Informal hiring is a phenomenon which is widely used across sectors in India. Usually, these workers are called as blue and grey collar workers. There are ~110 million such workers who are employed by ~63 million MSMEs.
MSMEs win and lose contracts based on the speed at which they can scale their workforce, and MSMEs 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 and contractors' business are low tech, expensive for what it offers and fragmented and 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. At the same time, businesses only get access to talent, but they still need separate mechanisms to manage them.
Personal references and offline networks have operated in India to source and meet the need for on-demand services. What has changed in the past few years is the use of technology to match and deliver on-demand services at scale. This decade is being touted as “Techade” for India and rightly so, because it is the small businesses who are leapfrogging old enterprises and are adapting to new technologies which help them grow.
In 2022, technology will definitely play a key role in solving problems like informal hiring in India, and it can enable both sides of this equation in many ways.
Enhancing the efficiency of discovery and onboarding for labour
Digital platforms can improve discoverability of a particular skill and also help the worker to get optimised wages accordingly. These platforms can also reduce the time it takes to search, find, review, verify and onboard a worker in any business.
Catalysing economic recovery by leveraging on-demand workforce
As we all are learning to live with COVID, it is important to align economic incentives across workers and businesses. By increasing earnings for workers and reducing fixed cost for employers, technology can help businesses to leverage an on-demand workforce and also giving workers an opportunity to work as per their want.
Expanding labour participation
Digital platforms can also empower women to participate in the workforce as per their preferred schedule. This is significant as most of the time, women have been unable to earn as they may only be open to working part-time. Technology can solve this by letting the workers set their schedule and wages.
Technology assisted management to improve productivity
As a small business grows, the biggest worry becomes managing all people who are operating collectively to deliver the desired outcome. Digital platforms can ease management of attendance, payroll and settlement of workforce at scale.
Skill first and bias-free engagement
It is critical that in a diverse country like ours, each and every skill is valued and being given equal treatment. By leveraging technology, workers can showcase their skills and ensure a bias-free engagement. For businesses, it helps to drill down on a key requirement and obtain that skill.