UC Earnings Index (Q2 FY22): Empowering Service Partners to become Micro-Entrepreneurs
Urban Company’s vision is to empower millions of professionals world-wide, deliver services at home like never experienced before. We take pride in providing a platform which offers higher earnings compared to offline opportunities. Additionally, we have worked hard to create a safety net which gives partners the benefit of being micro-entrepreneurs, but within the umbrella protection of Urban Company.
In the last couple of days, there have been concerns raised by a few of our partners, and other well-intentioned voices, regarding the earnings and well-being of our service partners. We hear you, and in the spirit of transparency, would like to highlight some important facts and data-points through this blogpost.
- Urban Company partners earn a net average earnings of Rs 280–300 per hour, net of commissions, fee and all associated product & travel costs
- The top quartile of service partners earn > Rs 36,000 per month net of all commissions, fees, travel and product costs. Partners doing 30 orders or more per month (1 order per day) earn approximately Rs. 28,000 per month net of all commissions and costs.
- All Urban Company service partners have access to life and accidental insurance cover, free training, loans and other benefits such as free vaccinations and PPE Kits. Several partners also enjoy free health insurance through the platform.
- During the pandemic, we approved Rs 100 Million worth of interest-free loans for all our beauty partners in locked-down regions.
- One of the tweets recently claimed that a beauty partner made Rs 67 for 4 orders. This is a mis-representation of facts. The screenshot shown is not that of her earnings page but a settlement ledger of the bank transfer. The partner accepted cash payments for 2 orders and online payment for the remaining two. Her net earnings after UC commissions and other fees for the 4 orders in question delivered between 1–3 Oct was Rs 1,941 (refer to appendix)
UC has always been a platform where both customers and partners are equal stakeholders. The very genesis of Urban Company was to organize the home services industry for both customers and partners. In the absence of organized players, the market was controlled by middle-men and aggregators, who restricted market access and kept a lion’s share of the margins. However, we believe we have made the industry more transparent, reduced the number of middlemen and given a voice to the hitherto voiceless informal labour.
Under no circumstances, will we ever shy away from doing the right thing for our stakeholders. This has always been reflected in our business decisions and strategy. We are not perfect, and acknowledge that we might have made mistakes in our journey so far. In the coming weeks, we will be announcing some important programs which we believe will further enhance the earnings and well-being of our partner ecosystem.
The data below highlights earnings for all our service partners in India. We have also separately highlighted the earnings of our women partners in the salon and spa verticals. Since Urban Company partners are not our employees, and free to work outside the platform and work flexibly, we have also provided data-points around earnings of partners who have completed 30 orders in a month and the top quartile or 20% of partners (30 orders per month in our opinion is about 50% of our service partners’ available work time depending upon the category).
Table 1: For all Urban Company Partners in India
As the table below highlights, Urban Company partners earn a net earnings of Rs 280–300 per hour, net of commissions, fee and all associated product & travel costs. As partners do more orders on the platform, and spend ~ 100 hours per month working for the platform, they see very healthy earnings of Rs 25,000–30,000 per month. The top quartile of service partners earn > Rs 36000 per month net of all commissions and costs. Our platform is bouncing back strongly post the second wave, and we expect earnings to be even better in Oct and the months ahead. We will publish an update on this blogpost at the end of Oct with the revised data. Our estimates suggest that in the offline world, service professionals earn on average between Rs 12,000–15,000 per month
Table 2: For women partners in the Salon and Spa vertical in India
In the beauty segment, we also sell products to our service professionals. These products are genuine, branded and at much lower costs than the offline world, with us passing almost all benefits of bulk procurement to our service partners (In FY21, our products business was operated at near 0% net margin at a slight loss, which can be verified through our annual audited financial statements. Needless to say, partners receive physical GST invoices against all products sold). In the calculations below, we have also deducted these product costs. Given that we have women service professionals in this segment, several of them also work flexible hours, balancing priorities at home with their work. Hence, it becomes important to look at both columns here to understand earnings, and also compare this with net earnings per hour. As the table below highlights, our women partners earn a net earnings of INR 280–300 per hour, net of commissions, fee and all associated product & travel costs. Our women’s beauty segment is bouncing back strongly post the second wave, and we expect earnings to be even better in Oct. We will publish an update on this blogpost at the end of Oct with the revised data.
Our commitment to our partners has been unfailing whether pre-COVID or during the pandemic. We have supported them throughout and will continue to do so.
Key partner enablement pillars
- Free training and upskilling: We have set up training centers and have 100+ trainers working with us to train and upskill the partners we onboard. We have also signed an MoU with the National Skill Development Corporation (NSDC), under which the NSDC will support Urban Company to become a 100% ‘Skill India’-certified organisation under the RPL (Recognition of Prior Learning) component of Pradhan Mantri Kaushal Vikas Yojana (PMKVY). The entire skilling cost is borne by the company.
- Insurance: All active partners on UC (partners who have delivered at least 1 job in the last 30 days) are covered under the Group Personal Accident insurance with benefits up to INR 3,00,000. The insurance cover includes coverage for death/disability, accidental hospitalisation, IPD treatment and OPD treatments. We have also extended health insurance benefits to all our UC Plus partners (covers upto 2 lakhs in-hospitalisation treatment, room/ICU expenses, OPD, medical equipment and 12 free online doctor consultations in a year), and are considering extending these benefits to all our service partners.
- Bank accounts and Loans: We help service partners open bank accounts at the time of joining the platform, and avail loans in case they need them to finance their starter kits. Overtime, we also offer through our partnerships, access to personal, vehicle and home loans to our service partners.
- Free vaccination: As soon as the COVID-19 vaccine was made available, we set up free camps pan-India for our partners. The ones who chose to get the vaccination done on their own were reimbursed. As of 10 Oct, 93% of our partners have received 1 dose of vaccines, and 50% have received two doses. By the end of Nov, we expect the vast majority of our partners to be both doses vaccinated.
- Free PPE Kits: We don’t charge partners for PPE kits. We collect a safety fee from customers, and for jobs where payment is made in cash, the equivalent is paid to partners in cash and settled through online payments.
Partner safety and grievance redressal
- SOS or Emergency Helpline: Our partners can reach out to us immediately at the occurrence of any safety or life-threatening related incident via the SOS button on the app. This helpline is available from 9 am to 12 midnight (7 days a week)
- Partner Helpline: Partners can reach out for grievance redressal via the normal helpline.
Security net extended during COVID-19
- Relief Fund for partners: We set up the Mohit Agrawal COVID Relief Fund to help our partners with medical expenses, hospitalization expenses and bereavement support, over and above applicable health insurances which the company provides. The fund raised Rs. 12 million by contributions from employees and external donors, which were matched by UC.
- Income protection and health insurance specific to COVID-19: In case of hospitalization due to Covid, UC would reimburse hospital bills up to Rs.50,000. Apart from this, we provided varied monetary cover as follows:
- Interest-free loans: We approved INR 100 Million worth of interest-free loans for all our beauty partners in locked-down regions. These loans had delayed and liberal payback periods which would start only after business activity resumed.
- Partner Counseling: 1) Mental health consultation for all partners during lockdown through a third-party mental wellness platform. 2) UC tied up with EkSaath Foundation to facilitate free doctor consultation for partners on COVID-19 related concerns, vaccination issues and for mental well-being.
All of our efforts are also supported by the findings of the Fairwork Foundation in 2020. The UK-based foundation, supported by the Oxford Internet Institute, scored us 8 on 10 when conducting a study on the working conditions of digital platforms based on the following five principles: fair pay, fair conditions, fair contracts, fair management, fair representation.
As with any large business, ours too is prone to challenges and conflicts. We are always open to dialogue and peacefully resolving issues whenever they arise within the UC family.
We understand a lot of people want to know how payouts to partners work. Here’s an explainer.
Customers can choose to pay partners via online or in cash. Approximately 60% of our orders are paid online, while the remaining are paid for in cash (Might vary by month, city and category).
Cash payments are fully kept by service partners without any settlements. All settlements, including our commissions, fees and any other applicable deductions such as repayments of loans, happen from the online payments. Hence, we have different screens in our partner app to show actual earnings and payouts or bank transfer settlement.
The payouts or bank transfer settlement screen should NOT be confused with partner earnings, since it does not show orders which were paid for in cash (Shown in a different section of the app). This screen is only meant for the service partner to understand the bank transfer details of their payouts, and deductions made. This transparency has historically been much appreciated by our service partners.
Let’s understand using the example doing the rounds on Twitter. Here’s the real story behind this image. TLDR: The partner in question made INR 1941 after UC commissions and fees for the 4 jobs in question, and not INR 67 as claimed. Further after removing travel and product costs, she made INR 1,141 for the 4 jobs.
This Rs 67 payout is a settlement and not the earnings for the dates 1st-3rd Oct. Here’s what the said partner earned during these dates:
- She delivered four orders of which payments of two orders were in cash and for the remaining two online.
- What you see on the tweet image is the settlement ledger for the four orders together at time of the online payout, and NOT her earnings. All our commissions, fees, settlements of loans etc. happen only against the money collected for online paid orders.
- Her earnings for these dates for the 4 orders delivered were Rs 1,941 after removing all UC commissions and fees. If we further remove travel and product costs, her net earnings were INR 1,141 for the 4 orders in question. Detailed explanation is given below -
For the 4 orders in question delivered between 1–3 Oct, the customers paid INR 2672, including safety fees of INR 196 (49 per job). After removing this safety fee (Which is kept by UC to provide PPE kits to partners), the total earnings were INR 2,476 (729 + 449 + 799 + 499). From this amount, UC commissions of INR 390, service charge of INR 28, and UC Plus Discount over and above 10% borne by UC (Opted in by the concerned partner as part of a pilot program) worth INR 117 were deducted. The partner therefore made INR 1941 net of all commissions and fees for these 4 orders. If we further remove travel expenses and product costs, the partner’s net earnings were INR 1141 for the 4 jobs.
2 of these 4 jobs were paid for online by the customer (Worth INR 1626 = 799 + 729 + Safety fee worth 49 & 49 respectively). The commissions and other deductions for ALL 4 jobs were adjusted against the online payment of INR 1626 collected for these 2 jobs, since cash payments worth INR 1046 for the remaining two cash jobs were kept as is by the partner.
Payouts or Bank Transfer Settlement Screen
At UC, deductions & settlements are of four types:
- UC commissions and service charges
- UC Commissions: These are collected either through advance credit recharges made by the partner willingly or through automatic credit recharges made by UC to maintain minimum balance to enable seamless acceptance of orders. In the above case, the partner in question had opted in for an advance credit recharge over and above the credit recharge done by UC to ensure she has enough balance to accept jobs in the future. This deduction is against commissions for future jobs. For example, Rs. 490 + Rs. 430 = Rs. 920 would be sufficient for the partner to accept another 5–6 jobs (Next 2–3 days on average). Payouts or online settlements happen 3 times a week on Mondays, Wednesdays and Fridays, hence most partners will opt in for enough credits to be deducted which gives them jobs for the next 2–3 days.
- UC Service Charges: Fee collected from partners for processing online payments
2. Deductions against loans and advances taken from the platform
3. Safety fee settlement: We don’t charge partners for PPE kits. We collect a safety fee from customers (Rs. 49 per job), and for orders where payment is made in cash, the equivalent is paid to partners in cash and settled through online payments with them. For orders paid online by the customer, this fee is deducted and then the remaining is transferred to the service partner. Hence, this is NOT a deduction borne by the service partner, but mere settlements against cash amounts already collected by the partner from the customer, or online payments made by the customer. In the above settlement, safety fee for all the 4 jobs (Worth 4 X 49 = 196) + One job delivered in the previous month for which the settlement was pending (INR 49) was settled = INR 245
4. Other deductions -These deductions are applicable when partners choose to opt-in for the pilot programs we might be running in various cities and categories. One such example is a partner side UC Plus program wherein they get access to more orders, higher value orders, and other benefits such as a health insurance cover free of cost, and access to a personal loan line of credit. Please note that UC Plus customer discounts up to 10% are fully funded by Urban Company.