Why does Joe Six-pack from the USA who drinks beer all day make $50,000 a year, and humble and hardworking Ram Bharose struggle to make Rs.50,000 annually? That’s what struck Manish Sabharwal, co-founder, TeamLease, when he touched down in the land of the free and the home of the brave for an MBA from The Wharton School. Seriously, why is India poor?
Ashok Reddy, Sabharwal’s partner at TeamLease, adds perspective: “In a regulated regime (where labour laws are adhered to), 5-15% of the workforce is outsourced but 100% of labour is employed in the formal space. In India, because of the multiplicity of labour laws and poor compliance, we are at 40% outsourced with barely 1.5% of labour in the formal sector.”
These stats are precisely what Reddy and Sabharwal want to change with TeamLease Services. The Bengaluru-based company is one of India’s strongest growing recruitment and staffing companies. The duo wants to put India to work, a mission that began 24 years ago.
Bitten By The Bug
Reddy and Sabharwal have been friends since their stint at the Shri Ram College of Commerce (batch of 1990). The two parted ways to pursue their careers and eventually MBAs, with Reddy going to IIM Bangalore. Around 1995, both found themselves in Mumbai and that was when the entrepreneurial bug bit.
“That is how India Life, a payroll and pension administration company, was born. At that point, that service didn’t exist in India and globally, it was a big market,” says Reddy.
Provident fund, super-annuity, gratuity schemes and all other aspects of payroll administration are run as trusts by corporates. The two began advising companies on where to invest their provident funds. Within three years, the company was working with 450-500 corporates. In 2002, when Hewitt Associates was looking for a strong India platform, it acquired the Indian firm for an undisclosed amount.
Reddy explains, “We still wanted to rule over our own kingdoms. When we evaluated what to do, the concept of staffing came about. Globall