AayWorks is a unified platform for sourcing, contracting, managing and increasing the productivity of blue & grey collar workers.
Our insight is straightforward: Small businesses (MSME) flex their labour force using either offline recruitment agencies or labour contractors. MSMEs win repeat contracts based on the quality and productivity of the workers they deploy.
The recruitment agency & contractors' business is low tech, expensive and fragmented. It does not help workers beyond placing them in a role — i.e. it does not offer any digital profile, no flexibility and ways for workers to increase their productivity.
AayWorks is a technology-led recruitment and worker-management platform specifically for this large and complex market.
Brief history of Blue collar marketplaces in India:
What makes a successful (vertically-focused) talent marketplace?
Benchmark Capital in the US has successfully invested in product & talent marketplaces (such as eBay, OpenTable, Yelp, Zillow, Upwork, Grubhub and Uber). Bill Gurley, a founder of Benchmark, defined 10 characteristics of successful marketplaces.
Of the 10, we believe AayWorks will excel in at least 8 of these and is clearly strong in 2 more — a perfect 10 out of 10.
Bill’s top 10:
1. New Experience vs. the Status Quo
A marketplace cannot simply aggregate supply & demand, it must provide additional value to both sides. AayWorks does this in many ways — One of our innovations is to provide 5 best-suited workers to MSMEs when they search, access pre-verified profiles and directly onboard them with the facility to contract & track their attendance.
An example from Benchmark: “By aggregating thousands of licensed limousine drivers, and overlaying that with a new-age supply chain management solution, Uber gives its users an experience that is drastically improved compared to the previous alternative.”
2. Economic Advantages vs. the Status Quo
AayWorks' data-rich approach to matching workers to jobs allows it to place workers on average in 24 hours, vs the market average of 7 days. At the same time, the Pay-As-You-Go model gives freedom to businesses to hire as needed, unlike the costly and cumbersome agency model.
An example from Benchmark on Airbnb: “For the property owner, the income is “found money” that simply didn’t exist prior to the marketplace. And in many cases the consumer receives a better price as well.”
3. Opportunity for Technology to Add Value
Over time, AayWorks will gather data on successful and unsuccessful matches, build richer profiles of workers and the MSMEs, leading to better matching. AayWorks can also help create “mandli” (a term for team of workers) selecting the best mix of individuals for a job from the huge database of workers who would not know each other and thus not be able to form a mandli of the same quality. This is a big deal for MSMEs, who often struggle to find the right set of workers in order to win a job.
An example from Benchmark: “At Uber, the system has “perfect” information in an industry where just two years ago there was a complete lack of visibility (on both sides of the network) that led to enormous waste of resources. Uber’s system enables higher car utilization, more fares per hour for the driver, and faster and faster pickup times for the consumer”
4. High Fragmentation
High buyer and supplier fragmentation is a huge positive for an online marketplace. The worker side of AayWorks is highly fragmented, as it is made up of individual workers and the occasional mandlis. On the buyer side, the market is also fairly fragmented.
An example from Benchmark: “The large airlines have all but obliterated the economics of online ticketing marketplaces, leading all the online players to focus on hotels, where the fragmentation and therefore the economics are higher.”
5. Friction of Supplier Sign-Up
Sign-up friction in any digital business is to be avoided, given how used to easy user experiences we have become. AayWorks allows workers to sign up and join in with a breeze in only 6 clicks. This entire process includes a verified ID document and is designed to minimize friction.
An example from Benchmark: “At companies such as Yelp, Uber, and Grubhub, new city launches are relatively quick after a process model had been established for how to launch those cities. The opposite was true for OpenTable, where the installation of a personal computer and internet connectivity were part of the early roll-out requirements.”
6. Size of the Market Opportunity
I often remind myself, an entrepreneur may have found a gap in a market, but is there a (big enough) market in that gap to make the business viable? In AayWorks' case, yes. A $5.5B sized gap. That is the current scale of MSME spend on recruitment & verification fees through traditional recruitment agencies/contractors. All this is addressable by AayWorks.
An example from Benchmark: “An interesting example is healthcare, which is unquestionably a very large market. However, the oligopoly of large players in this market controls a massive percentage of the market and is unlikely to support a new alternative. You can also miss-analyze TAM in the other direction. In the case of OpenTable, many investors missed the opportunity by mistakenly assuming the TAM was too low. In this case, they underestimated the percentage of the market that OpenTable could penetrate. OpenTable recently passed 10 million diners a month, with less than 20% of transactions in North America currently online. You must combine a TAM analysis with the likelihood of marketplace success and penetration.”
7. Expand the Market
Can we expand the market? Almost certainly, given the high quality of service we can provide, MSMEs and eventually large companies will become more confident to use flexible staff and thus increase the % of the workforce that is flexible.
An example from Benchmark: “Uber’s ease of use and simplicity have led many of its users to greatly increase the number of times they use an alternative car service. Some customers now use it as a second car alternative. As such, the company is meaningfully expanding the market for black car services, which is in turn a huge boon to the suppliers that share in the economic expansion.”
AayWorks operates in a market that is constantly in flux, as India is currently being built. You would think that a long-term government or private project, would be easy to define plans, but that is not the case. The jobs spread down from the statutory undertaker via layers of suppliers until the actual workers are contracted by the penultimate layer. Workers and mandlis are used for specific jobs and then released to find other work in almost weekly cycles, which is a boon for us.
An example from Benchmark: “Many failed marketplaces attack purchasing cycles that are simply way too infrequent, which makes it much more difficult to build brand awareness and word-of-mouth customer growth.”
9. Payment Flow
Our Pay-As-You-Go model greatly helps us in being in control of the money that is supposed to be paid to us in advance as opposed to in a commission model. AayWorks will also calculate payouts of workers that'll be facilitated using UPI directly between the employer & the worker basis number of hours worked. This is all being enabled on the backbone of New Labour Codes. It’s an area we are looking at carefully as the laws evolve in real-time as the business grows.
10. Network Effects
As AayWorks is engaged in tackling a very big market and data suggests there are 63.4 million MSMEs and 420 million informal workers, the impact of having a strong network effect will be greater for us.
An example from Benchmark: “With Uber. As the company grows, they are able to facilitate more cars on the road, and along with their investment in route and load optimization, this allows for shorter and shorter pickup times. The experience gets better and better the longer they are in the market.”
Talent marketplaces that bring together workers and employers could considerably improve the performance of India’s fragmented and largely informal job market and could create an economic value of up to $70 billion according to McKinsey.
AayWorks is playing its own part in that process, and we are excited to reimagine the way Bharat works and help to fuel MSMEs growth.