Technology is about to disrupt the blue-collar workforce in emerging markets

While technological disruption to the modern workforce is generally perceived as being a white-collar phenomenon — the increase in work-from-home arrangements during the COVID-19 pandemic, for example — the blue-collar workforce looks set to experience its own set of tech-fuelled changes.

Traditional contractors and agencies are bring disrupted. Advances in data science, Artificial Intelligence (AI) and machine learning are allowing companies to create new ways of finding work and managing workforce.

India is home to a 450 million strong blue-collar workforce. From security guards to delivery staff, construction labourers, housekeepers, maids, assembly line workers, plumbers, electricians and more, this massive cohort is working hard every day — but their situation is becoming unstable.

Inflation is threatening their already-meagre earnings. They have limited transparency while applying for jobs via middlemen/agencies. They can face exploitation by recruitment agencies or receive late or unfair payments from employers. They might not receive adequate training which could be grounds for them later losing the job they rely on.

Even contract employers face several workforce management challenges: high risk of improper background checks, difficult discoverability and skill match and time-consuming recruitment process.

Now that India has more internet users than the total population of the US, there is a big opportunity to address this huge market via efficient and fair online platforms that connect and enable the two sides — contract employers and blue-collar workers.

Job-seeking is among the most important functions for mobile phone users around the world. Indian unicorn technology company Apna’s job-seeking application is the second most downloaded app globally in the business category — yet more evidence of the link between Indian job seekers and their mobile phones, and the centrality of technology to the modern-day job hunt.

The SME (small and medium enterprises) sector is the backbone of employment in India, with a far larger number of blue-collar job vacancies than large businesses. However, SMEs typically are not power users. They require handholding as they integrate new technology or processes and have relatively low purchasing power.

Enterprise sales to larger corporations are more complicated, but once signed up, these companies’ purchasing power makes it easier for new innovators to establish a meaningful revenue stream.

Because of these factors, we are seeing simple and intuitive apps with limited features being successful in the SME sector, while sales of feature-rich customised applications are more often made to larger enterprises.

For blue-collar workers, in particular, this is important. By digitising HR processes, for example, whether for enterprises or small businesses, these start-ups can gather a level of data on blue-collar workers that has not been possible before.

By creating a digital profile of these workers, employers have access to accurate data on their employees’ data, such as employment type, income, hours worked and more, which is transferable from one employer to the next. Such datasets are giving rise to new financial services for workers who face a constant struggle between pay cheques and expenses.

Less than 10% of the Indian blue-collar workforce has access to formal credit. Verified digital profiles of these workers could provide them with a digital financial identity with the ability to open up lines of credit and borrowing for informal workers; a major opportunity for them to start their own SMEs and grow the wider economy. Linking capital, even if small, to those who can make it grow is a lynchpin of economic growth, and there is no reason that India’s blue-collar workers should not be a part of this process.

Moreover, by using AI to enhance a skills inventory management application, some digital platforms are automating talent profiling. This is uncovering stretch and upskilling opportunities for existing employees, while also meeting evolving organizational needs. The more data is fed into such systems, the better they are integrated with decision-making systems for resource planning and forecasting.

Given the rapid pace at which the world of work is changing and that challenges for employers and employees alike are evolving, these kinds of technological advancements are more important than ever. Organizations are struggling to meet their talent needs through traditional sourcing methods and candidate pools, while employees are charting nonlinear career paths: 56% of candidates report applying for jobs outside their current area of expertise.

Given these shifts, it is perhaps unsurprising that traditional contractors and agencies are bring disrupted. Advances in data science, AI and machine learning are allowing companies to create differentiated products and upending traditional ways of working and gaining employment.

Fintech for blue-collar workers: With better data and AI capabilities, startups are offering micro-credit and micro-savings solutions structured to fit the nuances of each job function or use case in the respective sectors. A B2B2C model allows access to large pools of blue-collar workers, contract employees and service providers who can receive financial services.

Increasing women’s participation: Increasing women’s workforce participation could add $700+ billion to India’s GDP by 2025. And yet, as per the World Economic Forum Global Gender Gap Index 2022, India ranks in the bottom five countries worldwide in women’s economic participation. An ILO report indicates that 34% of rural Indian women and 28% in urban areas were willing to accept work at home, given flexible working hours. Democratised access to such work opportunities is likely in coming years, thanks in large part to technological advancements.

Vernacular audio/video-first interface: Most of the growth in acquisition of gig workers is expected in tier-3 cities and rural areas, where the interfaces must be suited to their needs. In these geographies, language and access are the primary barriers to upward social mobility. New platforms are imbibing values of trust by allowing multi-modal expression, allowing any worker to record a voice review on their employer, in any language to another prospective worker. These audio referrals build more trust than traditional app interfaces built to serve a tech-savvy audience.

Combined, these developments — some ongoing, some on the horizon — are set to improve the status, stability and general well-being of India’s vast blue-collar workforce. Of course, they must be accompanied by solid wage growth and incremental improvements to their overall quality of life to have the most impact.

However, just the potential, for example, for India’s blue-collar workforce to finally gain access to fair lines of credit so they can take their lives into their own hands marks a major step for the country set to be the world’s largest by the end of 2023.