(This story originally appeared in on Jun 17, 2019)

BENGALURU: Bharani Dharanidharan (25) hails from Namakkal in rural Tamil Nadu. Last year, after finishing his engineering degree from Anna University , he was freelancing — making Rs 5-6 lakh a year. Cut to 2019: Dharanidharan works for a US-based startup remotely from India, making about Rs 32 lakh per annum. That’s a 5X increase in his annual income, the kind of jump employees fantasise about.So, what changed? For Dharanidharan, the magic wand was an income-sharing agreement startup, or ISA startups as they are commonly referred to in the US or Europe. The concept is simple: Enroll for reskilling courses for free and pay the company only after you have landed a job with a minimum annual income threshold. If you don’t get a job after the programme, you don’t pay. ISA, as a concept, is still nascent in India compared to developed economies.Dharanidharan himself was not sure if the promise by Pesto, an ISA startup, was true or if it was a scam. “After I heard about Pesto, I did a background check on the startup before I enrolled for their three-month programme. The concept is helpful as I did not have to pay. And now, I am the first engineer outside the founding team at Clipboard Health. This model made things easier for me,” Dharanidharan, whose parents are farmers, said from Chennai.Pesto is not alone in the ISA space. Other startups are emerging too. US-based startup Lambda School will set up operations in India this year as well. Pesto recently raised $2 million from venture capital firm Matrix Partners, while InterviewBit Academy is one of the startups that made it to the first set selected by Sequoia Capital’s new accelerator programme — Surge. Then there are the likes of AttainU and Photon Academy.Like Dharanidharan, Nikhil Dhaka got a job offer of about Rs 7 lakh per annum from IT services firm HCL. He declined it and opted for InterviewBit Academy’s six-month programme under an ISA. Within weeks of starting the programme, he got a job paying him Rs 24 lakh a year at Bengaluru-based payments startup Razorpay. “I applied for better opportunities. I like the idea that you pay from your own salary and not ask parents to pay for the courses,” said Dhaka, who is an engineering graduate from IIT-BHU, Varanasi.Both Dhaka and Dharanidharan will pay about 17% of their salary every month to the respective startups for one year and three years respectively. InterviewBit Academy has a maximum threshold of Rs 3 lakh it charges from students. But Dharanidharan would pay about Rs 16 lakh over the next three years as Pesto charges higher, with the threshold being Rs 21 lakh — a reason why most of its students pay for three years. Dhaka will complete his programme even as he joins Razorpay next month.As these startups see investors placing bets on them, they are looking to scale up fast. For instance, Pesto’s batch size has doubled from six to 12 people. InterviewBit Academy is planning a new cohort only for people from the IT industry who want to re-skill themselves for better opportunities as the IT job market remains sluggish.“We don’t want to mix the college freshers with mid-level IT executives, but there is a lot of demand from the latter. So, we are now looking at a batch only for experienced IT executives,” said InterviewBit Academy co-founder Abhimanyu Saxena. The startup also plans to test its model in the US to train locals there.Pesto’s co-founder Ayush Jaiswal said, “There is a lot of demand from people in the IT sector. For companies in the US, it is cheaper to hire good engineers here working remotely, paying them Rs 30-35 lakh compared to Rs 60-70 lakh in the US.” He said his startup has been able to place everyone with such companies abroad.What happens if someone refuses to pay after landing a job or leaves the course sessions midway? These startups are getting the companies, where the students land a job and non-banking financial companies (NBFCs) involved in the formal contracts. “We don’t say income-sharing in the official contract. It’s a loan agreement with an NBFC or the company giving the job involved. And the idea is if you don’t get a job, the loan is cancelled,” Saxena added. If one drops out of the course after a week — till the first week there are no riders — and finds a job in the next few months, the student will be liable to pay 17% of salary to the startup, for a term fixed in the contract earlier.These startups are also seeing interest from major tech companies like Amazon , Flipkart, Uber and others who are willing to even pay to get the best talent out of these programmes. In April, Lambda School’s co-founder and CEO Austen Allred had seen similar interest from companies, asking them to train Indian engineers. Backed by the likes of Silicon Valley’s Y Combinator and Google Ventures, Allred is setting up operations in India.“This (ISA) trend will continue and go beyond just engineering. The trend is changing from hire-and-train to train-and-hire. Across industries, the stuff people are learning are not relevant anymore, be it automotive, IT, banking, etc,” said KPMG India partner and head (education) Narayanan Ramaswamy.