Getty Images(This story originally appeared in 
on Feb 19, 2020)
Mohammed Hassan had to forego his monthly paycheque for six months when he joined the coding bootcamp at Masai School in Bengaluru. For the 24-year-old engineer from Salem, that was a luxury considering he was very dependent on the Rs 18,000 a month he earned as a mechanic. But one comfort was that he would have to pay Masai only after the course, and what was even more attractive was that he would have to pay only if he got a job with a minimum salary of Rs 6 lakh. After the course, he was picked up by social networking app ShareChat as a full-stack developer with a salary of Rs 18 lakh per annum — eight times his previous salary. on Feb 19, 2020)The enormous demand for software skills has encouraged a new business model that many students could find very attractive. Learn now, pay later, and that too, only if you get a certain minimum salary. The contract between the student and institution is called the income share agreement (ISA). If the student gets a job with at least that salary, he/she will pay 15-17% of the monthly salary to the institution for the first two-three years. “I could not possibly have pursued the course without the ISA,” says Hassan.
Pesto Tech is another company that offers an ISA. Their Pesto Remote is a three-month full-stack engineering course — teaching tech like React, Node, Mongo, Redux, Git, functional programming and testdriven development — remotely to students. The students must have had two years of work experience. “We charge 17% of their salary every month for the first three years only if their salary is Rs 15 lakh,” says Pesto co-founder Ayush Jaiswal. It also has the Pesto Pro programme for engineers with over five years experience, where the ISA kicks in if they make 1.5 to 2 times their previous salary. “We want to be a part of the students’ success and not burden them with a loan,” says Jaiswal. Pesto has students from 23 states learning and earning remotely.
Masai runs a 24-week gruelling course to train students to become full-stack developers. Once a student gets a job that pays Rs 6 lakh per annum or more, the ISA kicks in, which makes it mandatory to pay 15% of the monthly salary for three years. The total to be paid is capped at Rs 3 lakh.
“We are starting a part-time course for working professionals, three hours daily in the evening for eight months. They will start paying us if their salary is 1.5 times what they are earning,” says Prateek Shukla, co-founder and CEO. Unlike Pesto, Masai works with non-banking financial companies, which underwrite the fees, pay it to Masai if the student gets a job with the minimum salary, and collects the monthly payments from the students.
InterviewBit Academy, which recently raised $20 million in a series-A round by Sequoia India and Tiger Global, offers both upfront payments and ISA options. For the first option, students need to pay Rs 3 lakh. In the ISA scheme, it is 15% of the monthly pay for two years, provided the student gets a minimum Rs 7-lakh salary. “70% students from the current batch have got that minimum salary, others are still appearing for job interviews. If you have learnt it right and have got the required skill sets, getting a Rs 7-lakh job is not difficult at all,” says InterviewBit cofounder Abhimanyu Saxena.
Ankur Pahwa, partner and national leader for e-commerce and consumer internet at consulting firm EY India, says ventures offering ISAs are aligning industry requirements and students’ educational needs. “Apart from students, it also helps (recruiting) companies tied up with these startups save training and recruitment costs and meet in-demand job requirements,” he says.
But there are risks in the model and most are aware of it. InterviewBit co-founder Abhimanyu Saxena wonders if ISAs are legally enforceable, and points out that it might also be difficult to implement. “Let’s say a person gets a job and three months later joins another firm at a higher salary. How do you track that? There is no systematic way,” he says.
Pahwa says the success of ISA ventures will depend on maintaining learning quality and employability of candidates, especially as they start to scale. The big challenge would be the availability of highpaying jobs for a large number of students. The skill gaps may not remain as yawning as it is now. “Regulations in the space are still developing and any changes could have an impact on future business models,” says Pahwa.
