5 reasons why Uber might be looking to expand its Asian Pacific headquarters in India

In a recent statement, the Cab-aggregator giant, Uber is said to lay off another 3000 employees. It was a hard decision for them, but along that they said one more thing that raises our ears. Over the next 12 months, it will begin the process of moving its Asia-Pacific headquarters out of Singapore to a new location “in a market where we operate our services,” according to the company.

The company did not reveal where its new Asia-Pacific headquarters will be. Instead, in the statement, it intends to move its operational headquarters from Singapore in the next 12 months. It will move to a new location in the region, and it is finalising the details which it will share soon.

What makes us think that Uber's new APHQ will be India?

1. Revenue

Uber India reported a profit of $6 million for the financial year 2019. It was a 63% jump from $3.7 million in FY18. The expenses also shot up 67.6% to $115 million in FY 19 from $69 million in the preceding FY, according to the company’s regulatory filing.

Uber has an evergrowing market in the country. Currently, it competes with India's leading cab-aggregator, Ola. The company is over twice as big in sales but has been posting huge losses. As of yesterday, both the cities have opened operations in India. In these testing times, when Coronavirus has taken over the entire economy, re-opening of business will be a tough job. But due to the high demand for transportation facilities, Uber may fair well. Also, where Ola is still showing losses. Uber's revenue model can make itself reach a larger audience.

2. Infrastructure

According to analysts, India’s plans to set up a common infrastructure for hardware companies, such as design and fabrication facilities, will help more startups and product firms build and take products faster to market. Further, India has moved along an exponential technology curve.

It has become the second most connected nation in the world, with 560 million internet users, next only to China. India is continually developing its urban centres to take a prime position as a global tech hub. Cities like Bengaluru and Gurugram are few of the tech-savvy cities proving the said point.

And then there is the Digital India government project. It aims to digitally empower society and double the size of India’s digital economy. If Uber can leverage the benefit of the cheap technological structure, it can not only save costs but also increase its potential in Southeast Asia.

3. Low-costing workforce

India has a large workforce. Indians are hardworking and they tend to learn quickly; but here is a drawback. The country's low skill intensity and low education attainment present a major challenge in preparing the workforce for India's future. There are two main issues in this regard- skill-based learning and job opportunities. It's a loop. People are not upgrading because their no jobs, people don't have jobs because they are not upgrading.

In that case, the Indian workforce is cheap. To leverage this, the company might shift its HQ in India.

4. Established Market

Like Uber already mentioned, it will shift the APHQ out of Singapore to a new location in a market where they operate services. India is a set market, it is the second-largest cab-service in India only after Ola. Infact, Ola is in losses while Uber is not. Further, Uber once told Quartz, “India is a global priority market for Uber and our second-largest after the US in terms of (the number of) trips.”

So, India is the key to Uber’s future, especially at a time when the firm is losing billions of dollars globally, and growth in the US is quite low.

5. Expansion

Uber is already expanding its operations in India. Yesterday, it began in a total 35 cities; 10 new ones. While it is laying off employees and shutting down offices, what can be the reason for it to expand in a situation like this?

During one of the Tech Crunch's interviews, a spokesperson from Uber said that they aim to expand from about 50 Indian cities to 200 in the country by the end of the year. It will focus on onboarding two-wheelers and three-wheelers in many of these cities, the firm said. Uber’s expansion in India comes as Ola is entering one of the American firm’s key territories.

Further, it is also looking to acquire GrubHub, a food-aggregator platform, after it sold Uber Eats to Zomato. Its strategies are quite in line with the Indian market structure. What do you think?