Demographic Dividend vis--vis Skill Gap Business Opportunity for
Tertiary Players in Bridging the Skill
Gap______________________________________________________________________________
Prof. Rajeshwari Patil
ASMs Institute of Business management And Research,
Chinchwad
[email protected] 9860098150
________________________________________
____________________________________________________
`India would need to skill up 500 million people by 2022, but
its Current capacity for skill development is only 3.1 million. An
objective that can be achieved only with a joint venture of the
Primary, secondary and tertiary sector.1.1 BackgroundSkill and
Knowledge act as catalysts for economic growth and social
development of any country. To continue the current growth at 8% to
9%, the secondary and tertiary sector in India needs to grow at 10
to 11%. Assuming that agricultural growth remains constant at 4%,
the agricultural workforce will migrate to secondary and tertiary
sector. This implies that there will be gap in skills of the
migrated workforce.
By 2022, India is expected to be home to a skilled workforce of
500 million. About 12 million persons are expected to join the
workforce every year. This talent pool needs to be adequately
skilled to drive the economic growth. The gap between requirement
vis--vis the current capacity is significant and requires action on
multiple front. To fulfill Indias growing need for skilled manpower
across sectors and narrow the existing gap between the demand and
supply of skills, the Government of India targets imparting nine or
ten technical skills, including retail and hospitality, to 500
million citizens over the next 10 years.
India has always faced serious challenges in producing
sufficient skilled technicians. The strong economic growth over the
last decade and the consequent increase in demand for such skills
has further increased the demand for such skill providers. The key
problem in the area of vocational training is that the aspirants
for such training lack the finance to undertake such courses. The
organized financial system also generally does not extend such
funding due to the high transaction cost for such small loans and
the lack of bankable collateral. Currently, prospective employers
are coming forward to sponsor such courses, often through in-house
training facilities, backed by jobguarantees at the end of the
training. As the scale of such training increases, this sector is
likely to see rapid growth.1.2 Current Structure and supply of
education and Skill Development system in India.
1.2.1 Current Structure
The following is the structure and skill development sector in
India.Source: the skill development landscape in India and
implementing quality skills training (ficci)
1.2.2 Current Supply
The capacity of the education and skill development systems is
as shown below:
CategorySub-CategoryEnrolment School Education Pre-Primary
Students
5,264,053
Primary (Class I - V)
132,048,727
Secondary (Class VI - VIII)
52,195,171
High School (Class IX - X)
24,971,520
Higher Secondary (Class XI - XII)
13,414,499
Sub-Total
227,893,970 Vocational Training Vocational Training - ITI/ITC
1,062,524 Higher Education
Ph. D / D. Sc/ D. Phil
36,019
MA
481,521
MSc
230,247
MCom
156,714
BA/BA (Hons).
3,727,727
B.Sc.
1,579,355
B.Com
1,455,457
BE/ B Arch
1,668,228
Medicine, Dentistry, Nursing, etc.
305,629
B.Ed
244,825
Enrolment in Open Universities
773,917
Polytechnic Institutes
690,410
Others
2,973,517
Sub-Total
14,323,566 While the school education sector is about 227
million in enrolment, the combined enrolment in higher education
and vocational training is about 15.3 million. By limiting this to
the technically and vocationally qualified and skilled workforce,
primarily comprising of ITI/ITC (1 million), BE (1.7 million),
Polytechnics (0.7 million), we can observe that the current pool of
skilled talent is around 3.4 million.
1.3 Projected Demand and Demand Supply Gap
1.3.1. Projected DemandYearGDP Growth
rateAgricultureIndustryServicesTotal2007-08Actual
51
20
29
100
2011-129
47
22
31
100
7
47
21
31
100
2016-179
43
23
3410074422331002021-227-9412336100Source The challenge of
employment in India-2009 and ImaCS analysis
In such scenario large portion of the agricultural workforce
would migrate to secondary and tertiary sector. However the skill
set of the agricultural sector are not suitable to the
manufacturing and service sector. This gap thus created due to the
shrinking employment in agriculture sector necessitates skill
development.
2.1 The efforts till date
The Government of India targets imparting skills to 500 million
citizens over the next 10 years. With an aim to fulfill Indias
growing need for skilled manpower across sectors and narrow the
existing gap between the demand and supply of skills, National
Skill Development Corporation was set up as part of a national
skill development mission. It aims at training 150 million by 2022
the government set up. NSDC is a public-private partnership, 49%
owned by the Finance Ministry and the remaining 51% held by
industry bodies such as the CII, NASSCOM, FICCI and Assocham. NSDC
enters into a JV with leading players for 10-15 years. The private
partners provide equity and NSDC provides loans at a concessional
6- 7.5% rate with a tax holiday for the initial period of 3-5
years. Training is in 10 technical skill-sets including retail and
hospitality.
Key Areas of Vocational & Technical Training
Source: Anand Rathi Research
The course fee for technical courses ranges from `3,000 to
`24,000.
2.2 Perspective: Vocational / Technical Skill Development
The key driving factors behind vocational / technical skill
development
Demand for skilled workforce increasing with growth in service
sector
Inefficient public education system
Lacking employability skills based education system
There exist multiple challenges when it comes to
vocational/technical skill development in India, few critical are
enlisted below.
Lack of financial institutions support
Lack of quality trainers
Lack of equipments & machinery for trainingThere are
multiple formal and informal channels in play in skill development.
When it comes to technical or vocational training its predominantly
dominated by informal channels and in formal channels by in-house
training in corporate sectorChannels of Skill Development
Source: Anand Rathi Research3.3 Rationale for focus on tertiary
playersIn India the education system is primarily dominated by
three types of players; government, private aided and private
unaided. Formal education in India is on a non-profit basis and
thus driven by primarily the government and secondarily the private
aided organizations. There are a few private players delivering
formal education but the right to education bill will make it
unattractive for private sector to invest. This Act provides the
right to all children between the ages of six and 14 years to have
free and compulsory elementary education (standards I to VIII), in
a neighborhood school. Under the Act, private schools providing
elementary education are required to provide free and compulsory
elementary education to at least 25% of students from the weaker
section and disadvantaged groups in the neighborhood. If the school
also offers pre-school education, then the reservation would be
applicable for such levels as well. This coupled with gulf between
formal education and the markets skill requirements has opened up a
lucrative market for private players.Spread of Students across
different players based on type of training
Source: Anand Rathi Research
The corporate sector requirement primarily is for technical and
vocational training and interestingly 55% of students pursuing
technical education and 47% of students pursuing vocational
training are enrolled with private unaided institutions. These are
the only segments where a majority of students prefer private
education.
4 .1Research Problem
Manufacturing & services sector will require 250 million
skilled people by 2022. The gap between requirement and capacity is
huge. While government and aided players focus on elementary
education it is up to private players to help fill up the gap for
skilled workers. The research aims to study the challenges,
opportunities, remediation models of private players and identify
opportunities for improvement.4.2 Research Statement
The role of tertiary sector is important to reduce the impact of
risk on the students, institute and industry and to bridge the
gap.
4.3 Objectives
Primary Objective
To study the challenges, opportunities, remediation models of
private players and identify opportunities for improvement
Secondary Objective
1. To assess the gap between the current skill and expected
skills
2. To study the current educational model of the Academic
Institution and assess the compatibility of the curriculum with
industry requirement.5.1 Key Findings
A survey was conducted to identify the expectation of the
industries from students graduating from B- schools and to identify
the expectation of these students from the companies.
Some of the key findings are: Preference: An attempt was made to
identify what matter the most to the students when they take up a
job. The preference that the respondents focus while selecting a
company for their job is opportunity for growth and advancement.
This was followed by team work (57%), learning from the job (48%),
Enjoyable work task (40%), helping other (36%) and job security
(30%).
The least important values were:Independence on the job
Clear expectations and room for clarity
Enjoyable colleagues
Regular Travel
Working alone
Low pressure job Service to causes
On the contrary companies while hiring look at the following
Flexibility in working hours, Self-discipline, Aptitude and
willingness to learn, Commitment and
dedication,Self-motivated.Interest: Student Respondents were asked
to identify work area they would be most interested. While the
companies were asked their opinions about the skills required to
perform such work.The students are most interested in performing
activities that involve problem solving and those activities that
are in way linked to the organization goals and objectivities. This
Gen y is result oriented and what want to be recognized for their
contribution to the large goals Where
Activities involving athletic or mechanical ability; preference
to work outdoors or with objects, machines, tools, plants or
animals. learning, investigating, analyzing, evaluating, or problem
solving
preference for working in unstructured situations using
imagination and creativity
working with people to enlighten, inform, help, train, or cure;
being skilled with words
working with people, influencing, persuading, performing,
leading, or managing for organizational goals or economic gain
Work with data, clerical or numerical ability, carrying out
tasks in detail, or following through on others' instructions.
According to the HR, the skills that are in great demand are
effective communication skills, analytical skills, problem solving,
leadership, team management global exposure, empowerment and
ownership.However the gap that is identified on the scale of
5.1Communication skills
2Verbal Skills
3Presentation skills
4Listening Skills
5Written Skills
6Team work and collaboration
7People management skills
8Multitasking
9Proficiency with computers Excel analysis
10Email Skills
11Analytic skills
6.1The Final word..
The increasing skills gap in India has seen a lot of activity in
the skill development space over the last few years. While the size
and scale of gaps calls for a restructuring of the formal education
system, the numbers with respect to the availability and the
required capacity to skill en-masse might not be catered to at the
required rate by just formal education alone. This obvious gap has
attracted many private players who are vying to capitalize on this
newfound business opportunity - a National Treasure that is waiting
to be explored and nurtured by the entrepreneurs in the non-formal
skilling sector that has emerged in the last couple of years.
Estimating the size of a nascent industry can be a thankless,
but an exciting exercise. People Matters estimates of the skilling
industry are based on economic realities, as expressed by industry
participants, and by the larger macro-economic requirements. If
NSDCs 36 approved projects are slated to skill 55 million over the
next 10 years with an estimated turnover of Rs. 78,000 crore, then
the projected challenge of skilling 500 million could create an
approximate industry size of $100 billion. Such a massive
opportunity is enough to spur the level of activity that the
industry is witnessing with an increasing influx of players of all
sizes and backgrounds entering this space.
While players in the non-formal skilling industry are many and
increasing, and each has identified its specialized area of
expertise, this story probes further to understand if these service
providers have been able to identify their place in the larger
context of the industry.Some of the findings based on the secondary
and primary research are as follows for the tertiary sector.
Quality, Cost & ScaleTo capitalize on the opportunity,
skilling companies must get the cost, quality and scale equation
right. The dropout rate is increasing formal education is
increasing because of lack of easy finance.
CustomerSkilling companies are to identify who is the consumer
of this industry - is it the employer or the student. Both tend to
benefit. While the student becomes employable, the companies can
find the right talent.
Need for financial infrastructure70% of the target population
belonging to rural and tribal areas has no capacity to pay. While
skill development organizations have to create shorter and
affordable programs that will equip candidates with the right
skill-set for a job, the industry also needs financial
infrastructure in the form of banks and other financial
institutions being open to financing vocational education.
Policy Issuesno plan or roadmap for integrating vocational
training into the formal graduation system and for students from
the vocational system to enter into the formal system
Some key challenges that the private sector will face in skill
development training are:Sourcing of studentsIdentifying the target
group to provide training and skills required to work in a specific
sector remains a key challenge for the players entering skill
development training in India.
Absence of defined standards for trainingThe absence of defined
curricula and certification accepted by the industry is another key
challenge for the players. However, this, we believe, can be
addressed through the establishment of sector skill councils by
NSDC.
Establishing long term tie-ups with corporatePlayers will need
to enter into long term tie-ups with corporate to ensure placement
of their students, recovery of their fees, brand building and to
ensure scalability of operations.
High churn ratioPlayers have to counter the high churn ratio in
some sectors such as auto and construction, where the fees are
recovered from the students over a period of time, after their
placement. A high churn ratio can impact the profitability of
players
There are several business models that are followed. IFBI
Established byNIIT in association with ICICI BANK offers an
unbeatable combination for the student, and the industry. FBI's
offerings are designed in this context of modern-day Banking,
Insurance and Financial Services by developing competencies on 4
dimensions - domain, technology, application and customer-service.
The key focus area of IFBI is to address themanpower challenges of
multi-skilled and trained professionals in BFSI sector. IFBI is
actively engaged in re-skilling existing professionals in the
Financial Services sector - who are being overwhelmed by recent
economy reforms, technology advancements and changes in attitude
& approach in this sector
The Model IFBI program have come not just from established texts
and literature, but have been distilled from the real-life
experiences of practicing bankers and financial experts who are
part of the content-development team.
The methodology of the teaching-learning process includes
Case-studies, Project-work, Self-paced e- learning, Simulation
exercises, Role-plays, Information Search and Analysis (ISAS)
assignments, collaborative group activities and supervised
Internship (applicable for select programs). The program develops
essential professional attitudes like problem-solving, effective
communication, self-learning, team work, and deadline orientation,
multi-tasking, cross functional capabilities, and - naturally -
application orientation and IT usage.IFBI has launched over19,000
careersin leading organizations of the Banking and Financial
Services Industry. Today, IFBI graduates are working in leading
organizations ICICI Bank, Axis Bank, HDFC Bank, Kotak Mahindra
Bank, Dhanlakshmi Bank, HSBS Bank, ICICI Lombard, ICICI Prudential,
Laxmi Vilas Bank, Wealth Advisors Inc, Karvy, Fullerton Securities,
ICICI Securities, HDFC Securities, Bajaj Capital, Deutsche Bank,
ING Life and many more.Creating a model like the one mentioned can
help the business sustain in the long termReference:
1. An Experiment in employability enchancement- Merit track2.
Anand Rathi Indian Education
3. India's Skilling Industry: In Need of Synchrony people
matters
4. The India Skill Gap Richard Morris
5. The Skill Development landscape in india and implementing
Quality Skills Training- FICCI & iMaCS
6. Training for skills in crisis a critique and some
recommendations TJ training journal
67%
Majority of the student respondents look for an Opportunity for
growth/advancement.
The companies that were approached, however found that
expectation of the fresher are do not meet the reality.
Employers expect their employees to put in extra working hours
if required, they believe that flexible working hours increases
productive and revenue. It is used as major retention tool.
80%
Of the student respondents were most interested in Activities
involving working with people, influencing, persuading, performing,
leading, or managing for organizational goals or economic gain.
According to 88% of the companies interviewed were of the
opinion that freshers lacks the required skills to perform such
activities.