Ride-sharing companies looking for ways to cut costs

Since the beginning of the novel coronavirus pandemic, ride-sharing services stopped operating in Bangladesh.

Companies like Pathao, Uber and Sohoz are shifting their efforts to home delivery of groceries and medicines amid increasing responses they have received in the days of shutdown.  

But that is way far from enough to compensate the lost revenue from their core business – motorcycle and car ride-sharing. And the companies are under pressure to find ways to cut costs.

The good news is there have not been any job losses in the gig companies in Bangladesh yet, at least officially, because of the pandemic.

But pay cut within teams has already begun.

Pathao, the local ride-sharing giant, has already announced a restructured payment plan for each of its team members who earns over Tk30,000 a month. 

The progressive pay restructuring plan includes a salary cut, ranging from 30 percent to up to 70 percent, which will impact mainly the mid- and top-level executives. But the other benefits like healthcare, transportation and insurance will remain untouched.

The reduced pay structure was declared to remain effective from April 1 to September 30 this year.

An internal document of the company reveals that employees earning Tk50,000 will get Tk6,000 less over the two quarters, while a top-level employee with monthly gross earnings of Tk210,000 will receive only Tk128,000.

"We are happy that nobody is losing job during this crisis," Hussain M Elius, chief executive officer and co-founder of Pathao, told The Business Standard.

The company operates in three cities of Bangladesh – Dhaka, Chittagong and Sylhet – and in Nepal's Kathmandu. Pathao has ride-sharing services, food delivery, courier and e-commerce services. 

The company has around 500 employees on its payroll. It has 300,000 drivers in the ride-sharing service, which is totally suspended due to the lockdown. Half of the drivers left Dhaka.

Elius said he expected e-commerce business would rise amid the lockdown, but that was not the case.

"We have orders, but lack of delivery people and restriction on movement have pushed the business down further," he explained.  

Obhai, another ride-sharing service, said it is yet to cut salary or jobs. It has 500 bikers on its payroll who use bikes provided by the company.

Sohoz, which offers online bus ticket booking and ride-sharing service, is also facing revenue losses. It launched grocery delivery services after the countrywide shutdown was imposed and got a good response. It is also planning to launch online medical services soon.

But the pandemic has hit the company's revenue and if the situation prolongs, we will also have to find ways to cut costs for survival, said Sohoz Chief Executive Officer Maliha Quadir.

About a dozen employees who resigned recently complained to The Business Standard that they were technically forced to resign just before the shutdown and the company is planning a significant reduction in staff.

However, Quadir rejected the claim and said they may be part of the underperformers who are regularly asked to leave the team.

"We are trying to avert any heartbreaking consequence of business challenges due to the pandemic. Headcount reduction is the last part of cost-cutting plan, and we are yet to reach there. In fact, we will need people to run the expanding activities," she said.

"Right now, we are trying to avert possible pay cuts across the teams, but do not know the future," she added.

The Business Standard contacted Uber team in Bangladesh to inquire about possible cost-cutting measures, but did not get any response.