India: Pathways to service

12/31/2024
explorationserviceanalysis

Given my upbringing in India, I've always felt a pull to serve the subcontinent, with large sectors of people with more unmet essential needs as compared to the US.
Over the last few months, I visited India and through conversations with folks running startups, NGOs, and enterprises across industries like healthcare, financial services, education, and technology, I sought to uncover patterns, challenges, and opportunities to reduce helplessness and increase access to essential services.

This reflection piece aims to segment the Indian market and identify potential opportunities for service focused impact based. While not a comprehensive analysis, it provides a framework to make the analysis more tractable through some broader generalizations.

To start, there seem to be 3 broad segments of the population in terms of GDP per capita and disposable income.

The Urban Affluent (Top 50 Million)
Often compared to "Singapore" in conversations, this segment represents India's metropolitan elite. Their needs have evolved beyond essentials to quality-of-life improvements. The scale of this market can be interpreted through paid penetration of existing services. Hotstar's 38 million and Amazon Prime's 20 million are often cited as ballparks for sizing.

Success here often mirrors Western consumer markets, with companies like Swiggy and Blinkit leveraging India's labor cost advantages to deliver premium services. There is ample opportunity for building products to serve this group: but from my conversations, there aren't large service oriented needs to be fulfilled.
There are some trickle-down-economic theories touted by companies like last-mile delivery services, but there is doubt about the sustainability of the upwards mobility these create: similar to gig-economy fragility in mature markets.

The Middle Class (300-400 Million)
Colloquially referred to as "Mexico", this segment has an average expense of ~$10 per person. It is a large and diverse group and the hardest to unify. This includes gig workers, service workers in Tier 1 cities and small business owners in tier 1 and 2 cities to name a few.
The consensus was that the unifying characteristic of this group was financial fragility: and as such the best way to help them is systems for long-term financial stability and upwards social mobility. Two avenues came to the top

  • Global connection
    • The purely digital suply-demand mismatches a la BPO era are unlikely to be repeated but new, higher-skilled opportunities may exist that move beyond back-office work.
    • The in-person, human centric nature of Healthcare, coupled with the global supply-demand gap for practitioners is potentially available for scale (Nersify, )
    • The gaps are often in upskilling of digital and English language skills when going into tier 2 cities.
  • Local market development
    • Skilled trades are largely locked within silos of unequal access. Building programs for training and national certification for roles like masons, carpenters, construction operations, beauticians etc would allow for upskilling and mobility.
    • While UPI has democratized payments, significant gaps remain in access to affordable credit, insurance penetration, and tools for building long-term financial security.
    • Better credit access and structured training and certification would allow for creating more robust marketplaces for skilled trades without relying on export based outcomes.

The Fooded Poor (800 Million)
This group is defined by the reliance on government ration program to meet household food needs. The scale of this is verifiable through multiple sources. While itself not a characteristic of specific problems to solve, this reliance is a proxy for the lack of security for essentials and a parallel lack of disposable income. Hence, private enterprises will find limited opportunities for impact here.

  • Service opportunities in this segment fall to public sector and NGO efforts, with real success reliant on large-scale government programs for improving outcomes.
  • Agriculture, especially lower yield and bordering on subsistence, dominates employment and presents opportunity.
  • Non-profits are a great way to have point impact and showcase novel solutions. They need alignment with government partners to reach scale. (Agency fund)

Sources

  1. Size of India's Public Food Distribution Program
  • The National Food Security Act (NFSA) covers approximately 81 crore (810 million) beneficiaries across India, providing subsidized food grains through the Targeted Public Distribution System.
  • World Bank Report
  • PIB Press Release
  1. Segmentation of the Indian Population
  • According to Pew Research, the middle-income group in India (earning $10.01 to $20 a day in PPP terms) comprised about 66 million Indians (5% of the population) as of 2021.
  • Pew Research
  • Broader definitions including lower-middle-income groups estimate the "middle class" at 300-400 million with purchasing power parity adjustments.
  • World Economic Forum
  1. City segmentation https://en.wikipedia.org/wiki/Classification_of_Indian_cities