The Tata Strategic Management Group has released an article on the demand for skilled manpower and the government’s thrust on vocational training, which offers a sizeable opportunity for private players in India. However, there are challenges to creation of scale while ensuring sustained profitability. Players need to formulate an effective go-to-market strategy to address these unique challenges and enhance their chances of success.
The article has been authored by Mr K. Raman who is the Practice Head of the Infocomm, Media & Education Practice at Tata Strategic Management Group.
Livelihood and Skill Development in India
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This article was first published in Human Factor Magazine, March 2011.
Extracts from the Article follow below
Skilling India: Opportunities & Imperatives for the Private Sector
India is known to possess a significant demographic dividend due to its large and growing population in the 15 to 59 year age group estimated to be upwards of 600 million currently. This large working age population can make a significant contribution to the country’s growth provided it is equipped to be productive.
India’s training infrastructure which mainly consists of government Industrial Training Institutes (ITIs) and Industrial Training Centers (ITCs) currently has a capacity of 3.1 Mn seats and is vastly inadequate to meet the diverse skill requirements of the population. While almost 90% of the 450 Mn jobs in India require vocational skills (Figure 1), currently only 7% of youth
(15 to 29 years) receive any kind of formal or informal vocational training (Figure 2).
Taking cognizance of this deficit between demand and supply, the government has set an ambitious plan of training 500 Million individuals by 2022, translating to training 42 Million a year. The 11th plan emphasizes on the need for Public Private Partnership (PPP) to make this a reality.
The National Skill Development Mission, under the Prime Minister’s Council has been entrusted with meeting 30% of this target by providing viability gap funding to the private sector. A number of schemes have been set up under various ministries to facilitate vocational training through PPP.
The target of training 500 Mn people by 2022 roughly translates to a Rs 21,000 Cr annual spending in vocational training every year up to 2022. While current activity levels across ministries and schemes are significantly lower, the opportunity is still large enough for the private sector to take serious notice.
It is therefore not surprising that many large players have already ventured into the vocational Training space. IndiaCan, the Pearson Educomp joint venture, is working in several government projects. Career Launcher, known to be a test preparation player, has also created a presence in this nascent market as Skill School.
Other players in the career training space such as NIS Sparta and NIIT have also made their forays into this space. Apart from private players, a number of voluntary organizations have an established presence in partnering the government in vocational training.
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