Developing Skills in a Developing World

India is a country of contrasts created by rapid growth, where slums rub shoulders with  luxury hotels, where there's a dearth of skilled workers to fill up rapidly growing job openings.

Despite having more post-secondary institutions – and people graduating from there – than ever before, Indian businesses are unable to find qualified workers. This threatens the nation’s ability to continue its high annual economic growth, and limits the number of people who can rise out of poverty by gaining stable employment.

Recognising the magnitude of the problem, the Government of India in 2008 set a target of imparting teaching skills to 500 million people by year 2022. Yet experts are questioning whether the government alone has the resources to solve the problem, suggesting India may need a budget provision of over ten times that of what was set aside in 2011.

Smells like a significant shared value opportunity to us. At FSG, we think of shared value as the benefits created when the private sector uses core business assets in a way that sustainably addresses societal problems. In this case, businesses are constrained because they can’t find suitable workers, and significant numbers of people remain poor because they aren’t qualified for available jobs. So what can be done?

Examples such as Larsen & Toubro (a $10 billion diversified conglomerate) and Future Group (India’s largest organised retailer) are beginning to point towards promising solutions.

According to a 2010 Economic Times report, construction is India’s second-largest industry and is expected to face a potential labour shortage of 170-180 million people by 2022. In response, L& T is “a rare construction company in India with a training institute that feeds into its businesses.” The company is training thousands of workers across several states, and is planning to launch further vocational training for positions such as millwright fitters, transmission line tower erection fitters, tiling masons, and surveyors.

Muralidhar Rao, a Future Group executive, notes in another Economic Times article that “for our requirements, we will have to tap the vast majority of people in rural areas who do not have access to education and training… the future lies there.” The company recently formed a public-private-partnership with the rural development ministry to train – and place – 32,000 below-poverty-line youth from rural areas in 19 states over a one-and-half-year period.

Future Group’s Employability and Skill Development COO points out, “What we are doing is not just for now. It will help us create a steady supply of employable people for our expanding store operations.”

In both examples, linking up with NGOs and the government to collaborate on potential solutions has been an important component of the work. And in both cases, the organisations are leveraging core business assets to create change (knowledge of particular skills needed, ability to place candidates in jobs that the companies themselves need to fill), human resources strategies focussed on retention (so results are long-lasting).

But unfortunately these examples, while promising, are not yet enough. The thousands of workers they are training (which surely is a step in the right direction) are not going to add up to the millions needed. What do you think can be done to turn a stream of skilled workers into a flood? How can these organisations scale up, and who else can get involved?

Indians have a fantastic ability to work around constraints to make things happen. If the private, public and civil sectors are able to effectively join together and match skills to workers to jobs, they can create massive social and economic impact – with lessons applicable to policies and programmes around the world.