UAE hybrid working leads to 90% rise in demand for home cleaners

Urban Company

• Urban Company invests in tech and manpower to grow services
• Beauty treatments on offer as well as cleaning
• Employees incentivised to avoid staffing challenges of delivery sector

The rise of hybrid working during the coronavirus pandemic has seen Gulf residents spending more time at home, leading to a surge in demand for domestic cleaning services.

This has spurred growth in the wider on-demand home services industry, but investments in technology and manpower and rising business costs in the UAE has resulted in squeezed profit margins, according to the region’s biggest operator.

Urban Company was founded in India in 2014 and is now described as Asia’s largest technology-enabled home services marketplace, connecting consumers with a range of service providers, from cleaning and beauty treatments to PCR tests and pest control.

• New $800m ‘ultra app’ aims to shake up crowded Gulf market
• Indian workers return to Gulf in their droves
• Injection of interest in beauty industry as men turn to ‘Brotox’

Rebranded from Urban Clap in 2020, it is now present in around 60 cities across the Middle East and Asia and launched in the UAE in 2018 and in Saudi Arabia last year.

“We started in this market building the most common use case here, which was the part-time cleaning,” Nitesh Agarwal, Urban Company’s regional head for the Middle East, told AGBI.

“That is the largest category for us, still the category that we are deeply invested in improving.

“It is growing at about 15 percent month-on-month. It started slowly in the [start of the] year because it was Covid-affected at that point of time. But with people coming back to the country it’s expected to grow about 80 to 90 percent this year.”

Agarwal said that the traditional vision of cleaners with a simple mop and bucket has changed and the company has invested in providing its employees with steam disinfectors to mop the floor and scrubbing machines for bath tubs, wash basins and kitchen tops.

While the cleaning service is still its core business, Urban Company has expanded its offering into over 15 other sectors.

“[Cleaning] used to be 85 percent one and a half years ago. It is now in the 45 to 50 percent range,” he said.

• 

• 

Beauty in the home – for men and women

Its second largest sector is beauty services for women, primarily manicures and pedicures.

Agarwal noted that the company recently reduced prices from AED250 ($68.07) to AED99 and this has led to a dramatic surge in demand. “Pedicure is growing 20 percent week-on-week and it’s one of the largest categories,” he said.

It is not just women looking to take care of themselves at home as the app has seen a rise in male clients using grooming and at-home beauty services in the UAE.

“That is a growing market, especially post-Covid,” Agarwal said.

“In our Indian market men’s grooming was a sub 10,000 haircuts a month category for us in 2020. Within a matter of six months it went to 200,000 deliveries a month, but we saw similar uptake in men’s grooming [in the UAE] post-Covid.”

The third biggest service is at-home PCR Covid tests, which Agarwal said are still being sought, with July and August seeing peak demand.

The global online on-demand home services market was valued at $3.456 billion in 2021 and is expected to reach $6.396 billion by 2029, growing at about eight percent per annum, according to Indian research company Data Bridge Market Research.

The UAE is expected to be slightly ahead of the global trend, growing by around 10 percent a year until 2026, as the market is still fragmented and there are still a lot of users to tap into.

“The UAE is an interesting market. While it has one of the highest internet penetrations in the world, 85 to 90 percent of the [on-demand home services] market is still with offline and unorganised players,” Agarwal said.

“We are bullish about the depth that the market has and the penetration that we can get to. 

“We have confidence in India. I think we would be closer to 30 to 40 percent penetration – I think that’s where we should expect to be in the next two to three years for the UAE.”

• 

• 

Improved working conditions

Earlier this year a debate erupted when low-paid foreign workers at several international food delivery companies staged a mass walk-out, calling for better pay and working conditions in a rare show of industrial action in the region.

But Agarwal said Urban Company has already invested heavily in making sure the employees at its vendors are well taken care of.

“We increased their base salaries, and we work with our vendors to ensure that that is happening,” he said.

“We increased incentives and we also started regulating their living conditions, introduced a lunch hour and ensured that their day is more humane, which was not the case,” he said. 

As a result Agarwal said he has not seen any of the staffing challenges experienced by the delivery service companies and continues to hire new workers from countries like Nepal, the Philippines and India.

While it has invested in manpower and technology, the cost of living in the UAE has risen at its highest rate for 11 years and, though inflation is not at the level of developing countries, costs for UAE businesses are at their highest for over four years, which has impacted margins.

“This is a real challenge for us as well,” Agarwal said. “The problem with an on-demand marketplace is that customers will always want someone within 30 minutes or 60 minutes so that requires you to build buffer capacity and the customer would want to pay the lowest for the best service.”

Efficiency through technology

While they have not increased prices for users, the company have invested in technology to make their scheduling more efficient and complete more jobs using existing resources.

“What technology allows us to do is be able to intelligently get the same person more jobs in the same period of time,” Agarwal said.

“As our demand is increasing they are having to travel less, they are able to pack their calendars better. We are still able to give them breaks between two jobs, and lunch hours. 

“The industry benchmark of the number of jobs a cleaner does a month ranges from 35 to 45 depending upon month of the year. For us that number is closer to 60 and we have our roadmap to get it nearer to 65 or 70. 

“That allows us some leverage, but it is a real pressure point and profitability is not as high as it would have been had costs remained the same.”

Reports in the Indian media in September revealed that Urban Company enjoyed a 75 percent rise in revenue in the financial year 2021-2022, but rising costs also meant losses for the year doubled to $62.3 million.

“Those numbers don’t have any bearing on Urban Company’s UAE operations as it has always had a different trajectory,” Agarwal said.

Urban Company is now focused on expanding operations in Saudi Arabia and launching into new sectors, such as pet care and babysitting.