Urban Company is rethinking its approach to international growth by moving away from its earlier strategy of building operations independently in foreign markets. The home services provider, which is preparing for a Rs 1,900-crore initial public offering (IPO), is now focusing on partnerships and platform integrations to sustain its presence outside India.
The company had entered markets such as the UAE, Singapore, Australia, the US, and Saudi Arabia with high expectations. These regions featured strong demand for app-based home services, driven by large expatriate populations and high disposable incomes. However, operational and financial difficulties have led the company to reconsider its expansion model.
Urban Company has already exited Australia and the US. In the remaining international markets like UAE, Singapore, and Saudi Arabia, it is shifting towards partnerships. A recent agreement with West Asian e-commerce platform noon allows Urban Company to offer services through the noon app in both the UAE and Saudi Arabia. In Saudi Arabia, the company is also transitioning operations to a joint venture entity, Waed Khadmat Al-Munzal For Marketing. According to its draft red herring prospectus (DRHP) filed with markets regulator Sebi, the move signals an intent to wind down its subsidiary, Urban Company Arabia for Information Technology.
The company’s international operations are yet to achieve sustained profitability. In the nine months ended December 31, 2024, its Singapore subsidiary, Urban Home Experts Pte, recorded losses of Rs 43.32 crore, following a `118.56-crore loss in the previous year. In the UAE, its two subsidiaries posted losses of Rs 0.95 crore and Rs 1.51 crore, respectively. Losses in Saudi Arabia were more severe, with Urban Company Arabia for Information Technology reporting a 182% year-on-year increase in loss before tax, rising to Rs 23.45 crore from Rs 8.29 crore.
To address this, Urban Company established a JV in Saudi Arabia in March 2024 with Saneem Investment Company. It holds a 50% stake in the venture through its Singapore entity. The partnership restricts the use of the Urban Company brand to a period of 6-12 months, after which the venture must operate under a new identity.
The DRHP also mentions that the company may not be able to respond quickly to market changes under the JV model.
A recurring issue across international markets has been sourcing and retaining skilled service professionals. The DRHP notes shortages in overseas talent pools and the need to recruit workers from other countries due to limited local availability. This has increased reliance on local aggregators for handling visas and accommodations, creating additional dependencies.
Country-specific conditions have also posed challenges. In West Asia, strict labour regulations and localisation policies have made it difficult to build an independent workforce.
In Singapore, consumer expectations for specialised services have contrasted with the generalist approach used in India. For example, air-conditioning services are typically part of long-term maintenance contracts, not ad hoc bookings. Beauty services are also more niche and fragmented.
Even in the UAE, considered a promising market due to its Indian diaspora, Urban Company has faced strong competition from established players and a different demand structure, with categories such as in-home cooks making up a significant share of the market, an area where Urban Company has limited presence.
Despite the operational hurdles, international markets contributed 13.77% of Urban Company’s total revenue in the nine months ended December 2024, up from 10.57% a year earlier.