Making 500 million people employable
Saumya Bhattacharya and Shamni Pande March 18, 2011India 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.
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.
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.
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.
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.
"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.
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".
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).
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.
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.