India's Corporations Race to Train Workers and Avoid Being Left in the DustPublished: September 18, 2008 in India Knowledge@Wharton
Infosys Technologies, the icon of the Indian IT industry, has one of the largest corporate training establishments in the world, with more than 320 computer science faculty. At its sprawling 335-acre campus in Mysore, Infosys can train more than 13,500 people at once.
"We have invested over $450 million in our training institute," says T.V. Mohandas Pai, director, and head of education and research and human resource development at Infosys."This is probably the largest investment in education in India's history by any entity, be it government or nongovernment, in a single location." Additionally, Pai notes, Infosys spends about $5,000 training every fresh graduate that it recruits. These new recruits undergo 14 to 16 weeks of training before they start their jobs. This year, Infosys will recruit around 18,000 fresh graduates.
Another Indian IT giant, Wipro Technologies, hires around 14,000 fresh graduates a year and takes them through a training program of 12 to 14 weeks. Wipro spends about 1% of its revenue on training these recruits."This is only the running cost," says Pratik Kumar, Wipro's executive vice president of human resources."It does not include our capex cost."
Practically every major IT company in India spends weeks training its fresh recruits. But it isn't something they do by choice. Even those recruits from some of the best engineering colleges are simply not job-ready. Wipro's Kumar points out that if these fresh graduates were"completely deployable in terms of their technical proficiency," they would need in-house training of only a week or 10 days."The huge training infrastructures that companies have set up are a reflection of the inefficiencies of our educational sector," he says.
The National Association of Software and Services Companies (Nasscom) points out that while more than three million students graduate from Indian colleges and the nation produces 500,000 engineers annually, only a very small percentage are directly employable by industry. Says Nasscom vice president Rajdeep Sahrawat:"Only around 25% of technical graduates and 10% to 15% of general graduates are estimated to be suitable for employment in the offshore IT and business process outsourcing industries."
An Industry-Academia Disconnect
The reasons are many. The nation's education sector is highly government-controlled and therefore subject to a multitude of regulations around such matters as curriculum development and pay scales. The quality of faculty and the teaching methodology are largely inadequate. A focus on soft skills -- those personal and interpersonal attributes of everyday interaction -- is lacking. There is a disconnect between industry and academia. The list goes on.
"As a nation we have underinvested in education and employability," says S. Sadagopan, director of the International Institute of Information Technology, in Bangalore. N.R. Narayana Murthy, chairman and chief mentor at Infosys, agrees:"All the stakeholders -- the government, academia, industry and society -- are responsible for the current state of affairs." He adds a somber note:"If we don't take steps to improve the quality of our engineering graduates, we will soon lose out on our ability to compete globally."
The employability issue is not restricted to the IT industry. Even as India celebrates its strong economic growth and touts its demographic strengths, concern is rising over the suitability of its large workforce for the many new jobs that will be available, especially across high-growth industries such as retail, financial services, telecom and aviation.
Sanjeev Duggal, chief executive officer and executive director of Bharti Resources, a subsidiary of Bharti Enterprises, one of India's leading conglomerates, explains:"The employability issue in India is getting impacted by two different [problems]. One, most of the growth is happening in new sectors which require new skills. So not only do fresh recruits need to gain these skills, but even those already employed need to be reskilled; otherwise they will no longer be employable. Second, a lot of growth is happening in smaller towns and cities, and so there is a need to make the training of these skills available locally."
A social factor also comes into play. By and large, the Indian mind-set is oriented toward acquiring a formal university degree and not necessarily acquiring skills for greater employability. Says Rajen Padukone, president of university programs at Manipal University:"The professional skills and vocational programs need to be linked to a university degree, corporate funding and job placements to make them more acceptable to Indian youth."
Entry-Level Skill Gaps
The employability problem persists beyond the graduate level. B. Santhanam, chairman of the Confederation of Indian Industries' national committee on skills and human resources, points out that a 2006 CII study covering 36 sectors estimated that 80 million new jobs could be created in the next 10 years across India, of which 75% will require vocational skills."These 80 million jobs are going to be created if the growth rate that various companies and industries are assuming actually happens," he said."However, in sector after sector we find that there are tremendous knowledge and skill gaps at all levels of jobs. The employability issue does not concern only graduates; it is even more significant at the grassroots entry level, where we need a large amount of vocational skills."
According to the government's 2007-08 economic survey, 68.4% of the population will be of working age -- 15 to 64 -- in 2026, up from 62.9% in 2006. The survey notes that"for actual tapping of the demographic dividend, it is necessary not only to ensure proper health care, but also [to put] a major emphasis on skill development." The survey warns that"if skills are not adequately created, India could well be facing a demographic nightmare."
The primary responsibility clearly rests with the government and academia. However, the growing realization that industry can harness India's demographic dividend only through the availability of the right training and skill sets is driving corporate India to play a larger role in molding the workforce.
Across sectors, companies and industry bodies are not only beefing up their in-house training facilities, but also developing initiatives to make potential employees job-ready even before they enter the organization. These include tie-ups with educational and training institutes, helping them design the curriculum, training faculty in both relevant content and teaching methodologies, offering internships, and setting up their own training schools and finishing institutes.
Wipro, for instance, has identified poor teaching quality as one of the core reasons for the low employability of engineering graduates. To address this, under an initiative called Mission 10x launched in September 2007, the company has developed a set of teaching techniques to enable faculty members to help students take in higher levels of understanding of classroom subjects while developing key behavioral skills as well.
Under Mission 10x, Wipro plans to train more than 10,000 faculty members in 1,500 engineering colleges over the next three years. The training, for which Wipro bears the entire cost, is spread over five days. Says Azim Premji, chairman and managing director of Wipro:"The quality of education being imparted requires fundamental change. We need to bring about a systemic change in the current teaching-learning paradigm in engineering education."
Training the Faculty
Nasscom's key focus, too, is on upgrading faculty. It estimates that 12,000 to 14,000 faculty members need to be trained in the next three years to increase the employability of students recruited by the IT industry. The group is putting together a plan to work with the government and industry to address the issue, Nasscom's Sahrawat says."It is a very manageable and doable proposition. What it requires is willpower and program management."
Meanwhile, in a move to expand the pool of industry-ready resources for the banking and insurance sector, which is expected to create a million jobs a year for the next five years, leading players are offering industry-specific courses. ICICI Bank, India's largest private-sector bank, for instance, has joined with Manipal University to create the ICICI Manipal Academy of Banking and Insurance to offer a one-year residential diploma program to graduates who are selected through an entrance test. The bank and university have jointly designed the course content.
On completion of this program, which is expected to result in"first-day, first-hour productivity," the candidates will be absorbed in a managerial position in ICICI Bank, which is picking up the entire training tab of Rs 2.5 lakh ($5,425) per student."To fulfill India's global aspirations and sustain the growth trajectory, it is imperative that industry invests in preparing industry-ready human talent," K.V. Kamath, managing director and chief executive officer of ICICI Bank, said in a news release.
R. Bhaskaran, chief executive officer of the Indian Institute of Banking and Finance (IIBF), points out that the need for industry-ready professionals is becoming increasingly important not only because of the sheer numbers required but also because of changes in the banking industry in recent years.
"There has been a paradigm shift within the banking industry," he said."We used to wait for customers to come to us, but now we have to go out and sell. This has also resulted in many specializations within the bank. While in the past anyone could manage any function, we now need specialists." In keeping with this requirement, over the past few years IIBF has introduced diploma courses in such areas as treasury, international banking and microfinance to both fresh graduates and banking professionals looking to enhance their employability.
Modern Retail's Skill Sets
Retail is yet another area undergoing rapid transformation. Organized retail accounts for only 3% of India's retail sector, but that is expected to increase to 20% by 2010. This is expected to result in demand for 2.2 million new jobs. Retail majors including Reliance Retail, the Future Group, Bharti Retail and Shopper's Stop, as well as the Retailers Association of India, have tied up with various universities and training schools to provide course content and internships to students.
Says Biju Kurien, president and chief executive, lifestyle, for Reliance Retail:"Traditionally, retail in India has been in the unorganized sector comprised largely of small owner-driven stores. Modern retail requires very different skill sets, both because of the different nature and size of operations and increasing customer expectations." Kurien says Reliance is likely to employ around a million people for its retail operations over the next five years and is looking to set up its own university for retail education.
Meanwhile, the Bharti Group has created its own training and development company called Bharti Resources, which has set up a Bharti academy of retail in conjunction with the group's retail arm and is creating an academy for insurance in alliance with the group's insurance business. Bharti Resources has also set up 60 learning centers across the country to offer courses in insurance, telecom and retail. The target is to take this number to 100 by the end of this financial year and at least 1,000 in the next three years. Says Duggal of Bharti Resources:"With a lot of growth happening in smaller towns and cities, it is very important to have a huge distribution reach of the training of these skills."
Along with training where people are located, another challenge is the need for short-duration vocational courses for those who have not completed their formal education. To address the issue on a wide scale, CII is helping the government roll out a"modular employable skills" program. It is putting together the curriculum and identifying a set of assessors and the institutes that can carry out this training for different sectors."Our target at CII is to train at least 50,000 people through this program in the current year," CII's Santhanam says.
Upgrading the ITIs
CII is also working closely with the government and large companies in a public-private partnership model to upgrade the government-owned Industrial Training Institutes (ITIs) and align them more closely with the needs of industry. Companies that have adopted ITIs include Bosch, Hero Honda, Ashok Leyland, Larsen & Toubro, and Bharat Heavy Electricals Ltd.
Another key initiative of CII has been to help universities to understand the importance of soft skills and to integrate related courses into the university curriculum. While Madras University has made a soft skills course mandatory for all undergraduate and postgraduate students, other universities in the state of Tamil Nadu have included such coursework as part of their choice-based credit system. CII, which developed the curriculum and is also training the trainers for this course, is now looking at extending soft skills training to universities across other states. Companies working actively on this initiative include Tata Consultancy Services, Cognizant Technologies and Satyam Computer Services.
Says CII's Santhanam:"Never have I seen such a confluence of efforts of private companies, industry bodies, government and academia on the one common issue of skill development. If we can grasp this opportunity fully, we can set in motion something that can completely alter the employability landscape of the country."
Not everyone, however, is so optimistic. Manish Sabharwal, chairman of TeamLease Services, India's largest human resource services provider, strikes a note of caution. Skill development, he says, is only one part of the solution."There are three problems in the current Indian system: matching supply and demand, repairing supply for demand, and preparing supply for demand," he says."What we are all focusing on right now in terms of employability with skill development is only the repair part. This is a low-hanging fruit. But this repair pipeline will run dry if the prepare pipeline, by way of education reforms, is not fixed. And that is something that the government and academia need to work on."