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Pesto Tech finds hidden Indian talent for Silicon Valley startups: Startup Stories

A cab ride in the US made Ayush Jaiswal, an entrepreneur in his early twenties, pivot his staffing firm toward tech-focused education.

Source: Pesto Tech

During a visit to the United States in early 2018, Ayush Jaiswal chatted with a cab driver, a man who was originally from Afghanistan. The cabbie, Jaiswal was surprised to learn, was working as a part-time coder. “As a coder, he was making more than what software developers with five to seven years of experience make in India,” Jaiswal, the co-founder and CEO of education tech startup Pesto Tech, told KrASIA in an interview. “And that was just his part-time gig.”

After Jaiswal returned to India, he decided to pivot his technology staffing firm, Pesto Tech, toward education. His company’s new goal was to help software developers in India land coding jobs in the US. However, he wasn’t convinced that most Indian software developers would be on par with their counterparts in the US.

Jaiswal had dropped out of engineering in 2014, just six months after enrolling in a Delhi college. He recalls watching many of his seniors slog for hours at jobs where they were not happy. “I did not believe I was learning enough in college. I loved coding, but did not want a degree, because the life of an engineer was not good,” he said.

After leaving college, Jaiswal worked at multiple companies for free—as long as he could learn how to run a firm. It was early 2017 when, at a co-working space in Delhi, Jaiswal met Andrew Linfoot, a software engineer from the US who was on a backpacking trip in India. Linfoot was working remotely for tech companies back home and making almost USD 150 an hour.

They hit it off immediately and started a company together, hiring software developers for projects outsourced by US firms. A year later, Jaiswal and Linfoot were doing well, but they realized that their business was built on employees who were earning less than 10% of the money that US engineers would make for the same work. “It wasn’t fair to the developers, and we wanted to end this biased system,” said Jaiswal.“The world was getting smaller, and we believed it was possible for everyone to work with these big companies directly, without going through middlemen.”

Based in Gurugram, Pesto Tech now trains software developers with two to five years of experience, giving them advanced technical skills as well as soft skills that US companies look for in their employees and contractors, and then connects them with prospective employers for remote work opportunities. The software developers who are selected for the program do not pay any fees to undergo 16 weeks of training. Instead, they sign an income sharing agreement where they agree to pay 17% of their salary for three years.

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“We invest in people up front. We equitize talent and try to take a share of their future,” said Jaiswal. Although Jaiswal’s idea was simple—to re-equip software developers who have some prior experience and place them with US tech companies—it was not easy to execute.

From zero to hero

“When we went out in the market and told people we would train them for free and get them jobs, they thought it was too good to be true,” said Jaiswal. “It was incredibly difficult to convince them that it was not a scam.” After months of seeking candidates, Pesto Tech received 300 applications from software developers. However, after speaking to all of them and explaining how the program works, only five individuals agreed to go through it.

The first batch of trainees, who joined up in the summer of 2018, wasn’t the top talent that Pesto was aiming to net. Among them, there was a tester, a freshman, and a software engineer with one year of experience. Yet, Jaiswal said, with intense training in the following months, they all received job offers with an average salary of USD 30,000 a year. “These guys weren’t as experienced, but they got wonderful offers. Once we announced that, people started taking us a bit more seriously,” Jaiswal added.

The number of applications skyrocketed. For its next batch of trainees, Pesto Tech received 20,000 applications. However, the company had to contend with another challenge—the bias among American companies that suggests Indian developers are not as strong as coders in the US. “We thought it was time to make India good at front-end development rather than just being good at back-end work,” said Jaiswal.

Ayush Jaiswal, founder and CEO of Pesto Tech. Courtesy of Pesto Tech.

Now, two years down the line, Pesto Tech has between 220 and 250 companies as partners. While most of them are Silicon Valley startups, including AI and data training company Snorkel.org, education publishing platform Highlighter.com, and Y-Combinator-backed healthcare staffing solution company Clipboard Health, it also works with Indian unicorns like B2B marketplace Udaan, and food delivery giant Swiggy.

To date, Pesto has received 140,000 applications for its course. They are strict with their selection—only 250 people have made it through. It has had two cohorts since mid-2018, each with multiple batches. The first cohort graduated in November 2019. “We wanted to make sure that we discover talented people from the places where they often go unnoticed,” Jaiswal said. “So we have got  people from all across India, even from smaller cities like Indore and Jaipur.”

The company claims to have a 95% placement rate, with an average salary of USD 37,000 per year. “We have had people who got tenfold jumps [in income], and the best which we’ve done to date is 25 times,” Jaiswal said, adding that every trainee has at least doubled their earnings.

After landing jobs through Pesto, former trainees pay 17% of their salary to the company as long as they are making more than INR 15 lakh (USD 19,750). Additionally, if Pesto’s program doesn’t at least double their salary, they pay the company nothing (with exceptions for those who enter the program with high earnings). Pesto offers assistance with job placement for up to five years. Fees are capped at USD 30,000. The revenue model ensures a steady cash flow for several years, so long as their training regimen fits their partners’ needs.

The company raised USD 2 million in a seed round last April from Matrix Partners India and a clutch of individual investors including the founders of Swiggy—Sriharsha Majety, Nandan Reddy, and Rahul Jaimini. It claims that it “would be profitable at unit economics level by next month,” and that it is “operating at 80–85% gross margins.”

Meet your mentors

Jaiswal and Linfoot’s stint in tech staffing came in handy when the founders were designing Pesto’s curriculum. “When we were running the staffing company, we would place people with US companies, but they wouldn’t survive for long,” said Jaiswal. “We learned about the gaps that exist between corporates and academia.”

To bridge that gap and figure out how the US tech industry is evolving, Pesto Tech has formed a small team of in-house instructors that reach out to the chief technical officers (CTOs) of startups in the US to bring them on board as mentors. It also acquires firsthand input from these CTOs that is included in the curriculum, updating the materials with every batch that Pesto puts together. So far, Pesto Tech has recruited mentors from companies such as Tesla, Apple, Amazon, Flipkart, Swiggy, ScaleAPI, and OpenAI.

The other part of the puzzle is to ensure that Indian coders can fit in culturally when they take on remote roles with US-based companies. “We make sure that these people are very well-trained to be remote workers, which means they need to be extremely efficient when it comes to communication and discipline,” he said.

Jaiswal expects the demand for remote tech jobs to rise over the next few years. “The industry opportunity is extremely big for us right now, because we are currently at the intersection of education and remote work,” said Jaiswal. “We basically saw this two years back, and thus we have good inbound interest.”

Pesto Tech plans to stick to training software developers, although the firm is looking to expand its curriculum by rolling in more tech courses. So far, they have focused on Javascript. To cater to more trainees, the company switched to livestreamed lectures in February this year.

More recently, the COVID-19 pandemic has made remote work a reality for people who previously were not used to the format. Responding to the crisis, Pesto is opening up the remote work section of its training program for free. “We are getting early signs of growth from candidates, since people who are staying home are getting interested in education more,” Jaiswal said. “For companies, right now, it is all damage control, so even though we have seen growth in our demand-side, the majority is coming from our existing partners.”

Jaiswal believes that after the COVID-19 crisis blows over, the tech industry will embrace remote work arrangements more than before, which will create a massive market for them. “The world is changing at a pace we have never seen before. And people will have to adapt to this new way of living,” he said.

This article is part of KrASIA’s “Startup Stories” series, where the writers of KrASIA speak with founders of tech companies in South and Southeast Asia.