Thanks to this Bill Gates-backed startup, domestic maids are now getting paid in India’s cash crunch economy

18th Dec 2016
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Jatin Agarwal has been a businessman for the last 20 years. But one moment was all it took to put everything in perspective.

A year ago, while his house was getting built, Jatin would swing by every day to check on the work. He started interacting with the labourers during this period, who were also working with him as a part of his real estate business.

Founders of SERV'D (L to R): Jatin Agarwal, Tarun Sharma and Suhas Kelkar
Founders of SERV'D (L to R): Jatin Agarwal, Tarun Sharma and Suhas Kelkar

This interaction led him to an invite by one of his workers for his son’s birthday celebrations, at the labour camp.

And on landing there, Jatin was in for a surprise.

He saw a lavish party being thrown at the camp, with confetti and the works. Jatin says,

What struck me then was the fact that there was no difference between me and the others. Except for one - the provision of basic facilities.

And this was the very foundation of thought for him to create an impact startup that empowered the poor to come increasingly under the financial gamut.

Hence, in November of 2016, after the government’s demonetisation announcement, Jatin, along with two other co-founders, Tarun Sharma and Suhas Kelkar, kick-started their social impact startup, SERV’D.

Building it for the nation

Targeting the market of domestic help, the core idea of the startup is to bring them within the ambit of financial inclusion, while empowering them with basic financial products.

Moreover, it allows workers such as maids/housekeepers, cooks, nannies, drivers and others to have legal work history, in turn enabling them to have access to financial loans.

Jatin believes that domestic help, as a market, is not below the poverty line. The first basic problem is that their relationships are not strong with their employer. Second is the problem of insurance, as none of the insurance companies wants to lend to this particular segment.

Moreover, neither is the segment privy to savings nor is it offered credit products, since they don’t have a steady income. And this could be all because of a lack of institutionalisation in the space.

Addressing the problem, SERV’D has created a home service management app for service consumers and service providers (domestic help), trying to further institutionalise the space.

How does it work?

The service asks the domestic help to register their bank account, Aadhaar number and phone number. Further, the Aadhaar number is linked to their bank account and is used to verify the identity of the service provider. Next, the terms of service are defined by the consumer who is employing the provider (domestic help). This could be pointers like the number of workdays, job description and so on.

At present, the service is trying to engage with the domestic help through educational townhalls or their respective employers.

Once all this is done, the service provider gets a call for verification. The service also reduces the communication gap between the consumer and the domestic help.

For example, if your domestic help doesn’t turn up for two days, the service calls him or her to check on his or her status. Moreover, technologies like GPS history will allow the service to understand disputes better.

Consumers can also give a rating and review to these helpers based on their punctuality, reliability and quality of work.

But the main benefit of the service is to help these service providers create a legal work history.

The real deal

The firm at the backend creates automatic salary slips and documentation like terms of service for these domestic helpers.

Jatin says that once the firm has six months of data available for these service providers, it can start deploying loans to them, which under normal circumstances are given to them by loan sharks at unreasonable interest rates of 10-25 percent.

Further, it is in talks to partner with various NBFCs and microfinance institutions for providing this class with access to easy loans at fair prices. According to the founders, the interest levied wouldn’t be more than one to two percent per month.

Moreover, in order to avoid any lapses, the firm may automatically deduct a part of the service provider’s salary, which will be used to pay off the credit loaned to them. SERV’D also claims to carry out a lot of education about credit rating and managing credit with this particular class of workers.

The firm is also planning to provide insurance to these individuals nine months from now and is looking at partnerships on that front. The firm also claims that the insurance will be issued at a cost of Rs 350 per month.

The business model for SERV’D is simple. The company takes a percentage cut from the margins made by NBFCs on every financial product sold to SERV’D customers.

Goals and numbers

At present, the 10-member core team is working on grass root activations in and around Pune. Once the firm has rolled out the first 10,000 contracts, it will allow its existing set of customers to further act as evangelists for the service.

The firm is also looking to reach a count of 100,000 customers in eight cities by the end of 2017. According to Jatin, the initial plan was to go live on January 1st next year; however, with the announcement of demonetisation, the team decided to expedite the process.

Within two weeks of the launch, the firm had 100-odd contracts (or terms of service) closed and had already received 400-odd downloads of the app. SERV’D has also introduced SMSes in regional languages and guided assistance in the form of a missed call service.

However, the long-term vision of the firm is to reach two percent of the country’s population, bringing more than one crore Indians under formalisation. By April 2017, the firm plans to be present in eight cities, including geographies like Mumbai, Delhi, Bengaluru and Chennai.

Good stead

Earlier this week, SERV’D received funding worth $100,000 from the Digital Financial Service Lab (DFS Lab), a fintech incubator fully backed by the Bill and Melinda Gates Foundation.

According to Jatin, SERV’D made the cut out of 700 applicants who had registered for the prize. He says that the money will be utilised to develop tech for new roles as well as drive activation for the existing product.

While there are other means to still pay your domestic help, Jatin cites the behavioural change that platforms like SERV’D can bring to the process. He states,

“There is certainly a huge liquidity crunch in the economy. Cheque and net banking are easy to do through conventional means. But, whichever method you choose, it must be preceded by a five-minute one-on-one interaction with your domestic help to explain to them how banking works and ways to access their money by simply using an ATM. Thus, driving the fear of banking from them and encouraging this behavioural change.”

Moreover, domestic workers are part of the legitimate cash economy, and the demonetisation decision has certainly caught them unawares. Because of them using cash as the only means to transact, they have been spending part of their productive time exchanging their money. But considering their limited incomes and frugal saving habits, it is safe to assume that they have made ends meet through a great deal of hardship.

Therefore, platforms like SERV’D could be monumental in bringing about the change in behaviour necessary to dilute the hardships of demonetisation in a cash crunched economy.

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