To get a sense of India’s rural-urban union, drop in on a McDonald’s restaurant in the southern state of Andhra Pradesh, where hungry customers scan the brightly lit menu panel above the counter and line up to place orders. The eatery, nestled in a busy shopping mall in downtown Hyderabad, is unique: Most of the youngsters flipping burgers and taking orders are not city slickers, but employees recruited from India’s rural belly.
Take college dropout K. Bhargavi, 23, whose widowed mother runs a roadside sweet shop about 90 miles away, in Warangal, a district known for its granite quarries. The young McDonald’s staffer had never ventured out of her village until just over a year ago, but now earns US$100 a month for nine-hour daily shifts at the golden arches — an increase from the US$34 she made keeping accounts for self-help groups back home. Bhargavi wants to save enough money to go back to school in two years and then settle down in an arranged marriage. “I am happy I came here,” she says. “I can now plan my life.”
For people like Bhargavi, there is no economic downturn, because they are being snapped up by India Inc. Rural recruits account for 70% of the employees at McDonald’s restaurants in southern India today. Other big rural recruiters range from international firms such as IBM, Adidas and Vodafone to home-grown ones like telecoms giant Bharti Airtel, private-sector bank HDFC, and retailers Pantaloon and Aditya Birla Group. These companies are increasingly relying on rural India to staff their front and back offices in urban and semi-urban towns, but what’s unusual about this rural regiment is that they are not just trained, but also placed in their jobs by a public-private partnership called the Employment Generation & Marketing Mission (EGMM), headquartered in Hyderabad. The EGMM takes responsibility for the short-term training, while ensuring employment for each of its young job-seekers.
Four years ago, the state government took over this project after it was launched by the World Bank, and it has since invested US$33 million to help get rural people out of poverty by providing them job opportunities outside their villages. It suits everybody: The state is able to bond with the electorate, companies get a readymade, minimum-wage workforce, and the poor secure jobs. “It’s a win-win situation for all the stakeholders,” says Meera Shenoy, executive director of EGMM, who notes that the demand for rural labor continues to be strong despite the economic downturn.
The program identifies tenth-grade youngsters in rural Andhra studying in free government schools. Their families, largely farmers, are at the bottom of the pyramid, earning less than US$2 a day. Some of the youth have been part of the assorted Indian technical institutes, the state-run vocational training entities that are often criticized for being out of sync with industry needs. In a country with a billion-plus population, an estimated 88.5 million people between the ages of 15 and 29 need to be trained. But only a very small fraction receives vocational training, according to Narendra Jadhav, a member of the government’s Planning Commission.
Consider what’s in store for the world’s largest pool of young people: Nearly 60% of India’s population is under 25 years, according to a senior executive at the National Knowledge Commission, a government advisory body on higher education. For financial reasons, very few make it to college. Only 11% of those between 17 and 23 years old enroll in higher education. TeamLease, a staffing company in Bangalore, says 58% of India’s youth are not prepared for work or suffer from some kind of skill deprivation. And while around 14 million people enter the workforce every year, only 7% work in the organized sector.
In an attempt to cater to the demand for skilled workers, TeamLease branched out to train people in the lower-income population last year. But it soon realized that “in the short term, you can’t take jobs to people; you have to take people to jobs,” says Manish Sabharwal, chairman of TeamLease. He notes that it is an uphill struggle: While the privatization of skills development is a key way to solve the problem, the bottom of the pyramid needs huge public policy intervention for training delivery and financing. Employers, he adds, are not ready to pay for training potential recruits, while candidates are unable to pay for training or jobs. “Companies will pay fees for training only if they see value add,” says Anamitra Deb, a senior consultant at Monitor Group.
Ready for Work
Much, then, depends on programs like EGMM that are funded by the state government, which also provides infrastructure support. “We are not a human resources outfit. Our agenda is to take people out of poverty and provide jobs to first-generation workers,” says Shenoy. Its priority is not to make money from placements, but to ensure that the young workers are fit for employment. Volunteers regularly trek into the deep interiors of the state to unearth youngsters who can be trained, groomed and packaged for an assortment of entry-level jobs in a range of sectors, including telecom, hospitality, manufacturing, retail and outsourcing. “EGMM is more proactive; it talks to the industry and develops a curriculum which involves a lot of soft skills,” says Monitor Group’s Deb.
This readymade labor is what global and Indian companies are happy to try. “We don’t have to scour local colleges to hire ‘freshers’ now,” says a senior manager at McDonald’s. So far, the Mission has set up around 280 training centers and placed over 225,000 youth — and it is expected to double in size by the end of next year in the three large south Indian states of Andhra, Tamil Nadu and Karnataka. The Mission provides a basic 75-day residential training program, which includes English and computer-skills classes, personal hygiene sessions and counseling.
In Nellore district, 110 miles from Chennai, one training session has students participate in an exercise to understand the difference between a command and a request from a customer or a boss. Ashirvadam Munagapati, a teacher from a local school who conducts the exercise, believes such nuances are important if her students are training to be sales clerks in retail outlets, or manning the phones at a business process outsourcing business. “We try and keep everything simple and practical,” she says.
Companies are impressed. When Hindustan Unilever, the Indian arm of Anglo-Dutch consumer goods company Unilever, launched its PureIt water filter in 2007 in southern India, it used local sales teams. The launch involved a foray into direct marketing, so Unilever sought youngsters who could be easily motivated to perform well in a market with entrenched brands like Philips and Eureka Forbes’ Aquaguard. Using a village salesforce and providing jobs for the underprivileged also made good business sense. “It’s not about charity, but doing business. Doing well by doing good is more sustainable,” says Yuri Jain, vice president of water business at Unilever. He declines to reveal sales figures, but says he plans to hire rural youth for other Indian markets, too.
Unilever isn’t unique. Pantaloon Retail, part of the Future Group stable, hired more than 500 villagers to work in their southern outlets. With 25 operating formats, the company’s staffing requirement is huge — 50,000 workers are needed by 2010, even as the global downturn has forced the retailer to scale back plans. Kripesh Hariharan, vice president of operations at Pantaloon, feels that training people from the bottom rung of the social ladder has a lot of benefits. “They are more loyal and productive as it’s a bread-and-butter job for them.”
These companies’ hiring strategies are making a difference to their recruits too, both emotionally and financially. They not only provide them with a job, but also extricate them from their poor conditions. The rural staff earn anywhere from US$73 to US$250 a month, depending on the type of job.
A familiar sight in some areas is Unilever’s water filter sales force whizzing around local roads on motorbikes to close business deals. Just three years ago, V. Venkatesh, 23, and his farmer father struggled to support their family of four on a US$600 annual income in Gopalapuram village. After studying at the local technical institute, Venkatesh got sporadic work as an electrician, earning around US$44 a month. He wore flip flops, sported shoulder-length hair and had never worn a long-sleeved shirt. Thanks to Unilever, a confident Venkatesh now earns US$272 a month in pay and incentives and displays all the trappings of city life. He shares a leased apartment with friends, has invested US$1,740 in a half-acre plot in his village and pays a US$35 monthly installment for his US$1,304 Hero Honda bike. He’s also ecstatic about hitting his sales target, which fetched him a reward — a two-day trip to Goa a year ago. What’s more, Venkatesh is hailed as a hero every time he rides into his village. “With so much respect, I feel I have arrived,” he says in the local language, Telugu.
For people like Venkatesh, their aspirations go beyond just finding a good job. “It’s slipping into a new way of life as they carry their success stories back to the village, motivating others to learn and earn and drive out of poverty,” says EGMM’s Shenoy. Venkatesh’s prosperity has inspired many of his village friends to enroll in the varied training centers set up by EGMM. “The Mission guarantees jobs, which is comforting,” he notes.
That’s one reason why this public-private partnership is working. The chances of success are bright, particularly given that the base from which these youth start is very low: They have never experienced city life, or been exposed to any kind of formal training that would make them eager to learn and earn. It is also fully funded by the state. “Of the many poverty alleviation programs, this holds promise [because] it provides gainful employment to the poor,”says K. Raju, principal secretary of rural development for the Andhra Pradesh government.
For all the benefits, shifting from rural life to the urban glare can be a culture shock, as it’s the first time most of the youngsters are away from home. When McDonald’s managers went to interview EGMM recruits, none of the girls wanted to meet them because they thought McDonald’s was a chain of bars.To minimize preconceived notions, the last 15 days of the program provide on-the-job training at prospective workplaces ranging from security agencies and telecom firms to pharmaceutical companies and retail outlets, to get a feel for the work environment and see what’s expected of them. The familiarization helps them adapt to their new lives later.
Two-thirds of India’s population lives in the hinterland. The Mumbai-based Media Research Users Council, which tracks demographic data, says there are 122 million 20-to-25 year olds in India. Of these, 70 million are from the rural poor. More than 5,500 of those are employed at Apache, the Taiwanese original equipment manufacturer for Adidas shoes, sprawled over 313 acres in Tada village, three hours from Hyderabad. In the brick red and grey tiled factory, 14 production lines churn out over 400,000 shoes a month, making it one of the largest factories in India. Most of the people on the assembly line are unskilled and are provided on the job training, says Linda Shih, Apache’s Chinese human resource manager. They work on shoe uppers, carve out rubber soles, quality check and even prepare shoes for export. But not everyone stays. At times, the corporate environment — the monotony and fixed working hours — takes a toll on workers. Shih says that the attrition rate is 35%. This puts the onus on EGMM to counsel and motivate the youngsters to hold on to their jobs. It has embarked on a campaign where supervisors at the workplace are encouraged to take their new recruits by the hand during their induction phase.
There’s also pressure to take the program to the next level, expanding deeper into the interiors of Andhra, including many tribal areas untouched by India’s economic reform. “The question now is how to scale the program and create a revolution around this,” says Rama Bijapurkar, a Mumbai-based strategy consultant. For that to happen, the program has to spread its wings nationally. It also needs state government backing to fund the mission.
Already, the central government has initiated programs to link rural youth to state-run organizations like the National Bank for Agriculture and Rural Development (NABARD) and Khadi Gram Commission, but their progress is far from encouraging. “Middlemen and corrupt government officials don’t allow the benefits to reach the unemployed,” says Yuman Hussain, executive director of Kishanganj-based Azad India Foundation, a non-profit enterprise.
Still, EGMM is a small but important start. According to one consultant: “If other states are able to replicate the model, there could be enough ammunition [to] handle India’s rural employment dilemma.”