eryone agrees that only about a quarter of India’s graduates are employable. But no one has quite figured out what to do with the rest.
“When they come, they are absolutely fresh,” observes Rahul Shah, a once associate vice-president with Infosys Technologies Ltd’s business process outsourcing arm.
When it comes to soft skills, they don’t know how to write an email, or how to talk to clients. On the practical side, even those with degrees in accounting don’t know how to create financial models.
“They just know basic bookish concepts,” Shah says.
Grooming talent: A training session in progress at KPO Academy in Bangalore. The company is one of the many new start-ups in the burgeoning training sector
Shah left Infosys to start a firm called KPO Academy, one of the many new start-ups in the burgeoning training sector. KPO Academy relies on “finishing schools” where second-tier graduates will pay up to Rs40,000 for the prospect of future employment in the outsourcing sector, alongside partnerships with firms such as Infosys and JPMorgan Chase and Co. to take his recruits.
In some ways, his model combines the various ways companies have dealt with the need to train India’s unemployed youth. Many rely on so-called retail trainers such as Aptech Ltd for information technology and Frankfinn Aviation Services Pvt. Ltd for flight attendants where students pay to upgrade their skills.
Other companies run their own training centres, such as Infosys’ 4,000-seat campus in Mysore. Others such as Genpact Ltd have flirted with free or nominal fee training at storefront locations for potential candidates, while HCL Infosystems Ltd and Kingfisher Airlines Ltd have spun off their training units into separate moneymaking ventures that can also feed their own talent supply needs.
“There are millions of experiments going on,” says Manish Sabharwal, chairman of the staffing firm TeamLease Services Pvt. Ltd.
Not all of them are working.
“We’ve got about 24 experiments with training firms to repair our interview rejects,” says Sabharwal, “but it usually doesn’t lead to a job.”
Frustration on the part of recruiters is mirrored by those who hire. “I would expect that I could go to some company,” says Puneet Singh, vice-president for hiring at Genpact, “and say,‘Today I need 20 people who can do accounts payableas of now’.”
“I think other companies need to come up,” he says, explaining that he has to plan much further in advance to staff even a process of only two dozen people. “It’s a space that’s open.”
The numbers confirm that India’s human resources sector is, paradoxically, both a crowded and a wide open one. According to industry estimates, there are 20,000 companies registered in the areas of recruitment training, but the Top 10 companies make up less than 15% of the market. In most mature sectors, the Top 10 players command 60-70% of the market.
“There is a huge gap between what academic institutions provide and what corporates are looking for,” says Srini Krishnamurthy, who is managing director? of? human resources firm Expertus Inc.
Seeing a market in the estimated three million college graduates India churns out every year, according to trade body National Association of Software and Services Companies, or Nasscom—most of them unemployable—hundreds of companies are trying to fill that gap, and make the process morescientific.
On one side, companies are trying to tie up with colleges, and boost training on the skills the industry needs. Expertus, for one, hosts job expos where each candidate is pre-screened and matched with a possible employer based on how the candidate performed on an aptitude test, and the employer’s benchmarks. Expertus also teaches soft skills courses on campuses, which the colleges pay for.
Companies such as HCL and Wipro Technologies woo colleges to make sure they have something akin to a private talent supply. HCL Technologies Ltd ties up with colleges to provide on-campus training on business and communication skills. The company swallows the cost of the six-month trainings in order to get “right of first refusal,” says HCL senior vice-president and training head Anand Pillai, meaning the company will be the first to decide which students it would like to hire. And for a company that hires on the scale HCL does—that number can hit 5,000-10,000 in one month—Pillai doesn’t see the training functions going to vendors. “In-house training should be the norm,” he says, “when you attain a critical mass, there’s no need to involve any others.”
But for companies that hire on a smaller scale, training firms are moving in.
Last year, for example, Aptech started working with IT and retail customers to manage their fresher “onboarding” trainings, the season when graduates join employers en masse. The company expects that model to grow because it can make training more quantifiable.
“There is a significant move to having outside vendors,” says Aptech executive vice-president Nilesh Vani. “There is far higher accountability, and they’re far more open to being measured on performance.”
And dozens of brand new companies, like KPO Academy and Aspire Human Capital Management Pvt. Ltd are trying to fulfil requests such as Genpact’s for workers trained in specific skills. KPO Academy, a training company that is a product of Infosys and Accenture Ltd alumni, is inaugurating its first class mid-June.
Aspire, founded by former head of WNS Knowledge Services Pvt. Ltd Amit Bhatia, is also trying to develop the talent pool in smaller cities, but is asking employers to bear the brunt of the cost. In exchange, the company is promising deployable candidates, through software that breaks up each necessary skill and measures how successfully a candidate can be trained on specific skills.
But whether or not a company can successfully merge recruitment and training is still an open question. Aptech, NIIT Ltd and other training companies tried out a train-to-hire model at the request of BPOs several years go, to not much success.
On the one hand, says Aptech’s Vani, the fixed costs are passed on to training vendors while the income is extremely variable.
But on the other, students can leave half-way through the trainings to sign up with another employer.
“Two stakeholders are bearing the costs,” he says, referring to the student and the trainer, “without any guarantee”. Others, too, are sceptical the train-to-hire model can work.
“The risk really shifts to the supplier,” says Expertus’ Krishnamurthy. “If I’m an HR company, and a client says, ‘if you train and provide candidates, I’ll hire,’ but only hires eight out of 20, who pays the balance?”
Instead, Krishnamurthy expects to see vocational training and specialized institutes pick up the slack, and separate merged recruitment outsourcing firms to take over for mom-and-pop shops.
No one, though, has much reason to worry. “For the training and recruitment industry,” he says, “we’re going to be in a huge boom for quite some time.”