Skill development in the digital age

India’s flourishing digital economy is beginning to revolutionize yet another industry: home-based service providers. The informal sector comprised of service providers such as plumbers, carpenters and janitorial crews has been dominated by low-wages and erratic assignments for workers and unreliable quality for consumers.   A new wave of new players in the on-demand home services space are attempting to address the issue for both audiences.

A recent story in the Economic Times highlights the progress of many such start-ups including Housejoy, Zimmber, Mr. Right, UrbanClap, and Doormint. These home service aggregators are attracting workers with the lure of guaranteed minimum-wages and other perks, including skills training offered through training providers partnering with National Skill Development Council (NSDC) and offering professional certifications.

The major hurdle these home service providers continue to face is in providing a consistent, quality experience to all customers. As the start-ups look to scale their operations, they are struggling to find trained, certified professionals. To overcome this hurdle, companies are increasingly starting to work closely with skill training providers. Housejoy, the Bangalore-based start-up has partnered with a training provider to ensure that the workers in the platforms are skilled and certified as per the National Skill Qualification Framework

Leveraging the power of the digital economy to empower India’s informal sector workers could transform India’s urban poor. We have evidence of this in sectors such as transportation, where companies including Uber and Ola have transformed the lives of urban drivers, enabling them to earn better incomes and secure more consistent work. But the question remains: what role can these start-ups play not just in improving the customer experience, but also engaging more meaningfully with the workers themselves?

We are encouraged by the current momentum of the burgeoning companies focusing on skill development and improving outcomes for India’s urban poor.

Based on the foundation’s experience in skill development, we encourage home services and other informal sector start-ups to address the following as they seek to build profitable, sustainable businesses:

  • Focus on Skills: Skills are at the foundation of the informal economy, and companies that are specializing in frictionless services need to prioritize hiring workers who are skilled and certified. It is also important to recognize the skills and abilities of existing workers and help them expand their own capabilities.
  • Better Workers = Better Business: Ensuring workers are appropriately skilled and capable of earning meaningful wages is critical for the success of these new start-ups. Quality is the single most determinant of customer satisfaction, and as many of these start-ups look to scale, focusing on workers’ competencies and their ability to deliver quality services will be critical for customer satisfaction. Logistics start-up Rivigo, is proving the merit of this approach. The company’s focus on driver well-being has resulted in improved delivery times for customers.
  • Provide avenues for savings: As many informal workers from low-income, urban households begin working in formalized environments, it would be critical for companies to offer access to savings, insurance and other financial products from which they have been traditionally excluded. India’s urban poor often face uncertainties and unexpected crisis due to the lack of financial safety-nets that much of the formal workforce takes for granted. Bridging this gap would allow workers to focus on their jobs and worry less about financial strains—a benefit for both workers and employers.

At this point in India’s history, there are more significant opportunities to improve the lives of poor households—especially in urban areas—than ever before. We are encouraged by the current momentum of the burgeoning companies focusing on skill development and improving outcomes for India’s urban poor. Engaging with informal workers to ensure they receive training, certification and meaningful employment can be a true differentiator for these emerging start-ups and companies. We are eager to see how this sector continues to evolve.