India faces a curious dilemma. In the next two decades, it will add over 200 million people to its working
age - between 18 to 60 years - population. Much more than any other country in the world. Even China, seen as the mother lode of the global economy this century, will see its workforce shrink by about 100 million by 2030.
For India, more working people
means more income. More income means a more prosperous nation. For a country that will become a middle income nation - per capita annual wages of $1,200, translating into Rs 4,500 a month - by the end of 2010/11 after more than a century of penury, its young population presents a never-before opportunity for transition.
Students attend a workshop at the IIJT centre in Chandigarh
That is, if it can get its people readied for work. If it can train its young
to man global standard factories. If it can get its young to be smart accountants. If it can turn its young into efficient yet friendly front office staff at super markets. If it can have its young tell the difference between a dovetail joint and a lap joint in a well-crafted wooden table. If it can produce enough nurses and doctors to charm and heal the world's increasing old. If it can...
If you are among those sceptical of India's capacity to do so, Business Today
has news for you. There are the beginnings of a trend of India starting to train its people on a scale large enough to alter the nation's future. Dozens of training companies with ambitions of training millions in engineering, construction, manufacturing, retailing, insurance, banking services including microfinance, accountancy, hospitality, health care and other vocations are sprouting up around India.
Students at a Global Talent Track Centre in Bulandshahr, UP
|Meeting the 500 million challenge|
Training goals: National skill development corporation 150 mn
Labour Ministry: 100 mn
Ministries under national skill development board 250mn
Nitesh Kumar Chaurasia, an arts graduate from Gorakhpur, a town in eastern Uttar Pradesh, is one among the thousands of young Indians flocking to these institutes. Enrolled at a four-month module on business accounting at IIJT, a skill training provider and part of India's biggest staffing company TeamLease Services, the 21-year-old's logic for paying Rs 28,000 for the programme is simple: "I would rather work in a comfortable office environment." Among the several jobs Chaurasia has pursued in the past is a position in the Uttar Pradesh police force.
ITI-trained employees work at the Maruti Suzuki plant in Gurgaon
The draw of a higher probability of landing a job is strong and many pay the Rs 30,000 to Rs 50,000 course fees even if it is more than half a year's income in a lower middle class family. IIJT, across its 123 centres in India, has 12,000 trainees on its rolls. In an economy where even multi-billion dollar companies are growing revenues at 15 to 30 per cent annually, demand for talent is such that many among the neo-trained are getting jobs.
The story resonates across India, as BT writers and photographers who travelled to Bulandshahr, Chandigarh, Pune, Mysore, and Manesar, besides big cities such as New Delhi and Hyderabad, found. In the capital's Shastri Park, Delhi Metro Rail Corporation is training its managers and line workers. It has roped in multiple private players to train its workforce.
Scale is critical and players such as Centum, IIJT and Everonn, among others, have the ability to deliver scale
Dilip Chenoy, CEO, National Skill Development Corporation
Among various modules, IndiaSkills, a venture between Manipal Education and the UK's City & Guilds, trains the technical staff (mostly diploma holders from Industrial Training Institutes, or ITIs) in safety and maintenance. The target is to train 2,000 in batches of 70 a week; already 800 have completed their training. This is just the beginning, says Hari Menon, CEO, IndiaSkills. "Over the next five years, we plan to skill and facilitate employment of one million learners through 500 skill centres covering 50 per cent of districts of India," he says.
Aiding that effort is the National Skill Development Corporation, or NSDC, a partnership between the Union government and industry associations. The National Skill Development Policy puts the need for skilled hands in India at 530 million. NSDC has been entrusted the task of producing a 150-million-strong skilled workforce by 2022, or some 13 million a year. (The remaining 350 million, it is expected, will be covered by the current crop of colleges, ITIs and other institutions.) That's a big jump from the three million skilled workers India produces annually today. NSDC has committed Rs 667 crore to support private and government-aided skill initiatives and has given its nod to 26 projects to date (See NSDC's Project Partners). Several more are in the pipeline.
On course five years after
Background: Completed 10+2 in 2006; worked with CA for a year at Rs 2,000 per month
When he trained, with whom: In 2008, he joined one-year Complete Business Accountant course with IIJT Chandigarh
How much he spent on the course: Rs 30,000
Earning now: Rs 9,000 per month
Soon after passing out of school, Anup Chandel joined a chartered accountant's office in Ropar, Punjab as assistant in 2006. In his job, he was doing petty work which included helping the CA in preparing profit and loss accounts and balance sheets, doing tally transactions and other verification work.
At Rs 2,000 a month, he worked there for almost a year before a friend told him about the finance course of IIJT Chandigarh. "I wanted to work in the accounts department of a reputed company which was not possible without a diploma or certificate course in finance, so I enrolled for IIJT's Complete Business Accountant course in 2008," says Chandel. He paid Rs 30,000 for the course, but when it got over; he could not find a job. "IIJT arranged three to four interviews for me, but due to lack of qualification, I couldn't get a job," he says adding that he had to go back to the same CA in Ropar. This time, his salary was Rs 6,000 a month. "While working in Ropar, I kept looking for jobs," he says. Almost after a year, he got a job offer from Chandigarh's Integral Development Engineers. Today 23-year-old Chandel works as accounts officer in the company and gets Rs 9,000 per month. He is currently pursuing his graduation in commerce from Himachal Pradesh University through correspondence.
With a huge addressable market for skill development and active government support, many are joining the bandwagon, including corporates such as Centum Workskills and IL&FS, first time entrepreneurs such as Edubridge and iStar, NGOs like Pratham, and private players NIIT, Global Talent Track, or GTT, and Basix's BABLE. India is also poised to get its first vocational education training university in Gujarat to be set up by the state government and TeamLease.
The range of training runs from shopfloor to software. At an office on Pune's Dholey Patil Road, around 40 students are learning dotNET, a Microsoft Windows technology, at a lab set up by GTT. This is the latest centre of GTT, set up in 2008, adding to a chain with a presence in 15 states, including far-flung Assam and Jammu and Kashmir.
We work with companies to understand their skill requirements. We then work backwards and decide what courses we would like to launch
Sanjeev Duggal, Centum CEO and Executive Director
GTT works on a hybrid model: it sets up its own training centres, works with colleges and universities, and services employers who tell it their needs. GTT then selects, trains and assesses talent for them.
"Companies are looking for domain specialists. At the Pune lab, we will create experience learning for creating domain specialists," says Uma Ganesh, GTT's CEO. And, if the pedigree of her backers - Intel Capital and Helion Ventures - is any indication, it may seem that there is money, plenty of it, to be made.
But international experts point to the danger of a government-led nationwide training programme. Karan Khemka, partner at Parthenon Group, a London advisory firm specialising in education, believes hiring companies are running their own training. Pointing to Wal-Mart, the biggest retailer in the United States, or Infosys Technologies closer home - both have made training a fine art - he asks: "If vocational training had such tremendous potential, why is it that there are no large vocational training companies operating successful businesses?"
Yet, there is no denying India's crying need for skills, the genesis of which lies in its faulty education system. Government programmes such as the Sarva Shiksha Abhiyan and the growing prosperity of citizens means higher enrolment - near 100 per cent in many parts of the country today - in primary schools, but competency tests of students show how poor the quality of education is. A survey of rural schools in 2010 by Pratham, a non-governmental organisation engaged in education, showed that more than half the students in Class V could not read beyond Class II textbooks. In urban India, some eight million drop off from the education system between Class X and graduation, according to one estimate. (About two million graduate in India every year.) Such dropouts make for customers of what is being touted as the next big business opportunity: NSDC estimates India's training market at $22 billion.
Companies are looking for domain specialists. At the Pune lab, we will create experience learning for creating such specialists
Uma Ganesh, Global Talent Track CEO
It was a 2005 study by software lobby Nasscom and consultancy firm McKinsey & Co. that jolted India out of its reverie on employability. The study focused the spotlight on what employers knew - just one in four engineers was employable, or could be trained for a job. Profiles in other industries were no better. The employability situation has worsened since then.
Nasscom says employability in technology in 2011 is still 26 per cent, while in business process outsourcing services, it is between 10 and 15 per cent. "It's not that needs have changed or the industry requirement has gone up; it's just that the input quality has dropped," says Sandhya Chintala, Senior Director for education initiatives at Nasscom, referring to the abysmal levels of competence among students coming out of colleges.
That is bad news for the software and BPO sectors, which already spend Rs 5,400 crore on training every year and are projecting a need for 10 million workers by 2020, nearly four times the current 2.54 million. "About 95 per cent of Indians coming out of the education system are not employable," says GTT's Ganesh. But "a majority of them can be made job-ready".
Background: Parents were farm labourers
When he trained, with whom: Toyota Technical Training Institute, Karnataka, completed in 2010
How much he spent on the course: It was for free
Earning now: Rs 7,000 per month
After completing tenth standard with a good 82 per cent marks from his village school at Anedoddi, 50 km from Bangalore, in 2007, Satish Lakshmanaiah was unsure about the future. His parents, both farm labourers, were too poor to send him to college. On a friend's advice, he applied to the Toyota Technical Training Institute at Bidadi, off the Bangalore-Mysore highway. He got selected. Lakshmanaiah, now 21, earns about Rs 7,000 a month at Toyota Kirloskar Motor. His salary will go up by a few more thousand rupees after he completes his one-year probation.
The three-year residential course at the Bidadi institute, for which he was not charged, taught him skills in a range of automobile activities and made him an assembly specialist. He and 63 classmates can speak fluent English and basic Japanese, and command the respect of other colleagues for their problemsolving abilities. Says Lakshmanaiah: "My parents don't have to work in farms for a livelihood now, though they are into sericulture."
Toyota started the institute after a 2005 survey showed one-tenth of Class X pass-outs don't study further for affordability reasons. The course emphasises more on attitude development, says T. Somanath, the institute's principal. "Toyota observes people's attitude rather than skills while hiring.''
One way to get there is to copy what India's biggest carmaker Maruti Udyog has been doing: "adopting" ITIs for talent. It has employed over 500 ITI graduates with the Maruti Service Network so far, says S.Y. Siddiqui, Managing Executive Officer, adding his company will take the number of partnerships to 35 by the end of March. Other automakers, too, follow similar programmes (See Employability, Delivered).
It is an 'international' certificate as it involves third-party, external verifiers who come from the UK
Sharad Talwar, IndiaCan CEO
Still, training half a billion people in 11 years can be a very tall order. Dilip Chenoy, NSDC's CEO and Managing Director, says the biggest challenge before the training industry is scale. So while NSDC does promote entrepreneurs who know their local regions well and NGOs such as Pratham, it is aware of the need for roping in the big hitters. "This is imperative as players such as Centum, IIJT and Everonn, among others, have the ability to deliver scale,'' says Chenoy. Centum Learning, part of the Bharti Group, has formed a joint venture with NSDC called Centum WorkSkills India, to train 12 million people across 11 states in 383 districts by 2022. A venture with a unit of tech-enabled trainer Everonn will be even bigger, says the NSDC head.
Seasoned players like Centum bring to the table both backward and forward linkages. "We work with companies to understand their skill set requirements over a period of time. We then work backwards and decide what courses we would like to launch and where we should be opening our training centres,'' says Sanjeev Duggal, CEO and Executive Director.
There are start-ups in the wings, too. Intex Technologies, an IT hardware, mobile phone and electronics company, based in Delhi, is working on a solution based on third generation mobile phone technology where a phone handset can be used by instructors and students. Bangalore's iStar Skill Development, an NSDC partner, was founded by two batchmates from the Indian Institute of Management, Ahmedabad, to focus on training for the financial services industry.
Ravinder Singh Panwar
Background: Father is caretaker at a farm house
When he trained, with whom: B-ABLE in Dehradun, For three months July-September 2010
How much he spent on the course: Rs 9,900
Earning now: Rs 4,000 per month
When Ravinder Singh Panwar finished his schooling in Pipri village in Tehri Gadhwal in early 2010, all he wanted was to acquire a skill that will help him earn. Eldest of three siblings, Panwar heard about the B-ABLE learning centre at Vasant Vihar in Dehradun, Uttarakhand, from his maternal uncle and promptly came to the city to do a course of his choice in mobile repairing. "I chose to do this course because I can work on my own in case I do not get a job," he says. But that has not happened. Panwar works in a shop at a shopping complex on Rajpur Road and takes home Rs 4,000 a month. Not that it is enough to sustain him - a fourth of his salary goes as rent for a room he shares with two others. "I work from 9 a.m. to 9 p.m., but I have not started sending money home," he says. He has also enrolled himself for a degree course at the local DAV PG College. "The degree is a formality, but has to be acquired," he says. His long-term plan is to open his own mobile repairing shop in Dehradun in a couple of years. He will need at least Rs 1 lakh for this dream. "I will manage; probably I will take a loan," he says.
The quality and the availability of trainers is a challenge too. "Creation of trainers is one of the major issues before the country," says Labour Secretary Prabhat Chaturvedi. To address the problem, the Labour Ministry is assessing trainer requirements. The ministry has given a mandate to the Noida-based VV Giri National Labour Institute to conduct a study on trainer requirements. "We will work on the future course of action once the report is submitted to us March-end," says Chaturvedi. The news is not likely to be good, given how underpaid teachers and trainers are in India.
The next challenge is the lack of standardisation and certification in an industry that is more motley than organised today. Even as the likes of IndiaCan, a partnership between Educomp and Pearson, or IndiaSkills have been quick to embrace international certifications, NSDC's Chenoy says he prefers sector-specific skill councils that will "set up a competence matrix". Education and training firm IndiaCan's CEO Sharad Talwar holds a different view.
"It is an 'international' certificate as it involves thirdparty, external verifiers who come from the UK. These are experienced people who have tested across different markets,'' he says.
Sooner than later, it is clear that certification will become the norm. That pressure is felt even at rural, mid-size training ventures. Take Gram Tarang Employment Training Services, which operates in the Naxalism-affected areas of Orissa and Andhra Pradesh. It was forced to get certification from the National Council of Vocational Training and has also tied up with Meritract of Australia that does third-party testing, as also the Indian Institute of Welding. New Delhi-based B-ABLE, part of the microfinance organisation BASIX, has tied up with industry leaders for certification: Larsen & Toubro for construction and Tata Motors for the auto sector.
India's newfound push on skilling could help it follow the South Korean or even German models where an intense vocational focus in education and training helped the countries rapidly expand their economies. If the dozens of training institutes mushrooming in India can deliver it a skills edge, the country could reap benefits of its demographic dividend. Else, India better get ready to deal with a demographic disaster.