This essay is designed as a straight-to-the-point note for all those who wish to explore this specific area, and is a culmination of my experiences. I have kept it based in facts & logic.
Before you start reading, let me share that I am a firm believer in the power of commerce and believe that this century is about reaching out to the bottom of the pyramid by building economic models that are designed to unleash the value therein.
BACKGROUND OF THE PROBLEM
UNDP identifies 5 barriers to poverty reduction at the Bottom of the Pyramid (BOP), and Skill Barriers is one of them. Education and pre-employment training are among the most important and effective means of building skills and combating poverty. The importance of education as a prerequisite to employment that offers a living wage and opportunities for advancement has increased as more routine work has been automated. The best jobs often go to persons with advanced academic and technical skills, as well as an array of adaptive non-cognitive skills.
It goes on to mention that the opportunities lie in adapting business models to
address skill gaps, promote these learning opportunities amongst the groups,
leverage knowledge about skills gathered through ancillary activities, and
develop education infrastructure. (Al-Atiqi, August, 2014)
The BOP proposition views the poor primarily as potential consumers i.e. as untapped purchasing power. Providing increased consumption choices to the poor will increase their welfare, assuming rational consumers. It is almost an “item of faith” among development economists that the poor act rationally (The Economist, 2007)
So, pricing becomes an important element of the whole proposition.
The problem is not just economic. The proficiency of the learners in school system (and in higher education) is a barrier to growth, as well. While they can’t be attributed to poverty status, but the outcome of the conditions at school, whilst improving at a slow pace, is not significantly impacting the economic conditions at the BOP. The higher education system is producing graduates in all streams with most of them not having a clue of what they will end up doing.
The GER (Gross Enrollment Ratio) of ~73% at Std. IX & X, reduces dramatically to 19.8% girls and 22.3% for Std. XI & XII, with the highest drop-out happening after Std. VIII, and the pass percentage in the Std. X & XII Board Exams stand at ~75%.
In higher education, out of the 6 lakh engineers that come out annually, only 18.43 percent of them are employable for the software engineer-IT services role, while 3.95% are appropriately trained to be directly deployed on projects.
(AspiringMinds, December, 2014). The low
employability among engineering graduates is a cumulative outcome of poor
education standards and higher demand of skilled employees thereby creating a
drastic skill gap in the country. National Employability Report reveals that
corporates look for candidates who have their basic skills in order and do not
require much training upon being hired. Hence, candidates with lower quality of
skills in comparison to basic job requirements are left out in the entire
process. (Aggarwal, 2014). With nearly 2
million engineers being churned out every year, not more than 250,000 are
The percentage of students passing out of Arts, Humanities & Science streams, all combined, stands at 41.35%, and that of Commerce stream stands at 15%, which means that roughly 3 million people who do not pass the under-graduate level are joining the marketplace for jobs.
Overall the data from the National Sample Survey Office (NSSO) shows that 13 out of every 100 Indians between 5-29 years did not attend school or dropped out because they did not consider education “necessary”. This trend is more marked among rural students with 34.8% of drop outs (including those who have never attended school) indifferent to studies. A far lower proportion of urban students—about 22.8%—showed a lack of interest in education. Interestingly, this tendency peters out among older age groups. In the 15-19 years category, only 17 out of every 100 non-attendees called education unnecessary. In the 20-24 years group, it was even lower at 12%. This data reiterates other evidence which shows that as Indians get older, they consider education necessary.
“It is the educational system that is not encouraging people. It is much easier to change jobs than to change schools/ colleges these days with all the formalities needed. And once a child is out of school for too long, admissions become even more difficult,” said Himanshu, assistant professor at Jawaharlal Nehru University, Delhi.
That said, among dropouts and non-attendees overall (5-29 years), the need to supplement household income still remains the prime reason for not pursuing studies. The data from the NSSO mentioned that this was the reason cited by 36% respondents. Another 26.5% said they couldn’t attend school because they had to pursue domestic chores. What’s surprising is that the percentage of non-attendees citing domestic chores as a reason has spiked between 2004-05 and 2011-12.
So, the common thread in school dropouts, graduates of regular streams, and engineers, is that neither of them are ready for any kind of employment, whether wage-employment or self-employment. And even with all the new poverty-alleviation policies & practices that the government has launched, this does not help the economic condition of the families. And when these students are from BoP, the impact multiplies geometrically. This basically means that the bigger challenge is the unavailability of relevant skill-sets to increase one’s family income.
India is expected to be home to a skilled workforce of 500 million by 2022. About 12 million persons are expected to join the workforce every year. This talent pool needs to be adequately skilled. 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 to 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.
12 million people joining the fray to get jobs every year, but unfortunately, they do not have the right skill-sets.
Apart from all of the above, in a study done by City & Guilds, over 90 per cent of the workforce agrees that programmes like Skill India will provide the next generation with the right set of skills to support India's growing economy. The emphasis on the need for skill development is not only identified in India but globally as well. Additionally, the same report quotes, 91 per cent Indians feel threatened that their skills will become obsolete in the next five years.
This problem is the one that needs to be solved. So, while there are a whole lot of companies trying to provide skill-based training to people, the challenge is to connect opportunity to skill-sets; and there are a handful operators who can do this and are able to do this.
The basic deliverable of any proposition has to directly impact an individual’s roti-kapda-makaan (food-clothing-shelter) by ways of an improvement in the earning levels of the individual; and that need to be impacted by strengthening our skill development model.
The approach towards skill development must focus on the opportunity first, followed by identification of the resident skill set of the prospective incumbents. This needs to be followed by identifying the right faculty, the right classroom infrastructure and the right on-the-job learning environment for the skill to be developed.
The answer to the problem is not a simple task of creating ‘a’ product. One would need to create a model that presents differentiation in the product offering and the service offering, and for different target groups.
Keeping in mind the basic disposition of learners of the generation from the Base of the Pyramid, the delivery of the learning needs to happen in a physical environment, but technology needs to be integrated in form of online learning and augmented reality to make the learning process even more efficient & effective whilst reducing the time-to-competency, hence reducing the time taken to start earning from the time one decides to make a change in oneself.
For any course to be put up, the two simple questions to which we seek an answer.
a. Does it lead to an immediate opportunity, whether wage-employment or self-employment?
b. Will the skill-set be aspirational for the relevant target audience?
The target group of learners for any proposition can be segregated into buckets…
Bucket 1: Drop-outs: Those who have left school after Class X or have not pursued studies after Class XII.
Bucket 2: General Graduates: Those who are about to graduate after 3 or 4 years of post-school education from the fields of Arts, Commerce, Science, Nursing and Pharma Studies
Bucket 3: Engineering Graduates: Those who are studying or about to graduate after 4 years of studies in Engineering from the fields of IT, Electronics, Telecom, Electricals or those who have a desire to work in the digital world.
While the addressable market has been outlined earlier, the larger question is about the learners’ willingness to pay for the value proposition. The skill development industry works in three ways with regards to ‘pay-out’. The Government accounts for most of the sponsorship in the field of skill-development, and then there is Corporate CSR as a source of funds, and finally, there is the student paying for some of the courses.
In line with the rationale of students paying for the course, the following two points need to be noted here.
· Colleges: Today, in the skill development space, most of the operators are private entities, most of whom do not have infrastructure. What they do is that they go for franchising and that is how they are able to deliver. In yesteryears, most of the skill development was sponsored by the Government, and that happens even today, but the scope for the student-paid model has not been explored much. On the other hand, we have colleges who have been used to student-paid models since their inception. However traditionally, colleges and universities, typically have not been engaging in skill development as they feel that developing skills via a short-term program and without gaining wisdom, one will not be able to do the job. The mismatch is that colleges do not understand that skill development and regular education do not share the same place; and while the former prepares them for a specific trait, the latter prepares them for a wide-ranging set of attributes that students need to have to be successful in life. However, the landscape is changing and colleges need more funds and for this a lot of them are wanting to monetise their excess infrastructural capacity which they have not been using, however, barring a few enterprising ones, none of them have the rest of the things that they require such as faculty, courseware and industry connect. The other advantage that they have apart from infrastructure is that they have captive audience, and this audience, like any other audience, is looking for avenues to secure their feature in terms of meaningful employment; and some would want to opt for wage-employment, some would also want to be self-employed. If the proposition allows that, then they (and their parents) would be willing to pay.
· Aspirational Courses: Like the Kano Model, undergoing skill development is not aspirational (basic need), what students aspire to is for developing those skills that would help them get the jobs that they want as a career or the ones which pose an immediate opportunity for earning (performance needs). The demand for an aspirational course that can help secure a higher family earning is inversely related to the current economic status of a family; the demand is the highest at the Bottom of the Pyramid. The real source of market promise is not the wealthy few in the developing world, or even the emerging middle-income consumers: It is the billions of aspiring poor who are joining the market economy for the first time
(Prahlad & Hart).
So, students from the Bottom of the Pyramid, and students otherwise, will be willing to pay only if they see considerable and immediate value in what they are learning in form of an immediate impact.
However, the key driver in this case is that courses provided by existing training providers are affordable if supported with a loan product. In 2011, National Skill Development Corporation (NSDC) had also identified the points of risk and their mitigation solutions
(ISB, May, 2011). In the recent
times, with the launch of Pradhan Mantri Kaushalya Rinn Yojana (PMKRY) has been
launched which makes loans, ranging from Rs. 5,000 to 150,000 available to
students with no guarantee.
I talk about competition because for an impact to be made, operators need to find this opportunity feasible. The competition in this field is growing, but is not intense as yet, and with the size of population in India, the efforts made till date are rather insufficient.
In India, about 12 million people join the workforce each year comprising highly skilled (constitute a minuscule part), skilled, semi-skilled and unskilled work force. The last category constitutes the majority of the population entering the workforce. However, the current skill capacity of the country is about four million. Hence, skilling and technical education capacity needs to be enhanced to about 15 million. (E&Y, 2014)
The advantage clearly lies in an operator’s ability to create razor sharp IP, build engaging courseware, develop trainers out of operators (supervisory cadre), profile and then counsel the students accordingly towards the right programs, engage learners digitally, and build their social skills to become successful in this world.
Having said that, there are underlying forces that compel customers to pay for services and these trends make markets develop and grow. The market drivers for skill-development initiatives are
· Customer’s aspiration drives the demand for courses that lead to an increase in household income or build one’s sustenance and this is possible by linking learning to jobs or immediate opportunities for self-employment opportunities
· Government policies around sponsorship of skill-development programs is another key market driver.
o Pradhan Mantri Kushalya Vikas Yojana (PMKVY) from Min. of Skill Development & Entrepreneurship and Deen Dayal Upadhyay Grameen Kaushalya Yojana (DDU-GKY) from Min. of Rural Development and some 20 0ther schemes from various ministries of the Government have led the way in building momentum in the ‘Skill India’ initiative.
In its Twelfth Five Year Plan, India has set a tough challenge in the field of vocational education and training in its approach paper. It aims to increase the percentage of workforce with formal skills to 25% at the end of the plan. It is estimated that 50–70 million jobs will be created in India over the next five years and about 75%–90% of these additional employment avenues will require some vocational training.
I hope this note is of help to all those who wish to make a foray into the world of skill development or wish to understand the landscape in depths.
 Gross Enrolment Ratio (GER) is the total student enrolment in a given level of education, regardless of age expressed as percentage of the corresponding eligible official age group population in a given school year.
 This does not include other streams such as other forms of higher education and research and is limited to those who can fit in as workers, supervisors, entry to mid level managers in large portions of the manufacturing and service sector, either organised or unorganised.