Start where you are.
Use what you have.
Do what you can.
-Arthur Ashe
From Mexico in the north to Argentina in the south, Latin America is teeming with 600 million people.
Yet almost half the Latin American firms cannot find the workforce they need with the required skill set. This, therefore, is a region where 1 out of 2 people are a part of the informal economy – diversified, unregulated and unprotected by the government. And handymen services are a major part of the grey economy.
The traditional Latin American worker only completes secondary education before entering the labor market.
The challenge is two-fold. Not only are the Latin American countries competing with low-skilled, low wage-laborers but also the well – educated and highly competent workforce of emerging economies worldwide.
“2 out of 5 young people are neither studying nor working.”- Latin American Economic Outlook
Yet, there is a silver lining.
Skill Development In Latin America
According to numerous reports, employers and firms are willing to invest in industry-specific skill development courses rather than general education. It is more profitable for countries and companies to invest in skill-based training.
This has been the case in European countries such as Austria, Denmark, Switzerland, and Germany, which follow a dual system of combining school-based education with workplace training.
Government Initiatives
1.Chile’s Mi Futuro
This initiative of the education ministry primarily provides information regarding higher education and career opportunities.
Users can browse statistics on the projected employability and earnings for various careers and institutions, as well as information on accreditation, duration of the study, percentage of students employed within a year of graduation, cost, and percentage of students who receive grants or other financial support.
2. Colombia’s Graduados
This government-run site includes information on scholarship opportunities, postgraduate studies, labor market results, and labor rights and regulations for students and graduates.
3. Peru’s Ponte en Carrera
An online platform, it provides a few key statistics, student testimonials, and a large number of user- friendly tools to help students identify areas of interest and potential educational opportunities.
Market Opportunity
A lot needs to be done to upgrade the education system in Latin America to ensure that the human capital is qualified to support economic growth in the region. However, the current scenario has set the stage for an upcoming market – the on-demand services/delivery app.
This is due to a number of reasons :
1. Cheap Labour
Due to the difference in educational qualifications, there is a direct disparity in income as well. The low-income group is provided with jobs by the high- and middle-income group.
With more than half the population having a mix of secondary schooling and handyman skills like carpentry, cleaning, landscaping, and other home maintenance services they are the perfect workforce for a business model of handymen service providers.
The average pay for a freelancer handyman job ranges between USD 5 to USD 7 an hour in Latin America.
The average monthly income in Latin America is around USD 3000.
This provides a vast workforce of handymen ready to work at affordable rates.
2. Uneven Demographic Distribution
Latin America’s major population is concentrated in the urban metropolis. Sao Paulo and Mexico City have almost 21 million people each. Buenos Aires, Rio de Janeiro, Bogota, and Lima are other cities teeming with people.
Hence it is possible for a business to target a lot of people in a limited geographical area and focus on market penetration to be profitable.
3. Mobile Technology
While advancements in mobile technology have been happening for quite sometime on-demand delivery of goods/services is a new and emerging market in Latin America.
It is estimated that 73% of Latin America’s population will have access to mobile internet by 2020. – GSMA
There was a certain amount of distrust regarding online business models. However, by ensuring total transparency, visibility and traceability on online platforms, they have now become a reliable alternative to traditional service providers.
It is also useful to have both a website and an app for your business model.
The Home Improvement Industry
Due to the lack of access to tertiary education, a lot of people ended up being service providers. The on-demand home improvement services industry is worth millions of dollars but is mostly an untapped market.
IguanaFix is one of the most successful start-ups in Latin America, currently functioning in Argentina, Brazil and Mexico, the three largest markets in the region. The company operates a site and mobile app that connects customers with certified handymen-and-women, electricians, plumbers, painters, etc.
In 2018, the company handled more than 57,000 transactions per month and generating revenues of $30 million
In addition to providing on-demand home improvement services to retail customers, IguanaFix serves large corporations looking to outsource their maintenance needs.
A Long Road Ahead
The skill set of the current workforce will power the economy for the next 3 to 4 decades.
A high job turnover, low pay and stingy investment in skills by firms and workers in Latin America have been the trend so far.
But an enterprising businessman could provide a platform for a highly fragmented and liquid market of freelancer handymen and make this a profitable venture.
Rappi, the Columbian start-up has already made a mark in the Latin American market by making use of the cheap labor available in the market to cater to the high demand for a robust delivery system in the city.
Rappi’s app features a blank box in which customers could list whatever they wanted to be delivered. And customers inevitably entered the unexpected. Additionally, there’s a real need for alternatives to postal services in the region because of their unreliability.
You can read more about Rappi’s success here.
An integrated platform for handymen services could be the next big thing in the Latin American house maintenance market. Handymen with all sorts of training could register their services on a single platform.
This will help to create a peer-to-peer network in a given geographic market essentially creating a Latina version of TaskRabbit.
Since it opened up five years ago, this platform has often been a godsend to people with more money than time. The company stocks its auction house of personal assistants with people ready to deliver cupcakes to your office, or assemble your Ikea furniture, or clean your home.
In emerging economies, all kinds of on-demand models would be very profitable.
Needless to say, sharing economy is here to stay.
“I wake up every morning and think to myself, ‘How far can I push the company forward in the next 24 hours?’” —Leah Busque, founder and CEO of TaskRabbit