The race to digitize recruitment for Indonesia's working class

Michael Soerijadji, Founder and Managing Partner of AC Ventures

In recent years, Indonesia’s economy has grown rapidly. By 2030, we are poised to see GDP and the internet economy reach US$10 trillion and US$330 billion, respectively. At the heart of the shifting landscape, the country’s lower-middle-income (LMI) population plays a critical role. 

This is categorized as those who earn less than US$4,000 in annual income but contribute more than 54% of the country’s GDP.  

Representing more than 78% of Indonesia’s total population, the LMI segment of the workforce has started to see more abundant access to diverse and higher-paying opportunities. These opportunities deliver  higher disposable incomes, thus creating a wider middle-class in the archipelago. 

But even as the tech landscape in Indonesia matures in the context of e-commerce, fintech, and other verticals, there is still much room for improvement when it comes to unlocking greater income for average locals – especially those in the LMI group. 

Real people, real problems

With LMIs being the backbone of the economy, the pain points they face on a weekly basis hold real opportunities for market disruption.

On one hand, LMI workers must sporadically scour for work through personal connections, agencies, and job boards. Such channels are inefficient in their talent curation processes and result in tenures that are off-the-mark in terms of location, compensation, employment period, and the promise of financial stability. 

On the other hand, even with a sizable talent pool, employers still face challenges when trying to find committed workers with relevant skill sets. This is particularly true when it comes to verifying and vetting candidates at scale. It is also true in the context of speed requirements. While counterintuitive, filling roles for LMI workers can actually be harder than headhunting for white-collar positions. 

“Local startups looking to solve problems in the lower-middle-income recruitment space should model the success of prominent international examples”

When we look at the digital job market for LMI workers, current offerings continue to show gaping holes that need to be addressed. These include developing platforms that truly nurture trust between employees and employers, verify job opportunities, remove friction from hiring processes, and make it easier for professionals to support each other throughout their job seeking process.

Until these things get sorted out, the digital job market will continue to pose a slew of challenges for LMI workers. From a lack of verifiable track records to poor talent-job fit, the workforce will continue to struggle. 

So while for some time tech has been present in the job market to deliver the earliest versions of digital job boards with applicant tracking systems and identity verification (what we call HR Tech 1.0 and 2.0, respectively), the newest iterations need to find  a way to get married up with existing social networks to truly develop their ‘stickiness.’ 

This can then be bolstered by upskilling products that push workers to level up their competencies as they progress in their careers.

A true fit is worth billions

Indonesia’s HR and recruitment startups have much to be excited about, especially when looking at successful overseas case studies. In India, hiring platform Apna reached unicorn status after helping more than 16 million laborers in less than two years. 

Hidden problems were solved after the firm’s CEO Nirmit Parikh, an ex-Apple executive, went undercover in factories to understand the reason for disengagement within the workforce. 

Ranging from a lack of knowledge on labor demands to communicating with peers and a support group that can help point to resources for upskilling (and receiving better job prospects), Apna developed solutions to address these problems. It did so in colloquial mixed languages on its app’s user experience. This ultimately fit the preferences of the workers the company was targeting. 

Today, Apna is introducing upskilling solutions and actively managing 70 virtual communities on its platform.

Localizing for Indonesia

At AC Ventures, we see a few new players in Indonesia aiming to replicate and localize Apna’s success. We have invested in one company called Atma. 

Similar to its Indian counterpart, Atma offers personalized and verified job offers on top of communities for workers to share experiences, tips, and accomplishments. It is also developing its upskilling suite to help these workers learn the right skills for their career goals. 

One main key that Atma brings to the table is a deep level of localization. From language subtleties to chat-based forms and AI-driven job opportunities that encourage decision-making, the app caters acutely to the Indonesian LMI. 

This shows in its traction. The company is now more than doubling every month in job applications within its closed community since launch.  

Atma’s communities are some of the most engaged in the market, proving that user-generated content can go beyond just job posting and vetting. 

Bold experimentation is needed

When building job platforms, we believe that founders must have very deep knowledge of the inner workings of the segment they’re targeting. For example, in the LMI sector, Atma’s founding team has significant past work experience with drivers and manual laborers. 

They have followed Apna closely to understand pain points. While this has allowed Atma to build a strong early product, there is much more to be done as it expands its suite to cater to more industries, regions, and upskilling needs.

With very strong traction and a clear market fit, Atma has a lot of monetization potential in the future. The main objective today is to be useful in helping employees and candidates find each other and to continue growing the platform to be top-of-mind for entry level job seeking. Along the way, other premium services and monetization models will be introduced.

We see a great deal of potential for local platforms to find wonderful monetization setups. To become sustainable, the currently free platforms in the market need to boldly experiment with different business models (e.g. freemium, take rates, etc) to identify the best strategy that works – all with the welfare of the end-user in mind. 

So, despite teething issues, startups tackling this market in Indonesia show promise in disrupting the incumbents and changing the lives of millions of workers. As investors, we are excited to see how the space will evolve in the next five to ten years.

Bio: Michael Soerijadji is the Founder and Managing Partner of AC Ventures, a leading venture capital firm in Southeast Asia. The firm aims to be a generational partner to founders driving positive societal change and economic impact in Indonesia and beyond.

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