Bringing technology to blue collar recruitment: Why We Invested in Project Hero
By Siddharth Nautiyal, Badri Pillapakkam, Sarvesh Kanodia, Unnishankar Jayaprakash
"By formalising the labour operations of the unorganised and under-protected construction sector through innovative use of technology, Project Hero will create significant positive impact on the Next Half Billion workers by giving them access to better working conditions, more transparency and timely payments."
“I have been working (with Project Hero) since November last year. It is a unique company where not only do we get our salary on time, we have a PF component too. There is a 24-hour helpline through which we can speak to people and get answers to our problems,” says Balram Nishad, supervisor, Project Hero.
Balram is someone who has helped countless people realise what is often one of their biggest dreams, biggest projects in life. Building a home. Construction workers like Balram are the backbone of the big buildings making new India shine. They work night and day, across seasons, and with minimal resources. They are the ones we come across every day, yet wouldn’t be able to place in a crowd.
India has nearly 54 million people employed in the construction industry. The sector is the second largest in terms of employment after agriculture, yet continues to be largely informal. This means workers have little to no housing, employment benefits, or social security. Wages are usually paid in cash, often not paid on time, and workers are forced to live in unsanitary conditions. All of this makes for high attrition and a lack of motivation.
Project Hero aims to fill the gaps in this broken system. The company’s focus on using technology as part of its entire value chain, and the founders’ deep expertise in the area of blue-collar work, is an advantage for not just the workers, but also customers. Co-founders Satya Vyas (CEO), Pukhraj Grewal (COO), and Raghu Chopra are IIT-Roorkee graduates who have run an offline interior contracting company in the past. They worked to build that company for about five years before starting Project Hero. After getting work through the company, workers like Balram report an increase in their salary, assured monthly payments, greater stability, and better work opportunities.
The three main stakeholders in the construction ecosystem are the workers, labour contractors (LCs), and construction companies. Between 50% and 70% of construction workers are migrants who perform unskilled or semi-skilled jobs. They’re typically hired for projects by agents of LCs or find daily or weekly jobs from labour chowks. And even though supply is nearly always greater than demand, there is no guarantee that they will find jobs when they want. Most find work only for 12-15 days a month, reducing their bargaining power and earning potential even further.
LCs tie up with construction companies for sourcing and managing the construction workforce across their projects. These companies offer to take care of worker welfare requirements (food, accommodation) in select cases, particularly larger and longer-term projects, but LCs usually build out a network of agents for logistics, accommodation, and food, and recover these costs from workers over time.
Legally, clients (principal employers/building contractors) are required to pay social welfare benefits such as Provident Fund, Employees State Insurance, Buildings and Other Construction Worker Cess on behalf of the workers. But cash payments make tracking difficult. Construction companies are happy to outsource workforce management to LCs. Needless to say, the system is skewed against the workers, even though they do the hard labour.
The business model
Project Hero addresses many of these issues for the workers through its end-to-end recruitment and workforce management platform focused on the construction industry. The business model comprises sourcing, training, and deployment of construction workers. The platform has onboarded workers across categories, including general helpers, carpenters, plumbers, electricians, masons, flooring and tiling work experts, and so on.
Since most workers are paid in cash, there is scope for mismanagement of funds by different people. Large customers are typically strict about PF/ESIC compliance, and smaller players often depend on LCs to do the job or deploy in-house compliance teams. With Project Hero, all payments are directly transferred into workers’ bank accounts (creating a verifiable trail) and regulatory compliance is taken care of. Its workflow automation also removes the need for in-house compliance teams.
Workers attach a lot of importance to on-time, guaranteed payments. Project Hero’s structure that offers long-term projects and therefore greater utilisation of worker skills allows for significantly higher monthly wages.
Project Hero’s customers are medium to large building contractors in need of readily available construction workers. They want to deploy them at project sites across the country, and clients are willing to pay a little premium for a trained workforce with formalised benefits (housing, food, social security) if availability is guaranteed. This creates a win-win situation for both workers and customers.
For categories of workers that require prior training, Project Hero gets them on board the platform through tech-enabled hubs in specific towns with recruitment camps in nearby villages. The hubs also become training centres for onboarded workers, where they undergo behavioural and technical training through micro cohort-based courses.
Over time, Project Hero also plans to facilitate financial services for its workers. For customers, Project Hero provides a well-trained workforce, greater attendance and productivity, regulatory compliance, and adherence to project timelines.
Our thesis
The recruitment industry for blue-collar workers is competitive and suffers from high attrition at three-to-six-month intervals. Recruitment in blue-collar work is local network-driven and unorganised. Additionally, there is no large, organised player that handles staffing and job recruitment. This makes us believe in the potential for Project Hero to differentiate itself. It is the perfect play of a tech-driven solution that can aggregate demand and supply at scale.
We believe the company will be able to capture the demand for construction workers and provide them with jobs in preferable locations. These workers are also part of the underserved ‘Next Half Billion’ segment that is increasingly more confident about access to the internet and technology, but lacks options that cater specifically to them.
The upfront network of available, signed-up workers across categories for customers to work with a staffing company, and Project Hero’s ability to scale the supply are also positives.
We are confident that with time, the company will scale to serve this largely underserved market. The workers will also see value in the offering, with a better quality of life. And eventually feel empowered with formal training, better pay, and more projects.
