Leveraging the Indian workforce

Last week, Amazon India announced two programs to bring new local entrepreneurs on its e-commerce platform. In one, it was reaching out to 150,000 weavers and artisans across the country to bring India’s rich traditional crafts to Indian customers through its “Handloom & Handicraft Store” on its website. In another, it became Uttar Pradesh government’s online partner to promote art and crafts from the state’s nine districts. Amazon India says that since February, it has conducted training workshops with 150 handicraft societies and got 13 Khadi organisations to display over 500 products on its website.

Companies like Ericsson, Siemens and Mahindra & Mahindra, organisations like the Confederation of Real Estate Developers' Associations of India (CREDAI), Confederation of Indian Industry (CII) are tying up with other companies to launch programs across the country to skill very disparate groups of population. For example, CREDAI tied up with real estate company Rustomjee to train women masons in Chhattisgarh. In Uttar Pradesh, nearly half a million have enrolled for the state government training programme and 30% of the budget is earmarked for training women and minorities.

An analysis by an independent agency NGOBOX estimates that companies will disburse over Rs 50,000 crore by March 2019 since statutory amendments mandated CSR spends starting 2013. Last year, companies spent nearly Rs 11,000 crore with over 90% of the money coming from the top 500 companies in the country. NGOBOX predicts that education and skilling will draw up the most at about Rs 15000 crore, and healthcare will be a close second.

It is also estimated that nearly 10 million freshly skilled people will hit the job market each year, according to estimates of the government’s National Skill Development Mission.

The question then arises – do we have enough employment avenues being generated in the country to employ these newworkers. Big manufacturing investments are at a low-ebb largely due to an indebted local industry and the billion dollar foreign direct investment (FDI) inflows in the service sectors are equity investments, which will take a while to percolate down to operations and hiring. While, the real estate sector, one of India’s biggest employers has seen a showdown after demonetisation nearly two years ago.

Since 2014, in the organised manufacturing sector, the mobile handset-making ecosystem was the biggest employer drawing nearly half a million workers. And although auto sales had zoomed during this period, the sector hasn’t been a huge employment draw due to increasing shop floor automation. According to government’s new employee provident fund data, 7 million new accounts were created last year and 4.5 million accounts have been created so far this year. This seems to imply that there are new sources of employment popping up that we are missing out on–both organised and unorganised sector, which is eating up the new skilled workers.

For one, investors and entrepreneurs already seem to be aware that there is huge opportunity lurking in employing the newly skilled gainfully. The three listed staffing companies Quess Corp, Teamlease Services and Security & Intelligence Services (SIS), which provide temporary workforce to industry and businesses have shown robust growth in the last four years. In fact, the market capitalisation of these companies has doubled in the last eighteen months, suggesting that investors see good prospects going ahead. Just the three companies, which claim half a million unskilled and semi-skilled workers on their rolls are together valued at Rs 25,000 crore.

And true to their mettle, several Indian entrepreneurs are making their own interpretation of the evolving opportunity. From companies building a workforce for specialised services –like senior care companies like Bengaluru-based Medwell Ventures, to apps that organise local services or logistics startups that deliver for e-commerce firms–there are several models popping up every day. You may say that specialised staffing companies for nursing or security services have always existed and the spurt in new ones just represents the growing demand of the economy.

There is a fundamental difference. The new firms just don’t enlist people and send them off to work on contracts when a need arises. These companies are building specialised services that qualify them as an independent business in their own right. Medwell, started by Vishal Bali, ex-managing director of Fortis Hospital and funded by venture capital firm Fidelity, employs nurses not to send them off to work in hospitals but to grow its senior care and post-operative home care business.

These companies, to start with, use a lot of technology to train, motivate and regularise the employment of skilled people across the country. A new government scheme that pays a part of the monthly provident fund to first time employees is also incentivising hiring fresh workers. With compulsory linkage between unique Aadhar card and an employees’ provident fund account, it has now very simple to ascertain the new worker for the government, increasing accountability. In effect, a new breed of companies is organising India’s workforce.

Two examples demonstrate the shape of things to come.

Eight years ago, Sahil Vora and Rushabh Vora, in their early 20s, quit their jobs as a financial analyst and currency trader in Wall Street to return to India to start their own ventures. After trying their hand at a few options, they founded their company SILA that did building maintenance job for commercial real estate properties that were then cropping up across the country. It seemed a rather queer choice. Sahil had a graduate degree in Economics and International Studies from Trinity College, U.S., while Rushabh a MBA from Insead, France. Early in their career, they seemed to giving up a budding career in finance to dirty their hands with blue-collar workers who would clean and upkeep offices.

Last year, SILA’s revenue doubled to Rs 120 crore and they have 4,500 people on their rolls. The company operates in 110 cities in 21 states and has over a 100 clients. Though SILA started as a facility management business, it now does real estate project management routinely carrying out interior planning and fittings of entire buildings. It also advises prospecting companies on land purchase and document management. SILA has over half a dozen training centres across the country to train new recruits to take on various jobs. Rushabh says that they expect to grow at 70% in the next three years as they are constantly rejecting customers as they want to pace out their expansion.

SILA runs an app for all its blue-collared employees that rates their performance regularly–be it a facility worker at an airport, or at the Jammu & Kashmir Bank branch in Ladakh. These employees are continuously rated on four parameters: attendance, longevity, completing training modules on the phone software and a subjective analysis by the superior. SILA also has a dozen physical training sites across the country where it brings new and existing workers to be reskilled. Rushabh says that the continuous evaluation is necessary as the jobs are critical and we always need to know the top performing subordinates if a leader quits.

In Mumbai, Rahul Nanda, the founder of India’s best known security company TOPSGRUP and his daughter Rasshi Nanda have launched a mobile app Cheep, which aggregates the likes of carpenters, plumbers and electricians and make their services available on demand in Mumbai, Bengaluru and Delhi. Their model is simple. He charges registered subscribers a flat fee of Rs 199 per room of their homes per month and provides a repairman in 90 minutes. Nanda says that he has over 27,000 skilled workers on his platform and the app has already been downloaded 400,000 times. Nanda is also in talks with retail chains like Dominos to take care of all the tinkering work in their 1500 outlets across the country. Today, Dominos spends Rs 15 crore a month on jobs like plumbing and repainting of their shops. Nanda’s idea is to cut that spend by a third for them.

With Cheep, which Nanda says cost him Rs 4 crore to develop, he is drawing from his experience with the security and logistics business to ensure that the handyman he sends home doesn’t have a criminal record and arrives on time. To Nanda, the new idea is an extension of the ambulance service he started in Mumbai nearly a decade ago, where households paid an annual fee to have an on-call ambulance service. He will also use his technology experience from running a delivery and logistics company for Amazon that is helping him guarantee Cheep services within 90 minutes.

Between them, SILA is creating a large establishment for specialised services, while Cheep is organising the skilled but unorganised workers into businesses that eventually aim to be standalone. This may yet be the best thing to happen to the Indian workforce when there is a dearth of the kind of investments that swept China and organised its workforce two decades ago.