Gig Workers Battle Exploitation And Privacy Breaches By Urban Company

For almost two years, Latha (name changed) has been providing salon-related services via home services aggregator Urban Company, earlier known as UrbanClap, in the National Capital Region (NCR). While she benefits from the addition to her income, she must buy a subscription pack every month to keep receiving leads, failing which her account with the company will be blocked.  

“A year ago, my account was blocked for almost a month because I did not buy the subscription,” Latha tells Outlook Start-Up. She caters to a separate set of customers at her parlour, which gives her some cushioning against such situations, but many of her friends who provide salon-related services are not as lucky. They rely entirely on leads provided by Urban Company (UC) and are often left at its mercy. There are roughly 50,000 partners offering services on the platform. 

Currently, UC is the market leader among home services aggregators. It serves 63 cities across four countries, with over 50 of them in India alone. Among its competitors, QuikrEasy, formerly Zimmber, has the most significant reach. The list also includes Housejoy, Local Ramu and Timesaversz among others. But UC has an edge over them in terms of not just the area covered but also the range of services. Because of its wider presence and offerings, it has a much higher number of customers as well. As per a November 2023 company blog, it had serviced more than 10 million customer requests globally until then. 

However, things have not been entirely smooth for the company. Its run so far has been marked by multiple instances of protests by service partners who have accused it of exploitative practices. In 2021, they protested introduction of a new category of service providers which would include those with low ratings or ones who did not pay subscription. These partners would be allowed to work only on three days. Another point of dissent was the subscription system that required them to pay an amount upfront and lose it if they did not meet the target for the month. 

The company, at one point, used to charge commissions as high as 30% on high-value orders under the beauty category. In October 2023, three months after women workers in the beauty and spa category in the Delhi-NCR region protested the company’s exploitative practices, UC proposed to cap the highest slab of commission to 25%. 

Changing Times  

Things were not always like this, say those in the know of things, referring to alleged unfair practices by Urban Company. It did not charge penalties earlier, says Suman Das Mohapatra, organising committee member of All India Gig Workers Union (AIGWU) and convenor for its Karnataka Chapter. 

UrbanClap started operations in 2014 as a leads-providing platform. The firm, backed by American investment firm Tiger Global, rebranded itself as Urban Company in January 2020 to position itself as a horizontal gig marketplace with an asset-light model. UC later moved completely to automatic assignment of jobs depending on the location and service requested for. 

However, it was the Covid-19 pandemic that gave the company the much-needed impetus. The pandemic-induced lockdowns forced people to stay indoors and made them wary of about stepping out for essential services, including their grooming and salon demands. This triggered a huge demand for India’s home service marketplaces that would bring services to the customer’s doorsteps with their gig workers’ network. By 2020–21, India had as many as 7.7 million workers engaged in the gig economy, as per NITI Aayog estimates. The public policy think tank expects the number to triple to 23.5 million by 2029–30. 

Riding high on the evolving market dynamics, UC raised more than $250 million in a single funding round in April 2021 and attained the unicorn status. Until then, the company had raised less than $250 million in at least 10 funding rounds combined, according to Tracxn, a data intelligence platform 

The company has established itself over the years by riding on India’s emerging digital stack—including cheap internet data and digital payment infrastructure—and attracted thousands of home service providers. UC’s tech-enabled platform helped it bring together the deeply fragmented and largely unorganised network of service professionals into its fold as it presented itself to customers as a one-stop solution to wide-ranging home service needs.   

The Bane of Monopoly 

A lack of a legislation to regulate the gig economy has meant that India’s ever-growing network is left to the whims and fancies of the aggregating platform that enjoys the perks of a near-monopoly situation. Besides getting blocked by UC for not buying the subscription package, service professionals Outlook Start-Up reached out to say that the company has also been slapping them with penalties for taking up offline requests for home services from customers who had previously sought services through the UC platform.  

“Among all the services marketplace startups tracked by PrivateCircle, Urban Company emerges at the top on multiple metrics like valuation, total revenue, and total amount raised. This is also reflected in the sector’s Herfindahl-Hirschman Index (HHI Index). Services marketplace sector has an HHI Index of 7952, showing high market concentration. Higher the market's concentration, the closer the market is to a monopoly,” says Murali Loganathan, Director of Research, PrivateCircle Research, which provides private market intelligence. An HHI index of 10,000 indicates a monopoly, he explains. 

A Question of Ethics 

Two UC partners from Bengaluru—one offering women’s parlour services and another bathroom cleaning services—say that the company charges penalties if it finds out that the partners have been taking up offline orders. Both the partners did not want to be named for fear of getting blacklisted by the company. According to them, the company tracks their location even they are not working on any online service request.  

An electrician in Hyderabad, associated with UC for over a year now, says that the company also slaps penalties based on the duration spent by the partner at the customer’s service location. “Each service request has an allocated time. If the partner spends more than the allotted time at the location, the company penalises the partner presuming that an offline request has been taken up,” he says, also on condition of anonymity.  

Sometimes, the partners end up in a fix even if they do not accept offline service requests made by the customer. The electrician points out that the company is “customer-centric” and not “partner-friendly”. “Often, customers request me offline to fix an additional electric switchboard for some nominal charges after fulfilling the initial request through UC’s platform. If I decline, the customer might rate me poorly, and if I take up that additional request offline, then the company may penalise me for overshooting the time allocated to me,” he laments.  

He says further that while the company does not take serious action on customers if the service professionals rate them poorly, UC deals with low-rated partners very seriously. In June last year, many partners alleged that UC blocked their accounts if they got ratings below 4.7 out of 5.  

He alleges that the company tracks their location using the mobile phone application even when they are off duty, and checks if a partner is in the location of a customer who had taken the company’s services in the past.  

In its privacy policy document, UC states that it collects the location data of the service professionals. “We collect different types of personal data about you. This includes but is not limited to: Technical Data, which includes your IP address, internet service provider, device ID, device type, domain name, details of operating system, browser type, date and time stamp of accessing the Platform, device metadata, location data, and mobile applications used by you,” the privacy policy document states.  

The document also states that the company collects usage data of the partner, including call logs, mobile application usage and activity data, call and chat records with customers and end-users as well as email usage. 

Tracking the location of partners would be “untenable” and an “absolute breach of privacy”, says Maitreyi Krishnan, an advocate with the All-India Central Council of Trade Unions (AICCTU) and Karnataka State Committee Member. 

Gigin’s Bhagat agrees that the practice of platforms tracking the gig workers amounts to privacy violation and needs to stop. 

The UC partner mobile application does not let users proceed unless they allow it to collect and use location data “all the time”, a point verified by Outlook Start-Up. This means that the app can track the partner’s mobile location even when it is not being used actively.  

Avoiding Liabilities 

Urban Company, just like any other aggregating platform, acts as an intermediary between customers and its partners and states in its terms and condition document that it does not consider the service professionals as its employees. 

“UC and its affiliates do not employ you or any other Service Professional, nor are Service Professionals the agents, contractors, or partners of UC or its affiliates,” reads a provision in the company’s Terms & Conditions document meant for its partners. The document further says, “You agree that the relationship between UC and you, is voluntary, non-exclusive, on a principal-to-principal basis...” 

“But if it has been penalising its partners and restricting where they go and how they make money, then it suggests that the company is treating them as employees under law,” says Alok Prasanna, co-founder, Vidhi Centre for Legal Policy.  

In that case, “it would trigger the labour laws and require the company to provide for their social security costs such as provident fund, insurance, bonus and gratuity,” Prasanna adds.  

Others agree. 

“Exercising this level of monitoring and control would amount to an employee-employer relationship. Once considered employees, they [UC] cannot terminate or penalise them arbitrarily. It will also then invite social security liabilities for the company,” says Krishnan.  

Mohapatra criticises the approach of UC treating its service professionals as service professionals. “How do you define a service professional? It is a fallacy to avoid social security costs and evade minimum wage provisions. If they are not your employees, how can you control them? This way, they are enjoying all benefits and escaping all costs, and monitoring each and every movement treating them like bonded labour,” he says. 

If UC continues to justify tracking its partners’ location using the terms and conditions document and the privacy policy fine print, it may imply the acknowledgement of an employee-employer relationship and trigger the need to provide for social security obligations for its 30,000-something workforce. 

In its Earnings Index report for H2 CY23, UC stated that its partners get access to free life, accidental and health insurance cover from the company. “In CY23, over 1900 service partners benefitted from the life, accidental and health insurance covers, with over INR 5.51 crores disbursed as insurance claims in CY2023,” the report stated. However, the report doesn’t talk about any other social security provisions. 

A detailed questionnaire by Outlook Start-Up, seeking the company’s responses to allegations by its service partners, remains unanswered. 

Walking the Tight Rope 

The opinion that policymaking must take into account evolving dynamics of the gig economy is unanimous. The government policy and existing labour law is company-friendly and not in support of gig workers, says Mohapatra. To address the problem that these workers face, policymaking needs to evolve, feels Bhagat.  

Currently, India's labour laws do not have specific clauses that protect these workers or regulate the gig economy. In a first, the Rajasthan assembly passed the Rajasthan Platform Based Gig Workers (Registration and Welfare) Bill last year, but it is yet to get the governor’s assent.  

Urban Company has been planning to issue its initial public offering for some time now. Any perception of lack of empathy for stakeholders, service partners in this case, and continuing dissonance within the work sphere can have detrimental effect on its prospects. The company stands to benefit by putting the house in order.