2020 for a 9.99% stake in the acquiring company. Although that investment has delivered financial results, it ruined Uber’s plan to cash in on its consumer base by building multiple business lines.

Globally, Uber’s delivery business has grown to be bigger than its ride-hailing operations. Its ride-hailing business fetched revenue of $8.84 billion in the April-June quarter, up 184% from the same year-earlier period, while revenue from online deliveries grew 85% to $12.91 billion.

From a global perspective, India’s significance for Uber lies more in its technology centers at Hyderabad and Bengaluru.  Uber’s plan to double down on India as a tech center for global innovation remains unchanged. It has 750 employees at these two centers, and has plans to hire about 250 more by the end of the year. Uber’s tech teams have been working on a number of new products, including building mask-recognition capabilities, financial services, Adgrowth, IT and compliance technology. 

How did one of the most ambitious tech companies get its roadmap on India so wide off the mark? What went wrong at Uber’s fastest-growing emerging market?

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