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Organising the unorganised sector

LabourNet, which trains workers in the unorganised sector and helps them avail of insurance, plans to expand in Uttar Pradesh, Andhra Pradesh and Odisha

Nirmalya Behera & Shine Jacob 

Raja Naik from Bangalore and Abhilasha Sharma from Haridwar have never met. But they are connected by LabourNet, which is transforming their lives and making them skilled labourers in different spheres.

Earlier, with no formal training in masonry, Naik assisted a contractor. This was before he was identified by LabourNet, a Bangalore-based start-up that trains the workforce in the unorganised sector.

Now, Naik leads a group of construction workers at a Rs 1-crore building project site in Bangalore.

"I was given a month's on-site training in masonry and plastering by LabourNet. I have been working in the construction sector for the last 20 years. When I was unskilled, I could earn up to Rs 500 a day," he said. Now, he earns up to Rs 1,000 a day, says the 40-year-old mason. The training helped him learn the basics of construction.

Sharma, a mother of two, is confident of a change in fortunes after undergoing a two-month computer course by LabourNet. "I can expect a monthly income of up to Rs 5,000 after the training; it will provide me the job of a computer operator. Now, I can meet the school expenses of my children," she adds.

Naik and Sharma are among the 80,000-odd workers trained by LabourNet, the social enterprise that was started as a pilot project in 2006, as an initiative of the Movement for Alternatives for Youth Awareness (MAYA), a non-governmental organisation (NGO). LabourNet has been training workers across its 50 worksites and livelihood centres through the past four years.

The start-up was formally launched in 2008. "But it took three more years for the complete transformation of NGO-style working to a professional company mode of operations; we had to re-launch our operations," says Gayathri Vasudevan, chief executive of LabourNet. "Most of the people we train are school dropouts who aspire to join the labour market. Our aim is to ensure their real income increases through theoretical and practical skill-training. We focus on creating opportunities locally, as well as for those who move out for a livelihood."

So far, it has raised about Rs 35 crore through a mixture of grants, equity and debt. In 2009, it received assistance from the Grassroots Business Fund and GTZ.

In 2012, it raised angel funding from Sankhya Partners. The following year, it raised funds from Acumen and Michael & Susan Dell Foundation, through equity partnerships. It also secured a line of credit of Rs 23 crore from the National Skill Development Corporation (NSDC) for 10 years. The start-up has also been funded through grants by Ford Foundation, America India Foundation, CHF International (now Global Communities) and Accenture.

"LabourNet posted revenue of Rs 4 crore in 2012-13 and Rs 18 crore in 2013-14. It is expected the company will break even this financial year," says an executive. This financial year, it is targeting revenue of Rs 80 crore and aims to touch the lives of 200,000 workers in the unorganised sector.

Business model

After expanding across states, the company set up livelihood centres, many in semi-urban and rural areas. In time, these centres became hubs for sourcing candidates and training them. These centres collect fees from candidates for training and work contracts. They also generate income through local marketing partnerships. Low on capital expenditure, the onsite training business model is also funded by corporate houses or government agencies that employ from the unorganised sector. LabourNet receives service requests through its call centres and a web-based interface. It then broadcasts these job openings to registered workers qualified for the job. Workers register by paying a small membership fee.

The start-up provides workers for such as Godrej, Hindustan Unilever, Bharti Foundation, Jubilant Life Sciences and Apollo. Along with training and job placements, LabourNet provides them access to health insurance, bank accounts and identification cards. The company has helped provide various accident insurance covers to about 30,000 workers. LabourNet also ensures workers avail of benefits through sector-specific welfare boards in the fields of insurance, maternity benefits, tools, housing loans, as well as health insurance under the Rashtriya Swasthya Bima Yojana.

Focus
The company offers training in about 40 trades across three verticals - services, construction and manufacturing. The trades include carpentry, masonry, shuttering carpentry, electrical wiring, plumbing, painting, crane operation, fork lift operation, general machine maintenance, bar bending, press operation, fittings, beauty & hair care and safety training. The organisation is also considering imparting training in the agriculture sector and promoting micro-entrepreneurship in various sectors.

"A considerable change we brought in 2011 was a shift from being just an information provider to an overall hand-holder of workers," says Vasudevan.

LabourNet has partnered for skill development and initiatives for workers in the informal sector. In addition, it has joined hands with large, medium and small enterprises in formulating course content to meet their manpower needs.

Road ahead
It is targeting training a million workers through the next five years. After strengthening its presence in Karnataka, Maharashtra, West Bengal, Haryana Tamil Nadu, Punjab and West Bengal, it now plans to expand in Uttar Pradesh, Andhra Pradesh and Odisha. Major challenges before the company include streamlining operations and finding suitable talent for particular sectors. Also, the need of the hour might be piercing into the Hindi heartland in search of talent.

FACT BOX
Area of business: Trains people in the unorganised sector across 40 trades in services, construction and manufacturing
Revenue: Rs 18 crore (2013-14)
Target: Rs 80 crore (2014-15)
Funding: Rs 35 crore through a mix of grants, debt & equity
Investors: Sankhya Partners, Acumen, Michael & Susan Dell Foundation; Rs 23-crore line of credit from NSDC for 10 years; grants from Ford Foundation, America India Foundation, Global Communities & Accenture


EXPERT TAKE

LabourNet's greatest strength is the vision of its promoters. The team is working on construction, traditionally a difficult stream to work on. That was one reason why the National Skill Development Corporation was interested in the company. Moreover, it was able to build a good linkage with corporates.

Most of the partners are giving it additional contracts, as well as recognitions.

I am confident it will be able to scale revenue of Rs 100 crore soon. Major challenges include building larger connects with employers. Also, it has to maintain the quality of training by making it replicable and repeatable. Proper mobilisation is also needed to fill classrooms.

However, the primary challenge is maintaining the growth level. As a start-up, it will be easier to reach up to 100,000 people this year from 42,000 last year. But in the years to come, the team should live up to expectations.

Dilip Chenoy is managing director and chief executive, National Skill Development Corporation

First Published: Mon, May 12 2014. 00:39 IST
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