SUMMARY
Between Upskilling Indian Software Engineers Who Want Better Pay And US Companies That Need Talent, Pesto Has Found A Niche Market
The IT boom might have been over long ago, but the IT dream lives on in India. It’s almost every engineering graduate’s dream — and India produces 1.5 Mn of them every year — to work for one of the large US-based IT or consulting companies that have their operations in India (the chance to be sent ‘onsite’ for a couple of years to the US is the cherry on the cake). In the last few years, Silicon Valley startups have been added to the wishlist.
But, while they might be getting their ‘dream’ jobs, statistics suggest that their living standard, compared to their US peers, hasn’t improved much. The average salaries of Indian software engineers are between $6,600 (entry level) and $11,400 (senior level) per annum. Compare that to the US, where engineers make over $120,000 per year on an average at entry level. The pay gap is huge.
Ayush Jaiswal, a 22-year-old techie who worked in the US for a while, noticed this deep chasm in the pay scales of engineers based in the US and in India. He also realised that this isn’t because Indian engineers are not as capable as their US peers, but because they don’t receive the requisite training and skills enhancement to climb up the career ladder and increase their market value. This bothered him so much that he decided to do something about it.
Roping in his American friend, Andrew Linfoot, Jaiswal founded Pesto in 2017 — a startup that wants to create a marketplace for engineers in India for overseas clients.
Pesto is a school dedicated to helping India’s software engineers, especially developers, unlock their full potential by training them and helping them get appointments with US-based technology companies. They can work remotely at the same salaries than their peers in the US earn.
The aim is to create a level playing field and give everyone equal access to opportunities, regardless of where they are born.
Inc42 caught up with Jaiswal to learn more about Pesto.
Pesto: Creating A Level Playing Field For India’s Engineers
Pesto is on a mission to turn the global software engineering industry into a meritocracy. “Our market opportunity comes from giving engineers the chance to sell their skills in the global market so they can earn their true worth,” says Jaiswal. This is true. Only recently Tech Mahindra CEO C P Gurnani said that 94% of IT graduates are not fit for hiring; he was talking about the huge skill gap in areas such as AI, the blockchain, cybersecurity, machine learning, etc.
“We are focussed on upskilling India’s 5 Mn software engineers and pairing them with the world’s top tech companies. I want to give them a level playing field and I believe they’ll crush developers from different parts of the world in terms of competence,” he adds.
Jaiswal says the only way to improve a lot of Indian engineers was by leveraging technology to enhance their skills and knowledge. And the only way to change things was to lead the change. “So, I created a school where no one needs to pay (in the beginning). They get trained by the best, learning the latest technologies in the market,” says the young entrepreneur.
The Beginning
Jaiswal’s entrepreneurship dream started taking shape when he was a student of Class VIII or IX in Varanasi back in 2013-14. Even as a school kid, he was excited about all things related to technology. He did exceptionally well in science and mathematics. Like most regular schools in India, there were hardly enough computers to go around the class. Jaiswal soaked up all he could in school and turned to Google to quench his thirst for technological knowledge. Even before he entered engineering college, he had already learnt to code on Google!
In 2015, when he was 18, he quit KIET College Of Education, Ghaziabad, where he was doing his engineering, and founded his first startup, which didn’t do well. His spirits hardly dampened, Jaiswal moved on quickly from the failure.
Jaiswal and Andrew started Pesto as a B2C consulting company that makes money on the massive arbitrage between the India and US markets. On one hand, they help upskill Indian software engineers who want better pay and, on the other, they help meet the technical resource requirements of the US tech companies.
The duo started experimenting and working on different business models to recruit engineers to upgrade their skills and knowledge. They figured out the best way to upskill them was to enhance their coding skills, so they started a work-cum-training programme that enrols engineers into a training module.
How It Works
At Pesto, young engineering graduates and even experienced engineers are taught the best practices in modern software development and given lessons in how to be effective remote employees.
They undergo four weeks of classroom learning, four weeks of building a real application from the ground up, and four weeks of working on an open-source apprenticeship with Pesto’s international partners.
By the end of the training, the candidates would have written thousands of lines of code, shipped a real product to users and built an open-source portfolio. Once they complete the training, Pesto helps them get coding assignments from US tech companies.
“We make them beast developers then they get placed at US tech companies as full-time remote employees,” says Jaiswal. This means the Indian engineers earn at par with Silicon Valley engineers but don’t have to go through the hassle of getting jobs in or visas to the US. The model works only because Pesto is completely B2C. It is, in essence, a career accelerator programme for engineers.
“We believe that the most important thing is to be an awesome person with values. Besides the technical curriculum, they also undergo training in soft skills to ensure that their work ethic is strong and they fit well into different cultures,” adds Jaiswal.
Using Tech To Bridge The India-US Pay Gap
He had a deep desire to create something technologically disruptive that would also have a positive impact on society. While he was trying to figure out what it was that he wanted to create, he took up jobs at all kinds of startups — from foodtech to laundry services— to learn how startups work. Then he met Andrew when he was on his trip to India, who shared his enthusiasm for technology and his passion to create something worthwhile, and the duo founded Pesto.
Jaiswal says, “I started Pesto to enable Indian engineers to get the same respect, lifestyle, and money as US engineers. And that was only possible by helping them develop the same skills that engineers in San Francisco have. We want to make India a global leader in IT and provide high-end education and employment to Indian engineers.”
Equipped with the ambition to invest in India’s human capital, Pesto decided to go beyond the limited functionality of a traditional hiring firm that simply screens resumes on job portals and helps prospective applicants go through the hiring process. It decided to use technology not only to facilitate hiring but also to train the people they were helping get hired.
“We are using technology to automate everything — including the tax, legal, and logistical complexities of hiring overseas employees. This makes it easy for foreign companies that don’t have their own set up in India to hire remote teams in the country. It also gives graduates a much broader selection of companies to work for, especially startups that are working on interesting technological challenges,” says Jaiswal.
How Does Pesto Make Money?
Pesto launched as a bootstrapped company and sold $20,000 worth of services within days of coming into existence.
The startup is today cash-flow positive and is planning to raise some growth capital this year. It made about $350K in revenue in the first year itself. Pesto is working with Internet disruptor Gary Vaynerchuk’s Vayner Media as a hiring partner.
Considering its product, the size of the market, and the abundance of engineers in India, Pesto is confident about its prospects. “The problem is that most Indian students can’t afford to pay for our training up front. We have instructors and mentors from Silicon Valley to guide and train the engineers we onboard. This kind of training would cost about $20,000 per student,” says Jaiswal.
Pesto has found a way around this — instead of asking the engineers to pay the money up front, the startup charges a fixed percentage of each graduate’s future salary. “We take 17% of their salary for next three years with an upper cap of $30K. We also ensure that after the Pesto programme, they get at least two to four times of their last-drawn salary. Then parting with 17% becomes super easy,” says Jaiswal.
“After completion of their training, we match them with US tech companies where they earn significantly more than it would be possible at the average Indian firm. These increased salaries make it possible for us to cover the high cost of our training,” he says.
‘Are You For Real?’
Pesto is en route to gaining recognition in India and the US, but the going is not easy. Being a dropout and finding an American co-founder was the least of his challenges, says Jaiswal.
Ironically, one of the biggest challenges Pesto is facing currently is convincing engineers in India that the offer is for real. “Many people have reached out to me asking if what we are offering — a free training if we can’t place you for at least $23K per year (INR 15 LPA) after three months of the training — is a scam. Most of my time is spent on calls with engineers explaining how it works and convincing them to finish their applications,” he says.
However, both the founders have also had some turning points in their startup journey. “We started out just like any other developers’ shop in India, except that we trained our engineers way better and had insane standards for code quality. The turning point was when we realised the most valuable thing that we were doing was training our engineers, not our client projects. We decided to pivot and focus on bringing our training programme to more engineers in India,” says Jaiswal.
Raising The Bar Of Tech Education In India
With Prime Minister Modi’s thrust on ‘Make in India’, India needs to as many innovators as it can have. Among other problems the campaign is facing is the poor quality of education in India. Another issue is the challenge of being an entrepreneur in India.
Jaiswal adds, “It’s definitely very difficult to be an entrepreneur in India. I couldn’t tell my parents that I had dropped out of college and had to deal with many social stereotypes to be an entrepreneur. My parents still don’t understand what I do.”
Like many other startup founders, Jaiswal feels that the ecosystem in India is in a nascent stage and it needs support from all quarters to crystallise. “I found the ecosystem in San Francisco to be really amazing. The major difference is that people have an open mindset there. I would like to see more people here wanting to give back (to society) and getting involved with early-stage startups to create value for the ecosystem,” he says.
Only a handful of the 1.5 Mn engineering graduates who pass out in India every year come from the IITs. Engineering colleges have been springing up like wild mushrooms in India in the last few years — from 1,511 colleges in 2006-07, their number rose to 3,345 in 2014-15.
But this is not necessarily good news. Many colleges and universities simply haven’t been able to maintain or raise their standards. Students, thus, don’t have access to the right curricula, essential laboratory infrastructure, or even good teachers.
With the quality of education in India still being a challenge, upskilling people through training is a difficult task. But if more startups like Pesto come forward to walk this difficult path, things are likely to change for the better, both for the country and its engineers.
