March 2014

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Labor lessons

LabourNet, founded by Gayathri Vasudevan, is helping employment generation by creating an ecosystem for labor in India

Triveni, a beautician practising for 15 years in Kolar, helped set up a beauty and hair care center in her area, which was funded by Godrej. The center also helped source students and developed the course work. Since its inception in February 2012, she has trained 50 students. What’s unique about this venture is that it’s not just another corporate social responsibility initiative by a large enterprise. In fact, it’s quite the opposite.

This is one of the three livelihood centers set up by social enterprise LabourNet in Karnataka in April 2012, catering to a segment of informal sector workers who aren’t sure of what they want to do, but are sure of not taking up physical labor-intensive work.

The firm’s beginnings can be traced to 2006 when it started as a simple project of NGO Maya. “The idea was to look at an informal sector worker and match work to worker, operating as a simple B2C model,” says Gayathri Vasudevan, 41, CEO, LabourNet, also responsible for initiating the process with the group behind Maya. In 2011, the organization’s model was revamped to make it sustainable. Today, it provides on-site training to labor in addition to the newly-set up livelihood centers.

The model
LabourNet relies on its core strength of mobilizing and training workers and it has been able to monetize it this time around. “We also said let’s stop taking grants in the traditional sense,” she explains. The founders targeted large corporate clients in construction, infrastructure and FMCG (beauty and hair care) and trained their workers. “Your entire organizational DNA has to change when you look at sustainability,” she affirms.

LabourNet’s expertise lies in explaining concepts to a worker by imparting organized training. “Today, the entire training program in our country is for Std XII pass-outs. People are unable take it down to a lower level and that’s where companies have found value in us,” explains Vasudevan.

From the first few clients like Gammon, where 1,000 workers were trained at its plant in Maharashtra, Bosch India Foundation and Manipal India Foundation onwards, LabourNet’s strategy is to work with the client’s contractors to source more workers, also a measure to avoid politics among labor. The training is interactive and on-field, through a peer learning methodology. Says Manjay Singh, 33, an on-site trainer with LabourNet: “The training results in speed, quality and safety. There was a lack of focus earlier; now laborers get assessed as skilled and unskilled.” LabourNet negotiates for two hours of time per day with clients, for training which lasts 22 weeks for each batch of 25, month-on-month.

“Today, we have 120 people coming in together, an improvement from the early days when attendance fluctuated. Learning is boring for adults; to get them to take time off is difficult,” she says. Currently, its revenue model is based on charges for training, certification, and registration per worker.

Inception of an idea
The seeds of the venture were born during Vasudevan’s eight-year stint with the International Labour Organization where she dealt with workers’ issues, including education and training. “LabourNet was close to my heart; I wanted it to go national,” she recalls. However, she was clear it had to be done holistically by creating an ecosystem which addressed every aspect for workers in this sector. From 2006-’08, with funds from Ford Foundation and American India Foundation (Rs. 1.2 crore), she and Maya’s founders ran a pilot as proof-of-concept. They registered a set of workers to connect them with customers. In this period, they registered 3,000 workers and received 8,000 calls from potential customers. Buoyed by initial success, they decided to scale up, aided by grants from Accenture HIVOS, and CHF International, together with funding from Grassroot Business Fund and two individuals.

“That’s when complications started. The model was not sustainable,” she recalls. Customers wanted verifications or background checks on workers, an understanding of their skill sets, and professionalism. The problem was solved by opening bank accounts for those who didn’t have identification, and also by negotiating with banks for lower ‘Know Your Customer’ norms. The database scaled up to 25,000 registrations. As part of a project for the government of Haryana, they registered another 20,000 workers.

“We saw something wrong with the entire model and it crashed,” she mentions, admitting they weren’t able to monetize it. Workers only paid a registration fee of Rs. 150 and the model had no additional revenue streams. Besides, once connected to workers, customers contacted and paid them directly for services undertaken. “Workers paid for accident insurance and the marginal cost of opening a bank account but it wasn’t a sustainable model as clients never paid us,” she points out. “We had no control and this was becoming social good only,” says Vasudevan.

Today’s impact
Four months ago, Bangalore Metro Rail Project signed up as a client for training on safety standards to managers and senior supervisors of the 20-odd infrastructure agencies involved in the project. “Now we have a benchmark for safety standards with contractors and organizations getting personalized coaching on various methods. Corporates are including safety from project planning stages itself. They treat it as an investment, not an overhead,” Stephen Pollock, Chief Safety Engineer GC, Bangalore Metro Rail Project says on the positive impact of the training.

Course fundamentals
LabourNet partners with different community organizations to set up the vocational training centers and corporates provide capex. The goal: train and give adequate skills so they can get low-level skill jobs. Students are between 18-25 years old.

Post-training, LabourNet helps students with their B-plan, gets them funding options and facilitates their journey to become entrepreneurs. For its on-site training vertical, LabourNet has developed training content (manuals, videos, master guides and learning cards) for 15 trades broadly classified under the construction, mechanical and services sectors, which is currently a cost for the venture. But its biggest challenge is to standardize and deliver the training modules.

So far this has been tackled by showcasing live on-site training sessions to potential clients. Negotiating their rates is another hurdle. “Developing and delivering content needs work. Clients take time understanding this. For most people education is a static, in-classroom phenomenon,” she points out. But despite these hurdles, nothing seems to be deterring Vasudevan, who is ready to cast the net wider and scale pan-India.

© Entrepreneur India August 2012

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