On-Demand Service Platforms Struggle to Scale Amid Summer Workforce Crunch

Major cities like Mumbai, Bengaluru, and the National Capital Region are experiencing a scarcity of workers for on-demand house-help platforms like Snabbit, Pronto, and Urban Company's Insta Help. This resulted in reduced availability and appointments that had to be rescheduled or cancelled. Users have complained about having trouble getting same-day or even next-day service slots, especially for regular cleaning services, even though the platforms are trying to scale up to satisfy demand.

Demand for app-based home services is on the rise, which is causing this disruption. Rising demand is being propelled by more convenient platform-based hiring practices and dual-income households.

Core Reasons Behind Workforce Crisis

During the summer months, when schools are shut, gig workers often return to their villages to assist with harvesting. The effect was magnified this year due to elections in West Bengal and Tamil Nadu, which caused a significant portion of the workforce to leave urban areas. In response to a media question, a Pronto representative claimed that a handful of micromarkets are seeing exceptionally high demand.

In addition, he mentioned that finding trustworthy housekeepers has been more challenging in these areas over the past few weeks. Hence, prompting many families to seek assistance through Pronto. This spike comes on top of the category's steady growth over the past few quarters. Over the last eight months, Pronto's daily reservations have increased from around 1,000 to over 18,000, and they are currently expanding at a rate of over 20% each week. The company employs 3,000 people. According to the representative, Pronto's supply base is at an all-time high, and the company is adding qualified workers daily.

Investors Betting High on Demand Service Platforms

On-demand service platforms have also attracted investors who are increasing their bets on the market potential. Bringing its total fundraising to $112 million within two years of inception, Snabbit raised $56 million in a Series D round last week from Mirae Asset and Susquehanna Venture Capital, at a valuation of roughly $400 million. At a post-money valuation of around $100 million, Pronto raised $25 million in March from Epiq Capital.

During its results call for the December quarter, Urban Company announced that it will keep investing in Insta Help. During that time, Insta Help earned INR 6.8 crore in operating revenue. However, there is a discrepancy between the funding momentum and the actual world. People who do domestic work often switch between informal networks, different platforms, or different gig jobs. Platforms attempting to standardise services are finding it more difficult to retain workers due to rising expectations over salary, flexibility, and working conditions.