HR Tech – Growing Opportunity – “Lower participation of workforce in formal economy and increasing demographic divide”

The Indian job market continues to be upbeat as companies are going ahead with their hiring plans for the July-September quarter despite macroeconomic headwinds from high inflation, rising cost of money and ongoing geopolitical tensions. The Teamlease Employment Outlook Report showed that more than 61% companies intend to hire for white-collar and blue-collar roles in the quarter, compared to 38% a year ago. The hiring intent is up 7% from the previous quarter in India.

Problems & Opportunities:

  1. Growing demand for ecommerce [grocery, food, medicines, apparel] & quick commerce [grocery] leading to High demand for delivery & warehousing executives requiring hiring at scale which traditional unorganised mode of hiring is unable to meetSolutions: Jobs Database, Automated Hiring, Fast Onboarding, Interview Outsourcing, Compliance Management, HRMS
  2. Growth in Manufacturing & Construction Jobs[Construction Sector expected growth 13% in FY22] but largely informal hiring[97.6% Jobs in Construction are Informal – NSS]Solutions: Blue Collar Platforms with dedicated Verticals for Manufacturing & Construction
  3. Blue collar workers exhibit high tendency to switch jobs/ high attritionSolutions: Upskilling, Engagement, Productvity Management, Embedded Finance & Insurance – Employee Benefits, Earned Wage Access, Personal Loans
  4. Enterprises moving jobs from Full time to Outsourced/Part Time/Variable Cost models, changes in preference of select workforce to Part-time/Gigs/WFM modelsSolutions: Gig Jobs Database, Matching Engine, Monitoring & Assurance
  5. High Unemployment rate around 5%-6% [6.1% FY18, 5.8% FY19, 4.8% FY20, 7.8% Apr’22] and blue-collar work moving from traditional ways of working to intelligent workflows and automation requiring workers to develop digital literacy and develop diverse skill setsSolution: Upskilling Services
  6. Staffing Platforms like Quess and Team lease needing transformation –Solution: Opportunity to partner in transformation of Staffing business to full stack Blue Collar platform
  7. High demand for technology jobs requiring hiring at scale but facing supply constraints, high salaries, and attrition.Solutions: Discovery, automated hiring, standardisation and outsourcing of interviews and onboarding, full stack HRMS

 

Product Market Fit: Transformation in HR for Blue Collar

TAM, SAM & SOM:

Two models were used to estimate the market size.

Method # 1: It is assumed the enterprises will pay as per service; solutions will remain modular.

1. B2B Services: [Job Board/Discovery/Database, Job Posting, Automated Hiring, HRMS]

  • TAM: India has ~ 7.5 Cr. enterprises of which 5 lakh enterprises generate an annual turnover of more than ₹ 5 Cr. It is assumed that only these enterprises will have the intent and ability to pay for various B2B services. These 5 lakh enterprises is expected to increase 9 lakh by 2028. Enterprises should atleast pay ₹ 3000 pa for this database, ₹ 500 /Job posting [assumed 1 Job/Recruiter/month] and ₹ 250/Automated Hire [assumed 1 Job/Recruiter/month and 20 positions/Job posted], with annual inflation of 8% pa.
  • SAM: Penetration levels will move from 5%, 5%, 10% currently to 10%, 25%, 20% by 2028, for database access / job posting / automated hiring respectively.
  • SOM: Assumed equal to SAM as all players seem to be targeting all industries

2. B2C Services: [Upskilling/Skill Development & Training]

  • TAM: India has around 45 Cr Blue Collar workers of which 45% are in Agriculture sector. Of the Residual 55%, 30% are self-employed. The residual 70% equal to 17 Cr. Workers have been considered, assuming one worker spends ₹ 200 pa for one course only.
  • SAM: Certain skills can be taught effectively only through workshop instead of online video’s [eg: how to handle a specific machinery in a factory]. Also, not all workers would be willing to pay for these courses.
    Job Seekers registered on Job Boards will increase from 3 Cr at present to 17 Cr by 2028 @ 33% pa.
    Incorporating both factors, we have assumed that only 10% of the 17 Cr would be willing to pay for skilling by 2028 up from 1% at present.
  • SOM: Assumed equal to SAM as seekers will represent all industries

3. Staffing: Combined Gross Revenue of Quess & Team Lease is ₹ 11569 Cr (FY21). Assumed 50% market share of Quess & Team Lease put together. Net Revenue assumed to be 5%. Formalized workforce assumed to be 20%. Accordingly current TAM and SAM of ₹ 5785 Cr and ₹ 1157 Cr respectively are estimated. Assuming a 10% growth rate for next 7 years, TAM and SAM 2028 of ₹ 11,272 and ₹ 2254 are arrived at, respectively.

 

Method # 2:

It is assumed Hiring and HRMS as the only 2 buckets that recruiters/enterprises will pay for. Effectively, Hiring replaces Job Board, Job Posting and Automated Hiring and enterprises take a full stack HRMS and pay an annual fee/employee for the same.

1. Hiring: Assumed ₹ 1000 as cost/hire, 100% attrition, formalized hiring going up from 20% to 30%, and hiring via Online Platforms increasing from 25% to 50% by 2028. Accordingly, TAM, SAM, SOM work out to be ₹ 17,000 Cr, 3400 Cr and 850 Cr at present going up to ₹ 52,881 Cr, ₹15, 864 Cr and ₹7932 Cr by 2028 respectively.

2. HRMS: Assumed ₹ 600/employee with inflation of 5% pa. Numbers of workers consistent at 17 Cr. Going upto 38 Cr by 2028, and organised market users going up from 20% to 30%, we arrive at a TAM, SAM/SOM of ₹ 10,200 Cr and 2040 Cr at present going upto ₹ 31,729 Cr and 9519 Cr respectively by 2028.

 

Top List Companies

  • Billion Jobs
  • Vahan
  • Betterplace
  • Bar Raiser
  • Apna
  • Meraqui
  • Smart Staff
  • Work India
  • WorkEx
  • Awign
  • GigForce
  • Task Mo
  • Interview Desk
  • Superset – Acquired by ByJu’s
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