Handyman’s services matter to every home and office. However, the existing market of handyman’s services is suffering from inefficiencies. This article evaluates the market, identifies issues and states how Nayakam, an emerging startup from Pakistan is going to address such issues in the market.
Assessment of the handyman’s market
The market of any good or service is like a battlefield. A fair and competitive battlefield is the one that provides a level playing field for everyone.
Highly competitive markets have five key characteristics: 1) there are a large number of service providers (handymen) and service users in the market; 2) there is no barrier to entry into and exit from the market; 3) products and/or services are standardized; 4) market information is adequate and easily accessible, and 5) no price control mechanism is in place. Let us assess the handyman’s market in Pakistan on these five criteria:
- A number of sellers and buyers: There are a large number of service users but service providers available in the market are not in large numbers. Whenever any service user requires the service of any handyman such as a plumber, electrician, mason, painter, and AC technician, it is not easy to find them.
- Barriers to entry: There are many barriers for handymen to enter into the market. The existing service providers are over-protected by two types of barriers – one at the end of service users and the second at the end of new entrants – especially those who are qualified from technical and vocational education and training (TVET) system. According to Punjab TEVTA tracer studies, as many as 66,504 TVET students who graduated between 2009 and 2016 in Punjab are unemployed. Out of these 66,504, as many as 2,518 graduates are unemployed alone in the Rawalpindi district. It is pertinent to point out that those who graduated after 2016 are not included in these figures. It clearly shows the quantum of barriers for the entry of qualified handymen. The handymen’s market is suffering from the dominant role of spare-parts shop keepers/stores and middlemen. In fact, most of the handymen don’t have their own shops or offices. They associate themselves with store owners. Customers approach the store owners who assign the handymen to work for the customers. The store owners heavily regulate the entry of new entrants. Eventually, qualified people – who have received formal training from TVET institutes often struggle to get work. The store owners usually avoid them because they may not be willing to give such a high rate of commission. The store owners usually fix rates after assessing “paying capacity” and knowledge of the client about the nature of the service. Customers lacking information about the market are often subject to exploitation.
- Standardization of services: Handymen’s services are not standardized mainly because of a lack of standardization of practices and competencies. An overwhelming majority of the handymen have never attended any formal training at any TVET institute. They received training through ustad-shagird model. In such a model, a person, usually in childhood, is informally associated with a skilled person, who trains him over many years – 5-15 years. When his ustad (experienced handyman) allows him to do work independently, only then he starts working independently of his ustad.
- Price controls: Wages are heavily controlled by store owners or experienced handymen. They leave only a marginal space for service users to negotiate. Wages are usually negotiated by store owners with customers. The store owners act as middlemen. It is also interesting to note that the rates are not fixed – vary from customer to customer, depending upon the perceived urgency of work and look, paying capacity, and knowledge of the customer. After completion of work, the handyman collects wages from the client and pays the commission to the store owner. The amount of commission usually varies from 30 to 50%. In short, an imperfect market incentivizes the middlemen.
- Market information: Market information is neither adequate nor accessible to all players. Middlemen and few handymen play with and control the information. The qualified skilled people lack access to market information and customers and customers lack information and access to qualified skilled people.
Market working determines the extent of efficient utilization of resources. Since the market of handymen’s service in Pakistan is not well developed, hence, the efficiency of resource utilization is on the lower side.
Eventually, a large number of qualified skilled people are unemployed. The talent is trapped. It is not easy for qualified handymen to find the word and at the same time, it is not easy for service users to find skilled people in the market. Not only this, but another spill-over effect of the imperfect competition is; the non-availability of any incentive for creativity and innovations. No nation can afford such a high level of inefficient utilization of resources.
Nayakam Service Model
Technology is introducing radical reforms in almost every walk of life.
It is re-writing the way of doing things. It is bringing ease, speed, convenience, efficiency, and value in human lives. In a way, technology is a kind of gateway to revolutions. Nayakam Service Model is grounded in technology. Nayakam is going to introduce a technological revolution in the handyman’s service market in Pakistan. It aims to address the issues of market inefficiencies.
Above all, it is going to unlock the locked talent (i.e. unemployed in the country) and mainstream them to market through eliminating/reducing the role of middlemen. It will benefit both parties i.e. the service users and the service providers. Moreover, it is expected to enhance productivity, normalize prices, and promote innovations. Above all, exploitation will tend to diminish. Even the existing non-qualified handymen will also benefit.
Nayakam Model is going to empower the existing nonqualified service providers by enabling them to get qualifications from TVET institutes under NAVTTC’s program Recognition of Current Competencies (RCC).