The SME segment is perhaps the biggest job generator in India, but it regularly faces a recruitment challenge.
Companies are struggling to hire and retain employees, especially blue-collar and gray-collar workers. This ends up affecting the day-to-day running of their businesses, as more time and energy is invested in human resources than in other profitable activities.
Based on Namakkalwhich means “hands” in Tamil, aims to offer a helping hand and solve this problem.
Founded in 2019 by Balamurugan Sundararajan, Ravin Somi and Senthil Natarajan, the social enterprise works to organize the manual labor sector. The platform helps unskilled, low-skilled and entry-level workers find better job opportunities and makes it easy for companies to find and employ blue-collar workers.
Senthil Natarajan, Co-Founder and Managing Director, KPN Farm Fresh
The three founders are graduates of PSG College of Technology, Coimbatore. The idea for this job-hunting startup came to the trio when Senthil Natarajan, Managing Director of KPN Farm Fresh, was struggling to hire for the store and facing the resulting roadblock in expansion plans. .
Senthil, who comes from a business family, also talked about other family members and friends who have faced this problem.
“That was the trigger point. We could see a common problem across different segments,” says Balamurugan.
The problem here, says Balamurugan, begins with the first step: informing potential candidates of vacancies at a company. “There is no proper system to reach out to potential employees.”
This leads businesses to rely heavily on offline mediums such as agents and contractors, who focus solely on commissions. Eventually, hiring becomes an agent market.
“Attrition in this segment is very high and the company tends to spend more time and money on finding new employees,” says Balamurugan.
This problem statement, faced firsthand, led the trio to create a solution that offers a pool of resources for business.
“Labour market solutions are all geared towards the white-collar job market,” says Balamurugan. “When it comes to blue collar jobs, there is a need for help; candidates always rely on references from people they know.
The technology that enables businesses
The founders made it clear that they wanted to use technology to solve hiring problems.
“We wanted to create a medium for communication, but we didn’t want to go the traditional route of having an app,” he says.
Kaigal has an app, but it’s for cities where people are more tech-savvy.
“From the start, we knew we couldn’t attract potential employees through an app or website,” says Bala. “We wanted to build our medium using a social media platform used by everyone, like WhatsApp and Facebook.”
Using them as communication platforms, the company engaged candidates and MSMEs. He built software to automate data and also created a bot. Artificial intelligence software was designed to match candidate profiles to vacancies, while a multilingual chatbot was used on WhatsApp and Telegram for candidate and SME engagements.
From June to December 2019, they conducted a trial in Namakkal and Karur which are known for textile, egg production, poultry industry and truck body industry.
At the end of the trial, the team realized that their original thesis was correct. Kaigal has built its full business model through WhatsApp and Facebook. The company works on a commission basis, starting at Rs 1000 for hiring a candidate. Over 22,000 people have found jobs and over 1 lakh applicants have had interview opportunities across Tamil Nadu using Kaigal, according to the founder.
Challenge to switch from agency mode
The aim was to bring in businesses, ranging from small shops that need a salesperson to large industries that need blue-collar workers, and connect them with workers from all over Tamil Nadu.
Kaigal wanted to simplify the complex hiring process and ensure a constant supply of good resources.
But it wasn’t easy.
MSMEs rely heavily on agents and consultants for recruitment, and convincing them has been one of the biggest challenges, says Balamurugan. “It took them a little longer to trust us.”
When Kaigal entered the Coimbatore market, it reached out to MSMEs through various organizations including Coimbatore District Small Industries Association, Coimbatore Industrial Zone Manufacturers Welfare Association SIDCO and Madurai District Small and Small Industries Association. These associations help them to get in touch with MSMEs and to develop their clientele.
To attract job seekers, the company worked on offline marketing initiatives such as placing ads on the back of buses. It offered a missed call feature with team members in the back office calling back candidates and building their data from the information.
“We were entering an unorganized sector. Most of these people don’t have resumes or records of employment. We had to create their folder and create a resource pool in our database,” says Balamurugan.
When they receive a request from a business, the team uses AI to match the requirements with a database of resources.
Balamurugan says this segment also has another challenge: a lower “turnover rate” than white-collar workers.
For example, if the requirement is for an open position, the team contacts 20 candidates.
Balamurugan says they measure a candidate’s readiness based on certain factors such as how they respond to messages and how often they are in contact with the company. He says reaching out to 20 candidates means only 30% of them will show up for an interview.
The fact that these candidates do not have good employment records is another problem. They have to work for the company for a short time and are only hired afterwards.
“We had to make companies understand that we are not replacing their HR. What we basically do is line up people for interviews,” says Balamurugan.
The company, which now has an 18-member team, has nearly 7,000 registered MSMEs and 1.7 lakh applicants in its database across Tamil Nadu.
Some of the corporate clients he works with are IFB, L&T Microfinance, Bigbasket and KPN Farm Fresh.
In 2020–21, an estimated 7.7 million workers in India made up the gig workforce. This figure is expected to rise to 23.5 million workers by 2029-30, representing 6.7% of non-farm labor or 4.1% of total livelihoods in India, according to an article in InvestIndia.
Kaigal was selected as one of the top emerging startups by TANSEED, a StartupTN initiative, and awarded a grant of Rs 10 lakh.
In July 2022, he was shortlisted for the CHUNAUTI 2.0 Program (STPI), an Indian government NextGen Startup Challenge competition, and was awarded a SEED grant of Rs 25 lakh.
The company, which competes with players like Vahan, LokalPe, Meraqui, Team Lease and Apna, plans to expand its services to other southern states by the end of this year. The founder said the company plans to grow revenue 5x.
“This is a booming sector and has been in the spotlight during COVID. There is enough market depth for new players to come and play. We are aiming for an India-wide launch with one million SMEs, one million applicants and one million jobs by 2025,” says Balamurugan.