UBER: The butterfly which fluttered!!

In the last 2 years since UBER established in India, there has been a major social change that is not yet fully felt and understood.  Now, it is fashionable to become an UBER driver.  More importantly, it pays well to be an UBER driver.

School dropouts are now able to earn about Rs.60,000 per month; that is more than Rs. 7 lakhs per year!!  UBER currently has more than 50,000 drivers in India.  These drivers were perhaps making less than Rs.20,000 per month earlier.  Now their salary has gone up 3 times.  UBER singlehandedly has added Rs.2400 crores to the Indian economy in the last year.

Perhaps more important is that several of them now own their cars.  That is another Rs.2,000 crore to the auto industry.  But all this is nothing compared to the ripple effect that UBER is going to create very shortly.

The IT companies which recruit fresh graduates from engineering colleges pay only about Rs. 4 lakhs per year.  And, that too to people who have spent 4 years studying engineering and spending at least Rs. 5 lakhs for the program.   

http://www.thehindu.com/news/cities/chennai/record-campus-placements-at-vit/article7660950.ece

Contrast that with the Uber driver who makes Rs. 7 lakhs per year without spending too much time or money to get trained.  Uber is now going all out in the country to recruit drivers.  They have committed 30,000 jobs in Tamilnadu alone last week.  So, the IT companies are going to face a tough competitor in talent recruitment.  What will happen?

The IT companies will be forced to raise the salary levels for these entry level candidates.  It is not just the IT companies who will be forced to raise salary levels.  Construction companies, hair dressers, Government offices, hospitality industry, almost every other industry will be forced to raise salary levels.  In effect, the average minimum wage in the country will go up to Rs.60,000 per month.  This is the virtuous cycle that UBER has unleashed.

I bet that this will happen in the next 2 to 3 years.  Imagine what will happen to the Indian economy.  More people can afford to buy more goods such as a nice house, refrigerators, air conditioners, TV sets, motorbikes, cars, send their kids to good schools, etc. – in effect, our factories will be producing more to be sold within India.  Make in India will actually be Make for India!!  This increase in the size of the domestic market will bring prices down since the volume has gone up.  This will make our companies very competitive internationally and so we can sell more overseas – our exports will go up.

All this will happen without any government intervention or incentive.  All this will start happening soon because this UBER butterfly fluttered.