Business Today

New age finishing schools

twitter-logo Manu Kaushik        Print Edition: May 13, 2012

In 2008, Subrata Kundu, looking for a career in information technology (IT), enrolled for a three-year course at NIIT, even while he was already studying for a bachelor's degree in economics at a West Bengal college. But as the NIIT course came to an end last year, he began to worry. Considering he had spent Rs 1.5 lakh on it, the job offers he was getting were hardly commensurate. A typical offer was the one from Tata Consultancy Services, which provided a data operator's job at Rs 96,000 a year. "I was not interested in data entry jobs as they are low profile," he says.

Fortunately, in December, still unemployed, Kundu heard about a two-week programme the Hyderabad-based skills development company TMI e2E Academy Pvt Ltd would shortly conduct to train sales and marketing executives. The extraordinary feature of the programme: it guaranteed a job. It was being conducted on behalf of Axis Bank, which had 30 openings for such personnel and would absorb all those trained. It would also pay the entire cost of training. Kundu applied, got through the entrance test, and now earns a salary of Rs 1.8 lakh per annum.

New age finishing schools

  • Cost effective way for companies to hire people in bulk
  • Productivity of trained newcomer higher than that of other freshers
  • Attrition rates of such personnel usually lower than that of others
  • Simultaneous multi-location hiring possible if required
  • Increases their level of engagement in both course and job
  • Provides openings in large and reputed companies
  • No unpleasant surprises after taking up the job
  • Speeds up the career growth in the early years, provides a differentiator

This is a new training format called the 'closed model' which companies in the skills development business are increasingly turning to. Unlike traditional training institutes, which conduct courses and thereafter leave it to the students to find themselves jobs - at best, facilitating campus placements - firms like TMI, set up in February 2011, start training programmes only after receiving a mandate from a company to fill specific vacancies. The firms then find the right candidates by advertising in newspapers and thereafter putting applicants through a pre-enrolment test. Selected candidates are then trained and delivered to the company. The courses vary from 10 days to three months, depending on the skill level needed in the vacancies to be filled.

These new-age training institutes are fulfilling a crying need of industry: providing employable newcomers. Several studies have shown that though the country produces a staggering number of engineering, business and other kinds of graduates and postgraduates every year, only a handful of them meet the needs of recruiters. (See www.businesstoday. in/hiring-tools.) Many large companies have their own training programmes for new recruits, while a number of others like Airtel or the Future Group are setting up training institutes. "Every year we struggle to find the right people," says K. V. Balasubramanian, Managing Director of Indian Immunologicals Ltd (IIL), which makes vaccines and health products. "This is because our sales force needs to have some basic knowledge of the sciences and also know how to deal with doctors.

Girish Singhania, Founder of EduBridge
If a company needs a certain number of employees, it has to test at least 10 times that number. With such courses, the company is not involved at the pre-selection stage: Girish Singhania
Given the attrition levels, we need at least 100 entry-level sales executives every year across the country." IIL contacted TMI in April last year and has so far recruited 120 people after they underwent TMI's training, customised for IIL's needs. Around 475 million young people will need training by 2022, beyond what is provided by traditional institutes, say government estimates.

"The future of the training industry lies in moving away from the traditional methods," says Dilip Chenoy, Chairman, National Skills Development Council (NSDC). "At present, employers do not trust the quality of training institutes, trainees do not trust them either. To bridge this trust gap, the job guarantee programme is the only way to go."

Another company that follows this model is the Pune-based Global Talent Track (GTT), set up by the wife-husband duo of Uma Ganesh and Ganesh Natarajan in October 2008. Charging students between Rs 3,000 and Rs 45,000 depending on the course, GTT seeks to plug the skills gaps of those keen to enter the information technology, ITenabled services, banking, retail and financial services industries.

"We have a blended learning mechanism, which includes classroom teaching, digitised content, remote tutoring and case studies," says Uma Ganesh. "Whether a company requires 50 or 1,000 people, we have a vast network of over 800 colleges in large cities and several tier-II locations that can be tapped." Last year, GTT trained around 6,000 people for 60 companies, including Capgemini, Cognizant, ICICI Prudential and MphasiS.

Such tailor-made programmes have obvious advantages. "A generic course on retail trains a person to sell all kinds of products," says T. Muralidharan, Executive Chairman, TMI. But selling a car requires different skills from selling a detergent. It would cost companies much time and money to teach newcomers to sell their products. Whereas people trained by us can hit the ground running from day one on the job."

There is also the saving on costs. One more training firm which is moving towards the customised training model is the Hyderabadbased TalentSprint, started in 2008. "It makes economic sense for companies to go for this format," says CEO Santanu Paul. "Let's say a company needs 200 people. It can go to campuses, take aptitude tests, pick the best, bring them into the company and train them. It will have to spend a large amount of money training them as well as paying their salaries.

Instead, in the conditional job offer programme, job seekers often have to pay for the training and the company does not have to bear salary costs." EduBridge, set up IIM Bangalore alumnus Girish Singhania, is yet another firm that follows the closed model, training people for companies such as Reliance Retail, Aditya Birla Retail and Bajaj Allianz. Running 15 training centres in the country, it has in the past two years provided jobs to over 1,000 people. "If a company needs a certain number of people, it has to test and interview at least 10 times that number. There is significant cost involved in this exercise, too. They also save money if they do not have to be involved at the preselection stage."

However, there is no uniformity so far over who foots the bill for the courses these institutes run. Some charge the prospective employer, some the students enrolled.

TMI usually charges both, the Axis Bank programme Kundu joined being a rare exception. "It reduces the cost burden for employers while reducing attrition levels during the course," says TMI's Muralidharan. Students who have paid are naturally less inclined to quit midway. Given their urgent need, funding to set up such institutes is no problem.

Funds are coming from numerous sources, including NSDC and venture capitalists. For instance, investment firms Intel Capital and Helion Venture Partners invested $8 million in GTT in January 2009. "There is a huge demand for entrylevel professionals in the large IT, construction, retail and hospitality firms," says Pradeep Tagare, Director at Intel Capital. "For many of them, training is not a core business.

Companies have to spend money on attracting trainers and retaining them, creating infrastructure and training facilities." It is far more convenient to outsource the entire operations. "The cost advantage is a big pull factor for companies," says Ganesh Natarajan, who is Vice Chairman and CEO, Zensar Technologies. "There is a further advantage of not having to carry the bench and its related costs."

Chenoy of NSDC says the days when companies used to train people internally are coming to an end. "Today, a person is ready to switch jobs at any given opportunity," he says. "As a result, the return on cost of in-house training will be negative. Wherever attrition levels are high, companies are forging partnerships with training firms to get readymade talent."

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