Article: The industry for employability education: India's New El Dorado

Talent Acquisition

The industry for employability education: India's New El Dorado

The new industry expected to become India's largest revolution with an estimated private education spend by 2012 of $80 billion is an exciting field for skills development experts, private equity players as well as large industrial conglomerates – who all will win this lottery is still a far cry
The industry for employability education: India's New El Dorado

The new emerging industry of employability education is an example of a problem being efficiently turned into an opportunity


The industry of employability education, at its present state, is only the tip of the iceberg


The new industry expected to become India’s largest revolution with an estimated private education spend by 2012 of $80 billion is an exciting field for skills development experts, private equity players as well as large industrial conglomerates – who all will win this lottery is still a far cry.

Perchance a blessing in disguise, the huge employability gap in India has opened doors to a sea of opportunity, hopefully for the larger good of the nation. Just as many small players jumped the bandwagon to try to contribute their bit to address the problem of inadequate employable skills facing India, a new industry may just be India’s next revolution. If you take a look at the complete supply-chain ranging from school (K 12) to the employer (the employability industry), there is an array of problems at every stage of the supply-chain, and this has catapulted many interventions, both at the private and government level. The new emerging industry of employability education is an example of a problem being efficiently turned into an opportunity, resulting in an influx of multiple players to address specific gaps, making it a growing industry where every big and small player is vying for their own space.

A new industry taking the lead
The existing supply chain is in a state of dilapidation as education is a highly subsidized commodity. To enable the social objective of ‘education for all’ in India, government regulations have made school education, and in many states, even college education, free, to a great extent. This practice in turn has put education into a vicious circle of inadequacy – free education and subsidized facilities, leading to poor attraction of good teachers and better systems coupled with poor governance, leading to poor quality of students who are barely employable. The gaps created at every stage has today become a business opportunity which promises to transform the unemployable into employable – thereby attempting to answer corporate India’s skill gap (refer People Matters story ‘Where are the people?’ - Vol.1, Issue 2, March 2010 - to learn more about the grave shadow that befalls employers today). Companies have mushroomed at every stage to provide some kind of employability led skills development and training. But because of its unregulated nature, students, while being spoilt for choice, are misguided in deciding which company will help them afford their dream job. The interesting fact is that the education industry has begun its long march to market level, where increasing number of players are seen entering this space – creating the new industry of employability education.

Follow the money
The industry of employability education, at its present state, is only the tip of the iceberg. Given the dismal state of the government-run schools and institutions, the private sector has taken a speedy entry into this sector, and the market for formal education (K-12 to Higher Education) saw a growth of $40 billion, with another $10 billion in the non-formal (preschool, coaching centers, multimedia/ IT to schools and colleges, vocational studies and the book market) segment in the private education market in the last decadei. The opportunity that the industry brings along is huge, as research shows the present market of $50 billion is expected to grow to the tune of $80 billion by 2012 (private education spend)2. The education industry has started its march towards the market, but the presence of multiple players, and its complex and unregulated structure will take at least a decade before the industry can identify who would be the large players in this game. We have also seen many private equity players showing great interest in this sector. Following suit, we have seen recent cases where players like Lighthouse Funds funded $10 millions to iDiscoveri and Centum Learning being funded by Mayfield India to the score of Rs. 40 crores, along with many other large industrial conglomerates initiating their entry into the education sector. Players like HCL, Jindal Group, Birlas, have already played their cards to ensure they are not left behind in the race for India’s new El Dorado! Investors are actively seeking a stake in India’s skills development and employability training education market.
The growth prospect the new industry brings is stupendous, and has seen small and large players entering this space to capitalize on the opportunity. While the Indian education industry itself is a highly regulated body (though it lacks in governance), the influx of players in the informal segment has been haphazard and therefore the new ecosystem that is being formed lacks clarity in terms of the contribution of each player to the larger goal of addressing the concern of skill inadequacy in India. The new ecosystem comprising formal and informal education providers will go through change as the industry moves towards the proposed $80 billion market. And it may take another decade before we can identify the billion dollar companies that will emerge as market leaders.
The NSDC (National Skills Development Council) Report 2010 depicts the educational funnel for India which shows that one in ten students from grade 1 make it to graduating from college, while merely 25 per cent of them are ready to enter the workforce. The dropouts in India continue with nearly 79 million dropping off at the elementary level, 15 million in the middle school and 5 million in high school. Further, while 6.4 million appear in the class 12 exam, only 3.9 million graduate every year (NSDC report 2010). In the absence of adequate vocational schools and other skills learning facilities, this soaring number of dropouts will only add to the problem of inadequate productive workers for corporate India. This opens doors to many players fast emerging to fill the gaps in the form of, either embedded solutions to make the present system better, or after school/college solutions, to create employable candidates that corporate India requires. As a result, the industry of employability education includes service providers who address the three important trajectories to the problem at hand – assessment, training and placement (used by K-12, Higher Education and the Employability Industry to fill their respective gaps). Each of these solutions have relevance in more than one level of the defined education levels which makes it a crisscross movement and ultimately, spanning a new industry. This format, while it is a business opportunity worth $80 billion (by 2012), is equally maddening for the students given its unorganized state. Lack of regulation of this new space makes it difficult for students to decipher who to trust. The fragmented nature of the industry has led to the emergence of many players, and it is difficult to point who is credible and who is a cheat. There is a need to devise a way to defragment the system, but the question is who will bell the cat? Many players believe a possible solution would be to have an embedded system where the service providers connect with the schools and universities in helping them upgrade themselves to be able to bridge the skill gap. Perhaps such a solution would be helpful only in the smaller towns where the state of affairs is poorer, but the challenge remains in integrating the whole system to address the root cause of this problem.
The root cause for poor employability in India is poor school and college education. The obvious reaction of people in the face of such a problem is to identify alternate ways to solve it. The industry is cramped with people offering interventions after school which is available at an extra cost to the student, but there is no surety on whether all these players have the right intentions, and so the student is unfortunately left prey to the ills of the system. This is in fact an excellent example of a sector which is over-regulated but under-governed, thus leaving ample scope for loopholes. Many have gone a step further by saying that partnering with the existing schools and universities to upgrade their system through an embedded approach is the way, as it may save the student from being exploited to a great extent. But whether or not this really addresses the root cause of the problem is still questionable. A thought – if schools and universities are in the space of education, should they not be experts in delivering education, and if yes, why should they have to depend on an external party?
India has been churning out graduates, MBAs, engineers, and other post graduates for over a decade. Projecting from NSFC’s statistics, this would also imply a large unemployable pool of working age, who require aid. This itself makes this market very promising. There is no doubt that this looks like the next big revolution that India will witness, probably creating parallel business opportunities as we go along. But there is need for a more strict governance system for these emerging players; else the solution may just meet the same fate as its original problem. There is a need for someone to take a view of this complex ecosystem from ‘30,000 feet above the earth’ to clearly see the key stakeholders in this earth, i.e. the education authorities, the government, schools, universities, and small and big skills development players. There is an urgent need to integrate the efforts of all these sub-systems, so that they all speak the same language and strive for one primary objective of creating employable individuals. The different stakeholders, governed by different bodies at present, has resulted in each one speaking a different language, so while they began the journey to solve the same problem, their individual objectives have transformed through time.

Education Facilitators

Dilip Chenoy, CEO & MD – National Skill Development Corporation

NSDC has adopted a detailed and multi-pronged approach to skill 150 million people by 2022 in 21 focus sectors identified by the Government for addressing the critical need of developing employable manpower that would meet the requirements of India Inc.
The NSDC is encouraging the private sector, start-up ventures and even non-government organizations (NGOs) to set up large scale skill development projects by providing them with funds for this purpose. Till date, the NSDC Board has approved 22 proposals, which have the combined target of skilling nearly 39 million youth for different vocations over a 10-year period. Funding has already taken place for 10 such ventures.
With the current annual training capacity in the country being less than 4.5 million, we would need to skill more than 40 million people every year from now on over the next 10 years to achieve the Government’s target of having a 500 million strong workforce by 2022. The 22 projects that the NSDC has so far decided to fund will create a sustainable skills development infrastructure, which if rolled out as planned, will be able to effectively provide skill development opportunities to 7 million people annually.
Since the disconnect between what is being taught in colleges and universities and what business needs is one of the chief factors contributing to the low employability of our workforce, the NSDC is taking steps to identify and plug the loopholes that exist in the current system and also undertaking a sector-wise competency mapping.

Mark Parkinson, Director – The Shri Ram School

Education today is a big industry with a lot of money to be made off it. The government has increasingly undermined the autonomy of private unaided schools, so many don’t want to run schools because it is a big responsibility and lot of work. So what we have is a large number of service providers who want to only concentrate on one or more competence, and sell it as a product so that they can be part of the growth in the education sector.
When these “vendors” make their presentation, they expect a speedy turnaround and an immediate decision, but for a school like Shri Ram which has 4,000 students and 400 teachers, everything is planned like a business, up to a year ahead. An inclusion of a vendor solution or package would mean dropping an existing module which is not an easy decision. I do not think a school should outsource any of its core requirements. If education is not one’s core competence, one should not be in the education space. So the answer lies in developing the structure and operation of the school and not seeks ‘vendor’ help to fill the gap. Every time the school outsources a certain competence to an external vendor, it will never be able to build on its core competence. The Shri Ram school has its own ethos of excellence in delivery and the system enables and empowers every teacher and student to delivery high quality. Yes, if a vendor has a solution that is not Shri Ram’s core competence, we may think of outsourcing. In recent times, there are approximately 5 companies marketing their modules on physical education (PE) in schools. And PE being a concern area in many schools, it may see acceptance. But if the vendors are providing an embedded solution for the school’s core competence in education, it will lead to the school’s inevitable dependency on external factors, which is not in any case the answer to our problem of skill gap. Yes, if the question is about outsourcing teachers training, that would be welcome. Further, any inclusion (addition) to the present school curriculum may result in fee inflation. Such practices only reflect that we are seeking quick fixes, rather than providing a real solution, and so have stumbled upon these creative options which do not address the real problem. Moreover, India has a vacuum in the quality of leadership development opportunities available for school principals. Many principals in schools today may have been very good teachers, but have limited exposure to how to lead and build an Institution. Schools and colleges are about longevity and ‘Institution building’ and for this they must develop their own competency, lest outsource them to the many vendors.

Amit Bhatia, Founder & CEO – Aspire India

Education in India, like hockey, has a rich legacy, and a challenged present. The good news is that, unlike in hockey, education is no longer neglected, as seen from the many proposed legislative reforms (Right to Education Bill, NCHER Bill, NARAHEI Bill, Educational Tribunal Bill, Foreign Educational Institutions Bill, Universities for Innovation Bill). These proposed changes are meant to make the $80 billion education market in India ($30 billion government spend, $20 billion private school education, $20 billion private higher education and $10 billion private vocational education, coaching classes, etc).
India needs to embrace skills and employability-oriented education. Industrialization, globalization and now digitization, has dramatically changed the way the world works, and how jobs and careers are defined. A skills-based education system can catalyze Gross Enrollment Ratios beyond the meager 12 per cent currently. Access and capacity must be augmented through private and public investments as India needs over 100 universities and 10,000 colleges in the next 5 years. Moreover, it is no secret that only 25 per cent or less of our graduates and post-graduates are employable.
Embedded Education will benefit India most and allow focus on the root cause and fix the supply-chain, instead of interventions post-school and college, through private centers. Aspire’s growth from 0 to 30,000 students in just 3 years is largely due to the success of our Embedded Education model. For a child, the cost is least and benefits highest, when he/ she gets the right assistance inside the school. The challenge with the Embedded Education lies in the complexity in choosing the right vendors, as suddenly institutions are spoilt for choice. This opportunity is like the 19th century Gold Rush in the US with hundreds of startups jumping into the fray. And they have good reason to do so - the top 10 companies in education account for only 1 per cent of the $80 billion market.


Employers’ Perspective

B. Santhanam, President – Flat Glass, South Asia, Egypt & Managing Director, Saint-Gobain Glass India; Chairman – CII National Committee on HR

India is facing a gap in the quantity and quality of people at all levels, and more at the base of the pyramid. While 12-14 million jobs are created each year, our capacity to train people is less than 4 million. To bridge this gap, the National Skills Mission, announced by our Prime Minister, is working towards accelerating vocational skills training in India. Those at the base of the pyramid are poor and depend on their daily wages. Any vocational training that is long-term in nature (in the absence of an alternate source of income) will be unattractive to them. This has a major impact on the base of pyramid jobs.
Saint-Gobain Glass India has interventions at different levels to address these concerns.For the base of the pyramid, we have the ‘Modular Employable Skills’ – a one month training program conducted in our premises to make illiterate, unskilled persons, industry-ready, while paying a daily wage. The program addresses softer skills like industry safety, industry hygiene, self esteem, ability to work under supervision, etc; which is e-enabled with a simulation training platform, like the ‘Forklift Operations Simulation’. For Junior Management, we hire Diploma holders who are trained through MKT2 (Manufacturing Knowhow and Technology Transfer) - an internal self-tutored simulated e-learning program (which reduces training time from 2 years to 6 months), and they must score 80 per cent before they can commence work. For skill enhancement at the engineer-level hiring, we have e-learning courses in various fields of Sales, Marketing, and Technical Know-How. The Saint-Gobain Glass Academy is an innovative initiative for training our partners in aspects of Glazing, Processing & Fabrication. It has a rating system, which has been accepted by in the industry as a mark of quality. We have joined hands with the Government of Tamil Nadu and initiated a curriculum change to include a six weeks training program (at a mere cost of Rs.6000 per student), which makes students eligible for automatic placement in a Glass Fabrication Industry. In another partnership with the Bureau of Energy Efficiency (BEE), we train in the area of Sustainability, Energy Efficiency and Modeling. All these programs follow a standardized, structured, simple, scalable methodology that is IT and web enabled.

Bunty Bohra, MD – Goldman Sachs

With respect to human capital, I believe that past performance is a good indicator of future performance. If an individual has a track record of ‘demonstrated success’ – irrespective of the field or discipline – it is likely he/she has the work ethic and commitment to excellence that will have far more bearing on his/ her success over the long term than specific domain knowledge they possess today.
In India, hiring decisions tend to be based on a narrow view of vocational qualifications rather than a broad-based assessment of capability. Employers have a myopic focus on academic credentials, so that is exactly what the educational system endeavors to deliver. Therefore, soft skills such as communicating with impact and working collaboratively are de-emphasized in the formal curriculum as well as in the overall academic experience.
To break this pattern, the employers and the educational institutions need to work in tandem. Corporations need to widen the aperture through which they evaluate prospective candidates and take a diverse view of talent rather than seek narrowly defined skill-sets. For example, when looking for someone to fill an entry level corporate finance position, the tendency in India would be to look exclusively for those with accounting or MBA credentials, whereas a Western counterpart would consider liberal arts, engineering or natural science backgrounds as well. Further, companies need to consistently challenge their employees with stretch assignments and responsibilities to ensure that the key capabilities which define success are developed over time and through experience on the job. For their part, educators need to enrich the academic experience with a wider array of course options and outside of the classroom experiences as well as modify their placement processes to prevent from becoming degree factories.
Technical proficiency is critical to an employee's success but their ability to develop quality content in a manner that is additive to a firm's culture and deliver it for maximum acceptance has a geometric relationship with their ultimate effectiveness.

Sridhar Ganesh, Director HR & Lead Director – Diversified Business Group, Murugappa Group

I would like to address the concern in two parts from the stand point of employees and talent.
In terms of employees, at Murugappa we have been able to source people for our various requirements in manufacturing and other businesses from the large pool of people who make themselves available every year for employment. Once they join, we have a very robust on-the -job training programme that ensures they are skilled up appropriately. In fact, these efforts combined with our long standing employee relations record help us in achieving healthy productivity targets.
The story is quite different when it comes to talent – which also includes the leadership pipeline. In this area we face the same challenges as the rest of the industry. According to the NASSCOM-McKinsey report only 25% of graduates from professional courses including engineers and MBAs are employable. I believe, this needs to be addressed right at the root level, i.e., the quality of education imparted. We need to consciously raise the standards of measure from entry to exit. There is an urgent need that Education and Industry sit together to work out a road map to address this issue.
At Murugappa, we had put in place very vigorous ‘Learning and Development’ modules that have been operational for some time now. This has proved a very good investment and we rely heavily on them to meet our current and future needs of talent. We also through our L& D efforts, address the skill gaps. Also looking at the long term, we are working with select institutions in skill building of students through project work and internship programs. We have also stepped up on-campus student interactions to improve their understanding of the industry expectations.

Read full story

Topics: Talent Acquisition, Skilling

Did you find this story helpful?



How do you envision AI transforming your work?