What is the nature of business conducted under HTI?
Customer-facing personnel viz. waiters, front office staff and housekeepers handle customers, bring in sales and make or break a brand thereby making the biggest impact on hospitality and food service businesses. The question to ask however is that, are the staff members motivated and trained enough to convert walk-in customers to loyal patrons? HTI, through specially designed training programmes -- in both soft skills and job skills, has been working in this area and helping personnel working in restaurants, hotels, hospitals and retail businesses to achieve the desired goals.
You’ve recently introduced the Colaborate platform. What’s it all about? What made you enter this space?
Colaborate is the solution to the current economic crises. The Colaborate App connects companies and professionals on a freelance basis (internationally called the Gig Economy). Organisations face lower risk in restarting operations, while retired professionals, stay-at-home moms, teen students and out-of-work professionals can conveniently earn sustenance.
What's the size of the industry being addressed with this initiative?
In India, it is still very nascent hence the right time to foray. While the concept is picking steam, the impact of COVID-19 pandemic across businesses and job market(s) is set to bring the gig economy to the fore in the country.
Internationally though, the gig economy is trending. An estimated 36% of US workers are giggers and 33% of companies extensively use gig workers. As per MasterCard, US giggers contributed $1.28 trillion to the economy in 2018; about 5% of the US gross domestic product (GDP) and a whopping 44% of the global gig economy. Gigs are more popular with age groups 18-24 and 55-64 (76%) as compared to 68% for 45-54 year-olds. In fact, American financial services firm Payoneer has said that Philippines is the only country to have more female gig workers (62%) followed by the US with 47%.
Interestingly, as per a study, the US gig economy is growing three times faster than the traditional model. Consequently, PeoplePerHour (a leading gig economy company) has reported a significant jump in year-on-year new gig workers in Japan (513%), Spain (329%) and the UK (300%) since the COVID-19 outbreak. In India, apparently 97% of people are open to gig work.
What's the current and future growth rate for platforms (digital and non-digital) operating in this sector?
This space is still very unorganised hence statistics are not available. However, global trends indicate a huge shift in favour of the gig economy and gig culture. As per CNBC, the US has about 170 gig economy companies and bigger entities like Upwork, Airbnb, Uber, Amazon and Etsy are driving the numbers up. The gig economy is expected to grow by an impressive 17.4% compounded annual growth rate (CAGR) by 2023. And as per most predictions, gig workers will outnumber traditional workers in the next decade or so.
In India, who are the key players – digital and non-digital – catering to this market at present?
The gig economy participants in India mainly comprised your housemaids or house cooks; the plumbers, masons, carpenters who sit at nakas (junctions or labour chawrahas), the banquet casual workers etc. Over the past few years, we've started seeing some organised activity from the likes of Uber, Ola, Swiggy, Zomato, Urban Clap and so on. However, their business model is business-to-customer (B2C) centric.
And your platform caters to the business to business (B2B) space?
There are two segments actually. The first one involves astute owners and top management of companies that see value in shifting fixed costs (salaries) to a variable cost. This way, sales (rise or drop) are directly and proportionately linked to manpower costs. Smart businesses have already shifted to an asset light model (leasing property) and now will run on a HR (human resource) light model.
The second segment comprises individual entrepreneurs or professional freelance workers called liberated associates (LAs) who would love to work, but want it their way. Choose the time, place, hours of work and yes; the fees that suit them. They may also be explorers at heart who are bored by repetition. These could be retired professionals, stay-at-home moms or teen students looking for temp work to earn pocket-money or sustenance. Out-of-work professionals could also use Colaborate as a stop-gap arrangement till the economy picks up and full-time jobs are available.
Tell us about some of the pain points Colaborate is attempting to address?
Traditionally, there’s inherent distrust between employers and employees. Employers find staff disloyal, complacent and unappreciative of wages/ benefits. Staff feel neglected, underpaid and overworked. The uncertainty and volatility caused by Covid-19 has made matters worse. Owners can’t commit permanent employment or even annual wages. Job security is non-existent for staff.
Due to the pandemic, growth for the first time in decades has turned negative and an estimated 1.3 crore have lost jobs. At least twice that number are on salaries today ranging from 10% to 50% of what they were earning pre-pandemic. Many small and medium entrepreneurs under the burden of steep rentals, high interest, equated monthly installments (EMIs) and fixed salaries have shut down forever. And many large companies and conglomerates are desperately looking to restructure loans, raise debt to pay salaries and are still loss making. Indigo Airlines, for instance, has posted a quarterly loss of Rs 1,1195 crore.
Colaborate allows both to reengage in real time using tech as the driver. Companies need not commit annual or monthly salaries, can hire exactly as per production/ sales demand, and are relieved of statutory compliance viz. employees' provident fund (PF), employee state insurance (ESIC), professional tax (PT), gratuity etc. On the other hand, post nine months of lockdown and work-from-home, people have realised that their fast-paced and economically rewarding lifestyle costed them dearly. They had compromised on freedom, family time, health and work-life balance. Colaborate is the way to reclaim their lives and freedom.
The app facilitates flexibility of choosing the time, location, organisation, type of work, hours per day etc. It allows one to explore or experiment with organisations and even type of work. You are not committed to the gig (task) for a year or month – just short stints. If the liberated associate likes the work and they (companies/ business owners) like the LA’s work, they can continue. If not, dissociate.
Briefly tell us about the key offerings?
Colaborate creates a direct link between companies and professional freelance workers. They engage on low time commitment (as low as four-hour shifts) and since it's a B2B engagement, there are no compliance hassles either. Negotiations in the form of bids and offers (BO) are made based on skill set, needs, availability – demand and supply. Companies and LAs rate each other and directly affect employment demand and fees. Companies’ fixed costs are now variable, lowering break-even point and wage bill while LAs are not dependent on one organisation. Hard-work and cooperation are rewarded by increased demand and fees.
What all went into putting Colaborate together to ensure the offerings meet the requirements of the end user(s)?
Most of the aspects are part of any app launch in terms of look, feel, being user-friendly, interactive and multi-lingual. But we are also building in hooks via surprises. For example, the BO feature is a negotiation that is done in real time, auction style. So, when an LA makes a bid, he isn’t sure if it will come through or not. And when a company places an offer, they want the gig to be picked up at the best deal possible to control their costs.
This will require a sharp business acumen, knowing when to cut your bid or raise your offer. The barter system will bring in elements of fun and excitement. Imagine you could pick up a gig as a receptionist in an exotic location and get paid too. Now, imagine your partner or spouse could also be with you as s/he may be doing a gig in their kitchen or as part of their housekeeping crew. Exciting to say the least, right?
How challenging (regulatory/ non-regulatory) was putting together this platform?
Initially, India’s stringent labour laws and conservative approach to reforms was the biggest hurdle. However, on September 29, 2020, the Ministry Of Law And Justice passed The Code On Social Security, 2020 that identifies gig and platform workers as persons who work and earn outside of traditional employer-employee relationship. This means not only is the ‘gig system’ legal, it is free from traditional statutory compliance. However, the code clarifies that the Government may frame schemes for gig workers and their families to provide such benefits.
How much have you invested in the business so far and how did you go about funding it?
The entire seed capital (less than a crore) has been internally raised and includes a bit of debt. We opted out of seed or angel funding as we felt this would compromise on speed, due to the inherent distractions they’d bring. Also, investors bring in second guessing and opinions that weigh heavily towards finance / return on investment (ROI) and marketing. Whereas at an early stage product development and proof of concept are more important.
Who are your main competitors? How is your business different from them?
Essentially, we are in Blue Oceans as our product has no competition. All existing portals target full-time employment and interns (three months and above). Colaborate is the only one targeting gig workers and popularising the gig culture. We will also be the first to spearhead the ‘Gig Economy’ that’s trending globally and set to take India by storm. So, we have absolutely no direct competition in India.
Internationally, there are products that are similar but due to our Bids & Offers (with barter) component, it makes us unique. We will also be adding more unique features gradually. Also, bear in mind that the app was planned and being developed well before the new Social Security Code was released. No one could have imagined that these radical labour reforms would be announced. So we have the first mover advantage and intend to increase the lead.
Some state governments as well as individuals like actor Sonu Sood have already launched apps that connect businesses with people looking for work. How does your platform compare with such existing offerings in the market?
Yes, there are apps, too many actually, that connect companies to those looking for full-time employment and internship. We are not in that space. Our focus is on getting the gig economy and gig culture to take off in India. The Colaborate App clearly will tap into grossly underutilised resources: retired professionals, stay-at-home moms, teen students and out-of-work professionals. It will also catalyse restarting the economy as large and small businesses will be able to mitigate the risk by lowering their fixed manpower costs.
When are you planning to launch the Colaborate platform? In which markets?
As soon as we get the approval for the SMS template from the government. The metros are the primary target and part of our go-to-market strategy. However, in the long term we want to penetrate villages and Tier III cities with less than 10 lakh population. We want to connect companies to them as we feel they have a lot of underutilised talent and hold tremendous potential.
Any plans launch it in international markets as well?
We are already in talks with potential partners in the US, UK and Canada. However, these markets already have a developed gig economy, so despite our unique app, it would be tougher to penetrate. The more exciting markets for us are Nepal, Sri Lanka, Bangladesh, Malaysia, Indonesia and Philippines. We are still in the process of identifying potential partners.
What's your go-to-market strategy for this platform?
The app will not be available on the play store or the cloud and is only available via an invitation link. Non-profit Institutes, Associations and Federations will be authorised to invite their member organisations. The members that sign-up will invite LAs (ex-employees, students known to them, family members of employees etc.) to the platform. We will also authorise colleges and NGOs to invite their students and beneficiaries as LAs. Besides this, the parent organisation will also invite organisations and appropriate LAs on their own.
Tell us about the various revenue streams from this app?
Colaborate is a subscription model and here we have two main revenue streams – annually Rs 250/- from LAs and Rs 4,750/- from companies. This is the introductory pricing for companies, later we will increase their subscription amount to a more practical number. We have smaller revenue streams in the pipeline viz. pay-per-use for companies (Rs 10), advertisement, SMS / email blasts and promotional video uploads for LAs (Rs 50).
Take us through your growth strategy and expansion plan over the coming months in this fiscal and next.
Over the next four months, we expect the sign-up to be small but steady and are targeting a little over 1,000 companies and 50,000 LAs. Next fiscal, we should onboard close to 10 times that number – this is factoring the app gaining popularity, moving to other industries like retail, travel, manufacturing etc. and most importantly the economy kicking in.
How many businesses and gig workers/ professionals are currently enrolled on your platform?
The actual launch (app ready for download and use) is still to happen. However, we did a soft launch on October 16, 2020, and we've been conducting presentations on the App since. So far, we have received strong verbal commitments from over 1,000 hotels and restaurants -- reputable chains both domestic and international. We have not pitched Colaborate to LAs directly but over 20 colleges and NGO are eagerly awaiting the app and through them, our guess is about 5,000 LAs should sign up in the first month itself.
What steps have you incorporated to ensure users of this platform are verified businesses and individuals/ professionals?
Colaborate will have to be downloaded via an invitation link and companies will be directly invited by HTI or authorised Associations and Federations. Liberated associates (LAs) too will be invited by HTI or by companies that have signed up on the app. LAs will have to upload their Aadhar, PAN Card and Certificates to be scrutinised by companies. LAs could boost their demand by uploading a Police Clearance Certificate too. Later, the ‘rating system’ would provide a fair idea as to how professional the company and LAs are.
What measures have you taken to ensure data privacy and prevent data misuse?
All data has been protected using advance technology and security features. However, we suggest that companies or LAs do not share confidential information that would be a health or safety risk, or photos/ videos that could be misused. We are also not asking for details linked to credit or debit card.
How do you ensure businesses are offering fair compensation to gig workers/ professionals on the platform? What SOPs have you put in place to address this issue?
Going by the brand name Colaborate, it’s imperative that the platform creates a win-win for all. We will be working with Associations/ Federations to address this concern and also take regular inputs from LAs to ensure that certain lower ‘circuits’ are not breached. About six months into the launch will allow us to understand the prevailing Bids & Offers (history) and provide benchmark ‘rates’ – High, Average and Low. These rates will naturally fluctuate with the season/ demand and supply. Overall, Colaborate would not like to ‘mess’ with free-market demand and supply, but we would stay alert to groups or cartel formation and take appropriate action to ensure fairness.
What measures have you put in place to ensure transparency in dealings between businesses and gig workers/ professionals?
We are also encouraging LAs and companies to deal only through the app so that both will be secured as there’s proof of the gig requirements and remuneration. This also provides us the deal (Bids & Offers) details. Six months into the app launch, we will get a certain history of prevailing Bids & Offers and this will be made visible to all. Based on an algorithm, we would provide the 'High', 'Average' and 'Low' rate for a designation during the season.
How are you planning to address the Red Flags (issues) that'll be raised by businesses and gig workers/ professionals on your platform while availing of each other's services?
Colaborate is the liaison, the connector or the ‘market place’. Overall, we will not be getting involved with disputes as we are not providing services on a commission basis. However, we are also providing the framework for free and fair dealing and based on loopholes spotted, we will keep upgrading the app.
Some systems provided are the Rating – now if an organisation is constantly treating LAs badly or delaying/ denying payment, the other LAs will avoid them. Colaborate will also take action against such organisations by removing them from the app. Similarly if an LA gets a bad rating for punctuality, professionalism or being a bad team player, s/he will not be in demand. And if an LA is ‘blacklisted’ by three organisations that s/he does gigs for, they will be off the app.
There is a perception that businesses exploit workers/ professionals in the name of gig assignments – more work, less compensation. What's your take on this?
Perspective is important. If you compare the gig culture to permanent employment, it appears exploitative. In traditional employee-employer relationship, if an employee wants to leave a company, s/he resigns. Can an employer who does not need an employee just sack them?
If an organisation does well, employees feel ‘entitled’ to a higher bonus or incentives. Yet if an organisation is crashing, they can’t reduce salaries or benefits. Staff often refuse to multitask e.g. a driver won’t help with loading; a cook refuses to serve. Now, in the gig culture, the company will offer less if they are doing badly. They will expect multitasking. They won’t hire if there’s no work.
In fact, companies are also treated this way by consumers. If they don’t give them what, where, when or how they want - that too at a price they want - they take their business elsewhere. An organisation has to stay ‘relevant’ by meeting customer expectations; is that exploitation by consumers? And if an organisation is going bankrupt, then who suffers?
Consumers go to the competitors. Owners suffer for some time before they set up another business. The biggest to suffer are the staff – look at the graveyard – Kingfisher, Centaur Hotel, news media (online, print and television) companies and the Mills of Mumbai.
There are currently no government rules/ guidelines that protect the interest of gig workers/ professionals. In such a scenario, how do they protect their professional interests?
Colaborate will be building in various schemes like we have tied up with an insurance company that will give us accident cover of Rs 1 lakh for just Rs 200. The Training Tsunami is offering online skill upgradation programmes. We intend to tie up with the State Bank of India (SBI) for PPF (voluntary contribution), a finance company for housing and vehicle loans, and an insurance company for health/ medical cover. Naturally, since we are the pioneers in the organised ‘gig economy’ space (in Asia), we need out-of-box thinking and solutions. Given the era we live in, I don’t think it will take too long for dynamic and progressive organisations to Colaborate with us.
What's your strategy to keep exploitation of gig workers/ professionals at bay? What processes have you put in place to fool proof this aspect?
As far as exploitation goes, I have answered it above. With respect to ‘fool proof’, we would be the biggest fools to think we have a fool proof system in place. The idea is to be alert and responsive – spot the problem, and respond with a fast and practical solution.
Cartelisation (by business owners) is another concern associated with such platforms. How do you intend to deal with this issue?
In an app like ours, cartelisation is difficult given the fact that there are multiple buyers and sellers. However, as mentioned earlier, if we sense this, we will respond with a solution as cartelisation is not collaborative and that can’t be tolerated.
While businesses are likely to benefit from on-demand hiring and reduce their employee costs, how will the gig worker/ professional benefit from it financially?
I don’t think business will save too much in terms of costs as they will end up providing higher remuneration to make gig work lucrative. But the main benefit is a shift from the ‘fixed cost’ of manning to a variable component. So, higher sales will call for higher manning and vice versa. This increases the probability of the business being sustainable, viable and flexible. The business can respond faster to shifts in market demand and supply, and the vagaries of nature.
On the other hand, the gig worker may not earn more – that’s not the idea. The idea is to offer them flexibility to choose the time, place, duration, organisation and compensation that they wish to work for. They can change fields easily. They are not tied down by contracts or long-term commitments. Gig satisfaction is the aim and it is to be provided through freedom – liberation.
How will your platform help gig workers grow professionally considering it's not full-time employment, there is no concrete visibility on increasing one's earnings, there will be no climbing the ladder (professionally) – particularly for lower end jobs?
Clambering for promotion is a primary reason for dissatisfaction at the workplace – ruins team work too. Often organisations even promote only to ‘hold on to staff’ and the staff end up doing the same job as before. I’ve seen letters from organisations that effectively said: “You are promoted, but will continue to do the same job as before and will not demand a different seat/ cabin or more staff under you…”
In a gig economy, a person won’t be hired for a senior position than the one he/ she is qualified for. How do they grow? Simple, they undergo training programmes and/ or take up the senior position, initially at the old ‘rate’ or even a lower fee. They learn the ropes like an intern and then when they are actually qualified, they ‘bid’ for a higher fee. It is like a new and improved product or service – the market must recognise that the product is indeed a better product before they will pay more for it. So initially the company offers it at a lower rate.
What's your timeline like for making this venture profitable? What are the revenue projections like?
We aim to be PAT positive in roughly 18 months i.e. March 2022. However, we have plans to expand internationally – Asia and Europe, so depending on the timeline and budgets, that are yet to be finalised, we could be delayed by another 12 to 18 months. Revenue projected in the first 12 months is Rs 14 crore and we aim to double it in the next 12 months.
What are your business/ services expansion plans and timeline for achieving them?
We want to dominate and consolidate our position in the Indian hospitality space in the next five years. In the first two years, we also aim to make our presence felt in travel, retail and entertainment with a similar product. Six months later we will be releasing a product with specific iterations to suit the manufacturing industry and have begun working with a Subject Matter Expert (SME) on this. Once proof of concept has been established, we aim to enter other markets.
(The writer is a Mumbai-based independent business journalist and has extensively covered diversified consumer businesses over the last two decades. He can be reached at hello@ashishktiwari.com)
