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

Rajvpatil1980@gmail.com 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.