6. Startups Era : Organizing the unorganized

6

STARTupS ERA Organizing the unorganized

Every challenge is an opportunity. A start-up is also an opportunity to meet the challenge of finding solutions to problems. The problems are aplenty for the unorganised employment sector in India. Organising this sector can reap many benefits for the country. We will discuss the unorganised farm and textile sectors in the coming chapters. Let us focus on this chapter on endless possibilities for start-ups in other unorganised sectors. The start-up culture is picking up in India. We can expect a massive transformation in the start-up ecosystem of the country in the next 5 years. The unorganised sector, that still forms the bulk of India’s trade, has immense possibilities for new start-ups. Today, many new ideas don’t move forward as they hit against the realities of lack of resources and infrastructure. Here lies a big possibility in the idea of organising India’s massive unorganised sector. The cab aggregator apps are one such example. Similar models can be emulated in other unorganised sectors as well. Let us first try to understand what is the unorganised sector and its state in the Indian economy.

What is the unorganised sector?

The National Commission for Enterprises in Unorganised Sector (NCEUS) has defined the unorganised sector based on circumstances and the levels of livelihood. As per this definition, any venture consisting of all unincorporated private enterprises owned by individuals or households engaged in the sale or production of

goods and services operated on a proprietary or partnership basis and with less than ten total workers will be considered to be part of unorganised sector. In other words, these are businesses run by 1-2 people. Your milkman, car cleaner, domestic help..they all fall under this definition. You will find a large part of our population employed in this informal sector. Looking at local markets and small artisans, I often feel how organising this sector could turn it into such a big market. Many agencies and newspapers have published reports on the subject. However, they are also aware that it is difficult to estimate the real size of this market. The unorganised sector is not bound by laws governing the organised sector and its functioning pattern is based on convenience. In other words, it has the following salient features: • You can easily enter the unorganised market. • It is governed at a small level. • The ownership is local. • The governing laws are not clearly defined. • It mostly involves hard labour. • The work is done mostly by old and traditional technologies. • The prices are flexible. • The packaging of products is less sophisticated. • The brand name is absent. • There are no efficient storage and distribution networks. • Access to government schemes and grants is hard. • The hire-and-fire of employees is not governed by laws. • There are hardly any possibilities of development of skills and manufacturing. • There is no provision of leaves or holidays for employees as per the law of the land. • Employees have no safety against illegal treatment at the hands of employers. It is difficult to assess the real size of India’s unorganised

sector. Although, it has a lot of potential in big and small cities. Organising it can turn it into an inexhaustible source of opportunities for all kinds of start-ups.

Providing home Maintenance services

Managing household chores can be troublesome in this era of nuclear families. Simple tasks like plumbing, electric repairs, cooking, or paying our bills can become difficult to manage. Many would happily spend some reasonable amount to take care of these tasks. It is not only buying convenience but precious time as well. Making lives easier should be at the core of any start-up idea. There are many lavishly funded and well-publicised apps in this field. However, I will cite the example of a smaller venture working at a smaller level but effectively bringing service providers to the customers willing to pay. While contributing to the column ‘Innovate India’, I met Vishal Saxena, the proprietor of the start-up called ‘Home Sukh’. He had himself experienced the difficulty of completing homely chores. It takes a lot of energy to find the right kind of service providers. This led to the conception of the ‘Home Sukh’. It was an initiative to provide solutions to all kinds of home Maintainance at an affordable price. Even a region like Ghaziabad or Delhi-NCR is a substantial market. Just imagine the number of families in society and the sheer number of services they require every month. Likewise, think of the number of plumbers, electricians, cooks, sanitation workers and kitchen experts catering to their needs. Vishal acted not only as a bridge between these two segments but also added value to the services. In terms of value addition, Vishal ensured customers got services on time, identities of the service providers were properly shared and there was clarity on charges. His start-up ‘Home Sukh’ did not stop at that. Below are some of his other innovations which can apply to the unorganised sector in general:

• Special training programs for workers from different segments. • Issuing Identity cards to workers and linking their Aadhar

ID cards with the app. • Providing services through a centralised control system like a call centre. • Setting fixed rates for services. • Taking responsibility for non-fulfilment of services. • Ensuring availability of workers on time. • Ensuring the use of high-quality material. • Using dress code or providing uniform to workers. • Improving services based on feedback from customers.

There can be other value additions a start-up can employ while organising services of the unorganised sector. ‘Home Sukh’ is expanding and now entering sectors like construction and interior designing. The venture shows how the unorganised sector can be a fertile ground for any start-up. All it needs is innovation to turn services or manufacturing into minimum viable products. Think about expansion after you have attained success in one area. Many apps are doing the same business as ‘Home Sukh’. This does not mean you should start imitating them. Coming up with an app means little until you develop an understanding of the market. You have to prepare a database. As I have written before, there is no definitive research or surveys on the size of India’s unorganised sector. Entering the market and developing contacts are the only means of understanding it. Vishal’s company is operating only in Delhi-NCR, especially Gurgaon and Faridabad. It has set high standards of quality for services and materials and this makes the company stand out. The company can handle much larger operations through apps. But Vishal gives priority to accountability towards his customers. He believes in taking full responsibility for any ommissions.

This is a significant thought because merely making an app without accounting for quality will not take your startup anywhere. Such small ventures can contribute to a larger ecosystem. Many seminars and programmes under the Start-Up India mission help in connecting small start-ups serving the same sector. These are an opportunity for entrepreneurs to benefit from each other’s experiences. Such attempts will certainly strengthen India’s start-up sector. Big chances for start-ups lie in solutions to small problems. All it needs is a keen eye to identify those problems and think of solutions. These solutions can be scaled-up after understanding the market and with the help of technology. Many apps helping with domestic chores are a befitting example. According to Nandan Nilekani, the founder of Infosys and the architect of Aadhar Card, such platforms have the potential to set the price. These start-ups remove many inefficiencies and thus increase productivity. Therefore, such businesses can immensely benefit the Indian economy. They will also help in organising India’s huge unorganised trade sector.

Following are some of the changes that start-ups are already bringing to the unorganised sector:

• Ensuring dignity of labour. • Rating the performance and ensuring quality through digital platforms. • Making payments easy and transparent. • Standardising the entire process and services. • Enhancing productivity and skills.

Besides, such start-ups are also ensuring that workers don’t have to work for unpaid extra hours and the migrant labour does not face exploitation. By following the mandatory procedures of properly identifying workers and their police verification, these

start-ups are also enthusing trust among customers. It is difficult to quantify, but it can be safely stated that we have so far not even explored a minuscule part of the unorganised sector.

Enhancing the productivity and skills of workers

India has plenty of employment opportunities as well as working hands. What it lacks is skilled labour. Most people enter the unorganised sector as it is their only option of livelihood. They have no luxury to think about the quality of their output. For example, there could be a varying degree of skill differential between your tailors or electricians. But, there is no corresponding variance in remuneration. The unorganised sector does not offer money as per competence. It also has little avenues for skill development. Many labourers end up spending their entire lives doing the same work in the same manner. The modern-era start-ups can help in increasing production capacity and improving skill levels. This is for their benefit. India’s quality of labour will improve if employees of these start-ups get better opportunities for skill development. Better still, if it seems difficult. Because it will mean more opportunities for providing solutions. Modern entrepreneurs know the secret of success for start-ups lies in providing solutions to existing challenges. The start-up culture is driving the country’s youth in this direction. It has generated a healthy competition which is inspiring better ideas. Start-ups are finding new solutions to existing challenges and this is leading the country towards new heights. India’s economy cannot grow without improving labour productivity. The start-ups are expected to increase variables in the unorganised sector like the white-collar job market. This comprises proportional co-relation between skills and earnings. The most important aspect is the rise of new ideas in this field. The biggest lacunae in the unorganised sector can be turned into its biggest strengths. The unorganised sector lacks formal skill training. This

can prove to be a strength as it drives labourers to learn from each other. They are trained by their colleagues. Start-ups can set an example even by improving the standard of living of a small section of unorganised sector labour by imparting them better skills. This is already being done by many start-ups.

Some unorganised sectors where start-ups can revel

Farming and garment sector employ biggest unorganised labour force. This creates immense possibilities for start-ups in these fields. Following unorganised sectors also present similar opportunities to start-ups: • Labelling and packaging industry • Building and construction industry (daily wage labourers, masons etc) • Leather industry (Labourers working in tanneries) • Migrant labourers, domestic labourers, Contract labourers etc. • Workers involved in the fishery. • Fruits and vegetable vendors • Newspaper vendors • Daily wage drivers, auto drivers • Handicraft workers • Silk manufacturing workers • Carpenter, potters. It is not possible to mention all categories of unorganised sector. You will need to observe closely to identify them. These are the services which are essential to our daily lives and we mostly pay in cash for them. This sector is ripe for start-ups. Many apps are already aggregating auto-rickshaws, car drivers, fruits & vegetable vendors and domestic helps. Many new start-ups are emerging to tap the unorganised sector. Many young entrepreneurs tend to adopt already tested formulae. While this approach cannot be wrong, it is not likely to lead to disruptive innovation. Only

those start-ups will set the trend which will explore new areas. I had a chance to visit the Footwear Design & Development Institute (FDDI)in Noida while shooting for one of my TV programs. I witnessed the immense scope of business in the leather business. The institute is collaborating with international organisations. Many students from smaller cities are coming here to learn aspects like retail, designing. It is only one among many such institutes in the country imparting professional training to aspiring entrepreneurs. Start-ups are yet to tap the full potential of this sector. While such institutes are preparing a large number of professionals every year, there is a large number of workers already employed in the leather industry. These people have still not been able to develop skills and are still earning a livelihood through traditional know-how. Connecting this trained youth to the unorganised leather industry can give rise to a new ecosystem. Here comes the role of start-ups. This is just one example of the scope of start-ups in the unorganised sector.

Things to remember:

• Understand the unorganised sector before entering it. • Building an app is not enough. Learn ground realities. • Spend on skill development and productivity. • Aim at improving the unorganised sector. • Make an ecosystem by connecting skilled youth with unskilled unorganised labour. • Go for disruptive innovation. Find unexplored fields. • Start from small areas. Build your minimum viable product first. • Scale up your start-up after successful MVP. • Use already existing database as well as develop your own. • Do extensive research before entering the market. Study prospective competitors. Discuss with other experts.

• Visit institutes working for skill development in the unorganised sector. Here you will learn valuable things about aspiring youth and the concerned sector.