If you can’t find them, train them—that seems to be the line the talent-crunched Indian services industry has taken. And toeing their line is the training industry that has stepped up its activities in the last four months.
In April, Tata Consultancy Services (TCS) teamed up with the West Bengal government’s nodal IT agency Webel for a training academy. In March, AutoDesk Inc., a design-software and digital-solutions company, signed a Rs1 crore deal with Indian Institute of Technology, Madras, to set up a centre of excellence (CoE) that would serve as a design finishing school for engineering students.
Cisco signed up with Jawaharlal Nehru Technological University in February for training graduates in network engineering and design. In the same month, JK Technosoft, the IT/ITeS arm of the JK Group, announced plans to set up finishing schools across the country.
While new players are making forays into training, established institutes including NIIT Ltd, Aptech Ltd and NIS Academy, part of NIS Sparta, a Reliance ADA company, are upping the ante. NIIT, for instance, plans to invest Rs40 crore over the next three years in expanding its network. Cisco will invest Rs33 crore in the next 18 months in imparting training through its Cisco Networking Academy Programme (NetAcad) in India.
The NIS Academy recently entered into an agreement with ITC’s Wills Lifestyle. “We are offering a six-month certification programme in retail management. It comes with a built-in three-month internship with stipend, and has ITC pre-select the candidates before they join the programme,” says Muralidhar Rao, COO and president of NIS Sparta.
Companies such as Wipro Technologies, Genpact, HeroMindmine, Infosys Technologies Ltd, among others, have already been recruiting graduates and training them.
But what has stirred the training space? Experts say there is a huge unmet demand for skilled manpower because of exponential growth in the services, retail and IT/ITeS sectors. A study by Nasscom and McKinsey indicates a possible shortage of five lakh personnel in the IT industry alone in 2010. And it is not just a matter of numbers. Only about 30% of engineering graduates fit the needs of the IT industry, while less than 20% match the skill-set needs of BPO firms.
“Of the three million students graduating every year, only 0.5 million are employable. This is because the Indian education system has not kept pace with the changes in the industries. Even if some premier institutes have, it is entirely theoretical. The Indian academic system lacks application orientation,” says Prashant Srivastava, country manager, Gallup India Pvt. Ltd, a market research and consulting firm.
Moreover, companies no longer have the time to train recruits as there is an urgency to augment market share in the quickest-possible time and gain first-mover advantage. “In the face of increasing competition, companies are looking at employees who can be productive from the first day of the job,” says Smarajit Dey, president, strategic initiatives, NIIT Ltd.
Till now, some companies had been taking the easier way out—preferring to poach trained manpower from competitors rather than adding to their human resource pool. Poaching, however, doesn’t help anyone since the size of the talent pool remains the same. “Poaching is no solution. It only results in significant increase in attrition and hiring costs, reducing a company’s competitiveness,” says Deepak Kumar, director, human resources, Tetra Pak India Pvt. Ltd.
Such short cuts, therefore, can only take companies this far and they need to look beyond one quarter, say experts. The more effective solution is two-pronged. First, universities need to change their curriculum to the needs of the industry. “This appears to be a big challenge in the face of the rigmarole of government regulations. However, individual institutions can drive the change as Frederick E. Terman did at Stanford University in California in the middle of the 20th century, setting the stage for Silicon Valley,” says Srivastava.
The other way, a more feasible one, according to experts, is to set up finishing schools to bridge the gap between university education and industry needs. Cisco Systems has NetAcad running in more than 165 countries for about 1.8 million students worldwide. In India, it has about 8,500 members. The company is expected to step up its initiatives further. “The gap in skilled networking professionals will be 1,37,200 by the end of 2009, according to technology intelligence data provider IDC. This gap is growing at a compounded annual growth of 39%. With wide area networks, banks, financial services and insurance sectors and BPOs in expansion mode, we need people to help meet this requirement,” says Lokesh Mehra, regional manager, corporate responsibility, Cisco-South Asia.
Tom Joseph, director, worldwide education programme, AutoDesk Asia Pacific, emerging & central, echoes Mehra’s sentiment. “The challenge for companies like us is that we are into multi-disciplines and training becomes essential since university education does not provide the same,” adds Joseph. AutoDesk’s tie-up takes the count of CoEs in India to four. The other centres are at Mumbai’s JJ School of Architecture, Delhi’s School of Planning and Architecture, Ahmedabad’s National Institute of Design. It has six centres in China, one in Russia and about 10 in the US.
Emerging sectors such as retail, banking and insurance have brought to the fore requirements for a new set of skills. According to a recent survey by a leading employment company Manpower Inc., sales representatives were among the top three in the list of jobs employers are having difficulty filling. NIIT has a retail management programme, and has recently tied up with ICICI Bank to train graduates in the skills required by modern banking. It is paying off, too. “Students who have undergone NIIT’s retail management programme are already employed in companies such as Reliance Retail, Pantaloons Retail, Target, Reliance Fresh, Lifestyle, Magnamart, among others. ICICI has already picked NIIT’s first batch of about 500 students,” says Dey.
The value proposition for those in the training business is obvious, but what is there for the companies making the investment? Joseph explains: “Investing in education helps enhance the market, produce a more employable workforce and build manpower.”
The common thread that runs across the industry is that investing in education helps the companies to remain successful. As Jeffrey A. Joerres, chief executive officer of Manpower Inc. sums it up, “In 10 years, we will see many businesses failing because they have not planned ahead for the talent shortage and are unable to find the type of people they need to run their businesses. This is not a cyclical trend, as we have seen in the past. This time the talent crunch is real, and it is going to last for decades.”