Developing World, Developing Skills

India is certainly a fascinating place (as I’m getting to see firsthand, having worked here for the past couple of months). It’s a country of contrasts created through rapid growth, with slums rubbing shoulders against luxury hotels – and a dearth of skilled workers to fill rapidly growing job openings.

Despite having more postsecondary institutions – and graduates coming out of them – than ever before, Indian businesses are unable to find qualified workers. This threatens the nation’s ability to continue its 8-9% annual economic growth, and limits the number of people who can rise out of poverty by gaining stable employment. Recognizing the magnitude of the problem, in 2008 the Government of India set a target of teaching skills to 500 million people by 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 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 (L&T, a $10B diversified conglomerate) and Future Group (India’s largest organized retailer) are beginning to point to promising solutions. Per a late 2010 Economic Times report, construction is India’s second-largest industry and is facing a potential labor 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 1 ½ year period. Future Group’s Employability and Skill Development COO points out that “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 government to collaborate on potential solutions has been an important component of the work. And in both cases, the organizations 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 focused on retention (so results are long-lasting).

But unfortunately these examples, while promising, are not yet enough. The thousands of workers they are training – while certainly 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 organizations scale, 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 programs around the world.

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