Workforce connectivity platforms

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Workforce connectivity platforms
Workforce connectivity platforms targeted to entry-level, non-traditional background individuals.
SectorMost major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Technology and Communications
Technology
Business Model Description

Develop online vocational talent marketplaces that connect companies with entry-level professionals applying for formal positions, enabling the inclusion of individuals from non-traditional backgrounds and train them for their first job.

Expected Impact

This initiative intends to reduce unemployment through digital solutions.

Indicative ReturnDescribes the rate of growth an investment is expected to generate within the IOA. The indicative return is identified for the IOA by establishing its Internal Rate of Return (IRR), Return of Investment (ROI) or Gross Profit Margin (GPM).
> 25% (in IRR)
Investment TimeframeDescribes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Medium Term (5–10 years)
Market SizeDescribes the value of potential addressable market of the IOA. The market size is identified for the IOA by establishing the value in USD, identifying the Compound Annual Growth Rate (CAGR) or providing a numeric unit critical to the IOA.
USD 100 million - USD 1 billion
Average Ticket Size (USD)Describes the USD amount for a typical investment required in the IOA.
USD 1 million - USD 10 million
Direct ImpactDescribes the primary SDG(s) the IOA addresses.
Decent Work and Economic Growth (SDG 8)
Indirect ImpactDescribes the secondary SDG(s) the IOA addresses.
No Poverty (SDG 1) Gender Equality (SDG 5) Reduced Inequalities (SDG 10)
Country
SectorMost major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Technology and Communications
TC

Development need: >Only 42.56% of households in Colombia have a computers and/or tablets and around and 73% have a mobile phone (1).

Policy priority: > Modernization law of 2019 intends to modernize institutions and focalize investments to facilitate the deployment of high cost infrastructure in the ICT sector. Auctions of the connectivity expectrum have taken place (2)(3).

Gender inequalities and marginalization issues: >Only 6.11% of women work in the ICT sector, without growth over the last years (5).

Investment opportunities: >The IT sector is expected to grow with prospects for U.S. companies derived from the Trade Agreement (4).

Key bottlenecks: > The main bottlenecks and obstacles include rural connectivity infrastructure development and deployment, access to technology and devices and skill development among less educated population.

SubsectorMost major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Technology
TC.1

Development need: >Low penetration of technology in companies: internet of things (14,8%), robotics (11,1%), 3D printers (4,8%), virtual reality (1,7%), Big Data (16,8%) and AI (9,7%). Only 16% of large companies as of 2017 sold through digital channels. (7)

Policy priority: >Modernization law of 2019 intends to modernize institutions and focalize investments to facilitate the deployment of high cost infrastructure in the ICT sector. Auctions of the connectivity expectrum have taken place (2).

Gender inequalities and marginalization issues: >Only 6.11% of women work in the ICT sector, without growth over the last years (5).

Investment opportunities: >Micro commerce is the sector that is growing the fastest in digital adoption in Colombia (+37%) Digital transformation and efficient management through Big Data and AI, digital economy adoption, digital and mobile banking (6).

Key bottlenecks: >The main bottlenecks and obstacles include capex intensive connectivity development, transport infrastructure lags and low skills and adoption of technologies.

IndustriesMost major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Software and IT Services
TC-SI
Investment Opportunity Area

Workforce connectivity platforms

Workforce connectivity platforms targeted to entry-level, non-traditional background individuals.
Business Model

Develop online vocational talent marketplaces that connect companies with entry-level professionals applying for formal positions, enabling the inclusion of individuals from non-traditional backgrounds and train them for their first job.

Market Size (USD)Describes the value in USD of a potential addressable market of the IOA.
USD 100 million - USD 1 billion

> Recruitment agencies charge 10%-15% of the first wage of a successful hire. Assuming a minimum wage hire (US $300) for 16.4M of unemployed and informal individuals this is a $740MUSD market. (8)

> Online Recruitment Market to Exhibit 7.1% CAGR by 2027 globally.

IRRDescribes an expected annual rate of growth of the IOA investment.
> 25%

Top quartile IRR vcs investing in technology and AI according to pitchbook is 25.87% (9).

TimeframeDescribes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Medium Term (5–10 years)

VC median exit time in 2017 was 8.2 years (10)

Average Ticket Size (USD)Describes the USD amount for a typical investment required in the IOA.
USD 1 million - USD 10 million
Capital - Limited Investor Interest
> Some companies may be skeptical about the qualifications of a non-traditional job applicants.
Market - Highly Regulated
> The labor market is a highly regulated market, and if a significant proportion of hiring takes place through online marketplaces the government is likely to place more regulations,
Sustainable Development Need

> 5.3M or 21.4% of the economically active population in Colombia are out of a job and 14.1M are informally employed (12).

> 120-180 days is the average time a Colombian takes to find a job (13).

Gender & Marginalisation

> 28% of women and 31% of young professionals are unemployed, being those who have the hardest time finding a job (12).

Expected Development Outcome

> Connect highly needed talent to living wage jobs by making it easier for employers to find, validate and retain skilful workers while reducing barriers to entry for candidates from non-traditional backgrounds and shorten time to employment.

> Analyze how connectivity platforms and training can improve new employment generation.

Gender & Marginalisation

> Reduce unemployment gender gaps . In July 2020 unemployment rate for women was around 26% whereas for men it was around 16% (14).

Primary SDGs addressed
8 - Decent Work and Economic Growth
Decent Work and Economic Growth (SDG 8)

8.3.1 Proportion of informal employment in total employment, by sector and sex

8.5.2 Unemployment rate, by sex, age and persons with disabilities

Current Level

52% formality in 2018 (15).

20.2% unemployment in July 2020 (15).

Target Level

60% of formality by 2030 (15).

6.8% unemployment rate in 2030 (15).

Secondary SDGs addressed
1 - No Poverty
No Poverty (SDG 1)
5 - Gender Equality
Gender Equality (SDG 5)
10 - Reduced Inequalities
Reduced Inequalities (SDG 10)
Directly impacted stakeholders
People
> 14.1 informal workers and 5.3M unemployed
Corporates
> 16 M SMEs in Colombia looking for talent
Gender inequality and/or marginalization
> 26% of women in Colombia who are currently unemployed
Indirectly impacted stakeholders
Public sector
> Working towards reducing unemployment with the aid of new technology
Corporates
> AI technology providers who are benefited by increased use and purchase
Outcome Risks

> Risk of increased automatization reducing current internal human resources personnel, temporarily increasing unemployment

> Broaden tax base and thus increase social spending: an increase of formal employment will include more tax payers in the system

Impact Risks

External risk: >Lag in connection infrastructure in rural areas and the popularization of digital hiring could lead to even further inequalities in unemployment

Drop-off risk: > lack of digital abilities and adoption from companies and users

External risk: >regardless of the existence of the marketplace, Colombia lacks a workforce with the right skills to fulfil certain companies requirements

Execution risk: >Technologies could result confusing for new users, reducing adoption rates

What

Positive and significant outcome due to increased job placements.

Who

Underserved stakeholders that are currently overlooked for certain jobs and companies.

Risk

Failing to implement this initiative will perpetuate inequalities and unemployment in lower and less educated social groups.

Impact Thesis

This initiative intends to reduce unemployment through digital solutions.

Policy Environment

(Plan Nacional de Desarrollo): Generate services that help people acquire quality jobs, with an emphasis on groups with greater unemployment. Reduce job informality to 41.2%, contribute to connect 2 million job vacancies and reduce unemployment to 7.6%.(17)

(Empleo para la prosperidad): aims at facilitating labour insertion of vulnerable population through the strengthening of their transversal skills and access to employment opportunities.(18)

(Servicio público de empleo): Manages and promotes the Public Employment Services, with a quality approach through the timely and efficient operation of the network of providers in the field of articulation and integration of active labour market policies.(19)

Financial Environment

Financial incentives: IDB, Fundación Corona, Prosperidad Social and SECO, led the successful structuring of a social impact bond to transform the way of addressing the challenges of employability in Colombia and achieve greater cost effectiveness of employability projects for difficult to place populations.(19)

Fiscal incentives: Tax and contribution exemption for hiring young professionals for a year (120% reductions in obligatory payments for companies who hire them) (23).

Subsidies: Due to the pandemic, the city of Bogotá will subsidise companies who hire young people, women and adults over 50 years old (24).

Regulatory Environment

(The Law 2010 of 2019 (Law of economic growth)): generates Income tax reduction incentives to those companies that hire young workers who aspire to get their First Job. (20)

(Decree 2365 of 2019): this decree seeks to hire young professionals in public entities to foster public sector careers from an early stage (21).

(Law 1780 of 2016): this law incentivises hiring young professionals by exempting companies from contributing to compensation funds during the first year of the hire (22).

Private Sector

Start-ups such as Catalyte a software engineering services company that uses data science to build technology workforces from non-traditional backgrounds, has raised +60MUSD in VC.(6)

Government

The national government is an important actor promoting reductions in unemployment.

Non-Profit

IDB, Fundación Corona, Prosperidad Social and SECO, led the successful structuring of a social impact bond to transform the way of addressing the challenges of employability in Colombia and achieve greater cost effectiveness of employability projects for difficult to place populations.(19)

Sector Sources
  • 1) MINTIC (2020) Indicadores básicos de TIC en los hogares. Accessed february 8th 2021 2) MINTIC (2019) ¿Qué es el Proyecto de Ley de Modernización del Sector TIC? Accessed february 8th 2021 3) Oxford Business Group (2020) - New ICT laws and attention to innovation increase Colombia's internet coverage. Accessed January 26 2021 4) International Trade Administration (2020) – Information and Communication Technology. Accessed January 26 2021 5) Semana (2018) Analítica de datos, una de las tecnologías con más futuro en el 2018. Accessed February 8th 2021 6) EMIS Insights (2020), Colombia ICT Sector Report 2021-2022 7) MINTIC (2018) Así usan la tecnología las mujeres en Colombia - Accessed February 8th 2021.
IOA Sources
  • 8) Larking (2019) - How much recruitment agencies charge? Accessed June 30th 2020. 9) Cottonwood vc (2018) Cottonwood Technology Fund listed by Pitchbook as one of the best performing VC funds with an IRR of 46% (Fund I). "10) Venture Beat (2017) – VC investing still strong even as median time to exit reaches 8.2 years Adley Bowden, PitchBook - Accessed February 8th 2021." 11) OECD (2018) -Private Equity Investment in Artificial Intelligence. Accessed February 8th 2021. "12) ElTiempo (2020) – 43,5 % de la población desocupada perdió el empleo por la pandemia. Accessed August 20th 2020. " 13) Actualísese (2019) – Cuánto se demora un Colombiano en promedio conseguir un empleo. Accessed May 30th 2020. 14) El Expectador (2021) El peso del desempleo en contra de las mujeres. Accessed February 8th 2021. 15) DNP (2018) Objetivos de desarrollo sostenible. Accessed February 8th 2021 16) DNP (2017) – Plan Nacional de Desarrollo 17) Prosperidad Social (2019) – Empleabilidad Prosperidad Social. Accessed May 22nd 2020. 18) ServicioDeEmpleo (2020) – Unidad del Servicio Público de Empleo. Accessed May 23rd 2020. 19) SIB.co (2020) – Programas de Bonos de Impacto Social en Colombia. Accessed May 23rd 2020. 20) LBX (2019) – Nueva Ley de Crecimiento económico. Accessed May 21st 2020. 21) Presidencia (2019) - Presidente Duque expidió decreto que reglamenta contratación en todas las entidades públicas de jóvenes sin experiencia laboral. Accessed February 8th 2021. 22) Senado de Colombia (2020) -Aprobado en primer debate proyecto que promueve incentivos para la contratación de jóvenes al sector productivo. Accessed February 8th 2021. 23) Forbes (2020) -Bogotá subsidiará a las empresas que contraten gente en medio de la crisis. Accessed February 8th 2021 24) DSA Russell Bedford (2020) INCENTIVOS TRIBUTARIOS POR LA CONTRATACIÓN DE JÓVENES MENORES DE 28 AÑOS. Accessed February 8th 2021 25) Dane (2020) Mercado laboral por regiones. Accessed February 8th 2021 26) Global News Wire (2020) Online recruitment market. Accessed February 8th 2021