Companies operating in India's fast-growing instant domestic-help segment are spending heavily to subsidise existing customers rather than expanding the market, as intense competition forces platforms to prioritise market share over profitability, admits Urban Company, a key player in the segment.
Speaking during the company's Q1 FY27 earnings call, chief executive Abhiraj Singh Bhal said Urban Company and its privately held rivals have all concentrated their investments on retaining and acquiring customers within a limited set of neighbourhoods instead of broadening adoption of the category.
"Urban Company is as guilty of doing this as everybody else," Bhal said, referring to the practice of subsidising orders to drive repeat usage.
According to Bhal, the three major players – Urban Company, Snabbit and Pronto -- have spent the past six months competing for the same 3.5-4 million households, even though the company's own estimates suggest the addressable market comprises 7-8 million monthly transacting households across India's top 15 cities.
He attributed the strategy to the belief that the category is ultimately winner-take-all, where the platform with the strongest customer trust and largest installed base is likely to dominate over the long term.
"We're playing to win, not to look elegant," Bhal said, reiterating the company's willingness to sacrifice profitability to establish market leadership.
Urban Company's InstaHelp business processed 3.82 million orders during the June quarter, up 43% sequentially, but reported an adjusted EBITDA loss of Rs 132 crore, equivalent to Rs 346 per order. Although losses narrowed from Rs 447 per order in the previous quarter, the company has said it has no plans to generate profits from InstaHelp over the next five years, targeting breakeven only by FY31.
Bhal said competitive intensity has delayed the industry's ability to move towards sustainable pricing. Urban Company believes customer prices will eventually need to rise to around Rs 200 an hour to create a viable business model, allowing service professionals to earn Rs 20,000-22,000 a month while covering platform costs such as customer support, marketing, training and technology.
Urban Company estimates the addressable market for hourly domestic-help services at Rs 7,000-12,000 crore annually across India's top 15 cities. However, Bhal suggested that meaningful market expansion is unlikely until competition eases and companies reduce their reliance on subsidies to attract and retain repeat users.
