How online startups are reshaping the informal jobs sector in India

For Bharathi, a Class X pass woman with two kids, life has been tough. The Bengaluru based cook would often start work at 7.30 am and not wrap up before 8 pm, with a two-hour afternoon break. Living near the factory of Bharat Earth MoversBSE 1.87 % Ltd, she would work at seven houses in the neighbourhood, earning about Rs 15,000 a month. It was precious money for a family where her husband’s watchman job brought in Rs12,000 and rent outgo alone was Rs7,500. “Working at so many houses exhausted houses exhausted me. The long hours meant I had no time for my children either,” says the 35-year-old.

In 2014, helped by her brother, she created a profile on Babajob, India’s largest job portal for blue- and grey-collared workers (carpenters, maids, drivers, etc). “I didn’t know what it was, but I still wanted to give it a try,” says Bharathi.

Within a week, she found new part-time jobs that paid better and entailed shorter work hours, albeit not in the neighbourhood but a 20-minute ride from home. Now riding a two-wheeler, she works at just two homes instead of seven and for five-six hours, instead of nine, taking home about Rs15,000. “Now I am able to look after my children.” With some free time at hand, she is looking for some data entry work that she could do from home. “I had done a short course earlier. It can help bring some extra money that we badly need.”

There are reasons why Bharathi’s Babajob story must get attention. Since the economy opened up in 1991, along with the corporate landscape, workplaces and jobs too have dramatically evolved. In a country with a workforce of 487 million, these changes at best impacted a minority, mostly white-collar, educated workers at the top of the social strata, bypassing millions at the bottom of the pyramid — casual workers or free agents like maids, cooks, drivers, carpenters, electricians, plumbers. With supply aplenty and no policy framework, this part of the job market remained largely primitive, unorganised and sub-optimally productive with virtually no mechanism to connect supply with demand or set expectations around wages and service standards.

That is beginning to change, thanks to a slew of technology platforms like Babajob, UrbanClap and Taskbob. “These platforms have the power to scale. They can aggregate a lot of people, match supply with demand and shape pricing,” says Nandan Nilekani, cofounder of InfosysBSE -0.28 % and architect of the Aadhaar card. Unlike China, India may not be able to create millions of manufacturing jobs. The services sector will be a critical in farm-to-non farm transition for India’s over million farm workers. “These platforms can remove inefficiencies, boost productivity and create significant value (for the Indian economy),” Nilekani adds. Points out economist Sunil Kumar Sinha of India Ratings Research: “In a transparent way, these platforms will help semi-formalise India’s informal workforce.”

The Next Billion

One of the trickiest challenges in understanding India’s job market, especially at this end, is poor or no data, says Rajiv Kumar, senior fellow, Centre for Policy Research. For the first time, somebody in India is taking a stab at it. Babajob began its journey about a decade back. Cofounded by Sean Blagsvedt and Vir Kashyap, funded by marquee investors like Khosla Impact, USAID, SEEK and Gray Ghost Ventures, it today has 6.9 million job seekers registered on its platform and over 4.5 lakh employers. We want to change the way people hire and get hired from lower-income households (maids, cooks, drivers, plumbers),” says Kashyap of Babajob.

In partnership with the World Bank, Babajob has launched the index (mostly targeting over 900 million Indians with no access to internet) that captures average salaries in five key occupations: drivers, delivery boys, telecallers, maids and receptionists. The freely accessible data was rolled out in Bengaluru in August, and will soon be launched pan India. The city map will show an overlay of pin codes and average prevalent salary, and will allow users to post jobs in their chosen location. “We want to build an ecosystem that improves the livelihood of the next billion by matching their skills with the best employers in India,” says Blagsvedt.

Babajob data from across India (made available exclusively to ET Magazine) throw up several insights, some predictable, others not as much. Mumbai is the best paymaster across categories. In Delhi, the average monthly salary of a maid (Rs7,213) is lower than in Chennai (Rs7,630) or even Pune (Rs7,609), perhaps due to huge influx of migrant workers from Uttar Pradesh and Bihar. Between 2012 and 2015, in some worker categories, salaries have consistently risen in the top five cities — cooks (Rs8556 to Rs11,069), drivers (Rs8,726 to Rs12,599), office help (Rs6,258 to Rs8,212) and delivery boys (Rs7,352 to Rs10,795). Salaries of maids grew the slowest, from Rs7,491 to Rs8,123. And there have been areas where salaries have gone up and down. For example, salaries of retail sales staff grew from Rs10,470 in 2012 to Rs14,912 in 2014 before dipping to Rs13,876. Retail clerk salaries have remained flat, perhaps a good proxy for the online surge and offline challenges that Indian retailers are facing. In most job categories, salaries offered to men are higher than to women for the same job. The exceptions are sales (there is no gap), receptionists (women demand better salaries) and house help (the gap is thin).

New Job Exchanges

Beyond these data, a slew of new technology platforms are also helping reshape a highly unorganised, casual workforce at the bottom of the pyramid in small but significant ways. A range of business models are emerging. Babajob is the oldest, set up in 2007. Its services, available across India, are free for job seekers; for employers it has free and paid versions.

Bengaluru-based Avinasha Sastra, 29, is a freelancer techie who was looking for a parttime house help. He tried three maids sent by the security guards at his gate. “None of them worked out,” he says. Tired, he registered on Babajob for a Rs2,000 fee. “I didn’t want the headache of vetting and shortlisting the candidates.” They assigned him a manager who did all that. Sastra just did the final interviews. “It has been three months and it has worked out great,” he says.

UrbanClap began in 2014 and has 50,000 registered service providers like plumbers, carpenters, beauticians, along with more skilled service providers like yoga trainers and photographers. Cofounder Raghav Chandra sees this as a $50 billion opportunity. “We manage the end-to-end experience, hoping to offer standardised service,” says Chandra. It tries to standardise everything, from service and job rates to equipment and products used by the service providers.

Besides police verification and screening, it offers free training — both hard and soft skills like how to talk to customers — on an ongoing basis. Beautician Gayatri Lakhpatani, 28, worked at salons for eight years before joining UrbanClap seven months ago. “They provide us with a kit that costs up to Rs50,000 which we paid in three equal instalments,” she says. Her income has almost doubled even as her work hours have become more flexible.

Aseem Khare’s Taskbob, founded in December 2014, operates only in Mumbai right now and has 350 service providers. For the top 15% (as ranked by customers), it has an exclusive arrangement, treats them like semi-employees, offering them a minimum monthly guarantee if they are available for a specified number of hours. A combination of incentives and penalty helps Taskbob control service quality. For example, there are penalties for not being on time or not taking calls. The penalty for not turning up after accepting a job is harsher. Conversely, jobs that get five-star ratings from customers attract monetary incentives. “Rates for all job are fixed. Our service providers do not need to negotiate that,” says Khare.

Housejoy, launched last year, is present in six cities and claims to have 10,000 service providers. Before coming on board, they do a police verification in partnership with a third-party company, Better Places. Most of its hires come through a referral programme, a tool rarely used in this category. For each referral, members get Rs1,000-5,000 (depending on job categories), paid after three-four months. “Referrals are the easiest way to break into such an unorganised market,” says cofounder Saran Chatterjee.

Housejoy has a hybrid model where 10-20% of the service providers are employed with them. “If they take up more than two assignments a day, their earnings could well go up to Rs50,000 per month,” he says. Regular training via app-based video modules helps workers hone their skills.

There are other unexpected benefits.

With digital transactions and a trackable service history, these platforms help create digital footprints and profiles for a hypercasual workforce that will be invaluable for other sectors. “As consumers, it will open new doors for them. Think of financial products like loans,” says Nilekani.

Market Dynamics

At the bottom, finding well-paying jobs is often a challenge. That is getting sorted. Carpenter Pankaj Sharma lives in Dwarka in Delhi. A year ago, he joined UrbanClap to find new clients. He now travels to Gurgaon for work instead of seeking work in the neighbourhood. “I get less work in my area. Rates too are better in Gurgaon.” His earnings have gone up from up to Rs15,000 to up to Rs20,000 a month now. Also, earlier, his money would often be stuck with clients not paying on time. “That does not happen anymore.”

compromises or exploited at multiple levels. The online platforms are now replacing those personal networks. Anita, 25, a fresh hand from Raebareli, was looking for a cook-cum-maid job in Delhi. She was clear she did not want a live-in job or one that entailed late nights. Through Babajob, she landed one for Rs8,000 within days of registering. The 7-to-5 job also gives her Sundays off. “Online platforms are helping tackle the information asymmetry in this end-of-the-job market,” says Manish Sabharwal, cofounder, TeamLease Services, a staffing firm.

With better matching of demand-supply, jobseekers can be a bit choosy. Arjun Dattaray Sanap, 34, a Pune-based driver, considers himself lucky. Driving for 14 years, he got a job through Babajob four months back. Now a driver for a private sector executive, he has to travel about 8 km on bike but he has no complaints. His salary has gone up from Rs10,000 to Rs12,000. But more importantly, “this is a cushy job. My earlier job involved long work hours,” he says.

With their training programme and differentiation of service, these platforms are offering a career progression, rare in this category. Amit Jadhav, 24, was earlier an auto rickshaw driver. Two years back, he joined Taskbob, which put him through a training programme. “I learnt how to clean a house, from sofas to carpets,” he says. He started as a helper at Rs12,000. He is now a leader, cleaning two houses a day (within a 5 km radius of his residence) earning up to Rs30,000 a month.He is joined by a helper (often a fresher). “I go to these houses wearing the company dress. It feels good. They treat me with respect, especially when I do a good job, and offer tea and snacks,” he says.

Working for these technology platforms, these workers, though not employees, become stewards of their brands. “Out of selfinterest, these platforms will invest in training and skilling a workforce that has had little access to any,” says Nilekani. In the process, it will help highly casual, untrained, unorganised workers with sub-optimal productivity become better at their jobs.

Boosting Productivity

That should be good news for the economy too. Over 90% of India’s workforce (400 million) are in the informal sector, often selfemployed selfemployed: the ratio is among the highest in the world. “I disagree that India has had a jobless growth. What we have is a wage problem; there aren’t enough good, well-paying jobs. It is not self-employment, it is self-exploitation,” says Sabharwal.

Workforce productivity in India is poor. Half of India’s workforce (farm workers) contribute just 15% to GDP. Compare this with the US and China. According to data from Conference Board, in fiscal year 1989-90, India’s labour productivity per person employed (in PPP terms) stood at $4,941, slightly better than China’s $3,323 though sharply lower than the US’s $79,437. But over the last decade and a half, India has lagged behind. In fiscal year 2014-15, labour productivity for India moved up to $13,637 but China’s stood at $23,809 and the US’s at $117,970.

“If the Indian economy has to grow well, then boosting labour productivity is critical,” says Sinha of India Ratings Research. The long-term average annual increase in workforce for India stands at 1.7%. “To attain a GDP growth rate of 9%, India will need to boost its labour productivity growth by 7.3%,” he says. That is far higher than what is currently happening. Labour productivity growth in India stood at 3.05% in the 1990s, 5.52% in the 2000s. The best it achieved was in 2005-08 when it peaked at 9%. In 2011-15, it hovered around 3.84%. In a small way, these new platforms will help boost productivity. “Unlike China where the manufacturing sector helped in farm-to-non farm migration, in India the services sector (that these platforms are focusing on) will play a critical role,” says Nilekani.

As these platforms grow, expect some of the variables common in the white-collar job market — like wage inflation, attrition, service standards, gradation of workers based on skills and experience — to play out at the bottom-of-the-job market. But for good and discerning employers, a better service experience will make up for it. “From Rs1,500 earlier, I pay my maid Rs2,100 now. But I am happy to pay that. A job well done means my mind space isn’t occupied with it. It is worth it,” says Bengaluru techie Sastra.

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