The rise of 'service' aggregators
Grow Your Business, Not Your Inbox
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.
The opportunity that India’s on-demand services has thrown open to entrepreneurs has also created a parallel ecosystem of micro-service entrepreneurs – enabling traditional blue-collar workers to live and earn at par with white-collar people.
In Mumbai, Prabhakar Rao Shinde earlier this year was able to marry off her daughter within two years of his association with Ola. His monthly gross income dramatically rose from Rs 20,000 (working as a chauffeur for a real estate developer) to around Rs 82,000.
Somesh Jha, a Gurgaon-based plumber working with services marketplace UrbanClap paid off his Rs 20,000 debt in three monthly installments. He takes home around Rs 30,000 every month, twice of what he used to earn working with a plumbing agency.
Much more than enabling growth of these on-demand businesses, technology and smartphone penetration has disrupted India’s blue-collar job market including driving, plumbing, carpenting, electrical repairing, courier delivery, home cleaning and car cleaning, with better life and occupation.
“Three aspects have led to this shift. First, the growth of Indian middle class and convenience these services offer. Second, fundamental and underestimated wave of how smartphones can revolutionize an economy as it made cab drivers efficient in their job.
Third, there are investors betting on this change,” says Sean Blagsvedt, CEO and Founder, Babajob.com, a Bengaluru-based blue-collar job marketplace. The platform has been a prime source for on-demand startups in procuring blue-collar talent with around three million job seekers registered on Babajob. com.
The standardization and an organized structure that is being brought in the otherwise large unorganized market by these startups are also shunning existing stereotypes attached to these jobs. “People think there is no respect in our profession.
They just order us rudely to do things. But since getting work through these online platforms is well structured, it gives us the credibility and respect as we represent them. Also, there is no haggling with customers over prices,” says Arun Kumar, an AC repair serviceman working with a home services platform.
“This problem is quite deep rooted in our culture. More than the financial security, these people deserve and need respect. The fact that they are treated respectfully with platforms like us enhances their livelihood,” says Aseem Khare, Founder and CEO, TaskBob. Mumbai-based Taskbob last month acquired Bengaluru-based Zepper Services in the same vertical for an undisclosed sum.
Typical of an e-commerce model, most of these aggregators to grow emphatically have been using venture capital to fund these servicemen’s earnings along with incentives while surviving on lesser margins.
“We charge nominal commission of 10-20 percent and rest goes to servicemen whereas for example out of around Rs 1,200 that a service costs at a typical salon, the salon therapist only earns around Rs 400 while the rest goes to the salon. With us, even if the therapist fulfills two services a day, they earn Rs 2,400, which means above Rs 60,000 a month, quite compelling for people who are just 10th grade pass. This is to the surprise of our employees,” says Abhiraj Bhal, Co-founder, UrbanClap.
Moreover, since their earning is linked to their performance, these servicemen enjoy the freedom of work and can even avail leaves similar to working in a corporate structure. “They work their own hours and can take leaves for their family occasions or incidents,” says Abhinav Khare, Founder and CEO, Vyomo, beauty and wellness platform backed by cricketer Yuvraj Singh’s seed fund YouWecan Ventures.
The startups handpicks servicemen, experienced and fresher, from recruiting agencies online and offline and provide them with training related to the app, customer service and communication and soft skills before taking them on-board. Many platforms are even looking at provisions for providing insurance to these servicemen and their families.
“Apart from training on driver etiquettes, riding skills, safety and soft skills, we are now working on giving insurance to drivers and their families,” says Prakash Solomon, Founder, mGaadi, Bengaluru-based on-demand auto-rickshaw booking service.
UrbanClap partners with experienced servicemen called “subject matter experts” in different categories who then shortlist around seven candidates for training from around 70 applications for example in plumbing. The training period however varies.
At Vyomo, training period ranges from 15 days for experienced servicemen to six months for freshers, which are given Rs 10-12k in stipend too. This also has a direct implication to the government’s Skill India initiative. With growth, these on-demand platforms are already heading towards a crunch in the availability of servicemen that will only get more acute henceforth.
Apart from the top one or two leaders that will emerge in respective categories as consolidation rise, the lower bunch of these platforms will face the heat. Investment in training would be crucial in enhancing the supply.
“Currently India has around three million stylists, but it will need around 15 million by 2020. The talent crunch is already there,” concludes Abhinav.