Only Half Of India's Youth Workforce Is Employable As Industry Faces Skill Shortage

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Hello and welcome to the Core Report’s Weekend Edition. So a quick stat or a set of statistics before we start off. 65% of India's population is under 35 but may lack the skills needed by a modern economy. This is the Economic Survey of the Government of India that was presented in July this year saying this, only 51% of youth is deemed employable, which means a lot of youth are actually not deemed employable or one of two are not readily employable, which means someone has to take on the burden of either skilling or re-skilling.

Now this is at a broad level, but as you go down to industry, things become a little starker. There are industries, for example, automotive where there are transformational changes happening, the arrival of electric cars and hybrid vehicles or electric two-wheelers for that matter, which require a completely new set of skills and skilling to tackle and manage it and we've seen some very interesting fallouts of industry or specifically some companies not being prepared for that. But the larger challenge is, of course, skilling across the country and across the board.

So let's try and understand how three different people are approaching it from academia, from within industry and industry connected to academia and see where we can go in terms of the skill challenges and then, of course, meeting the jobs challenges, which is a separate maybe but a larger discussion as well. So I'm pleased to have and introduce my three guests for today. Arindam Lahiri, CEO, Automotive Skills Development Council, Siddharth Shahani, co-founder and executive president of Atlas Skill Tech, recently launched Skills University and Shantanu Rooj, founder and CEO of TeamLease EdTech. So Shantanu, let me begin with you.

GE: We had a conversation recently and this sort of set me off on this conversation as well about why engineers even in IIT Bombay were not finding jobs. Now that's a jobs issue. But if you were to take us a few steps back and look at the larger challenge of skills and where they are and what they're able to or not able to meet, why are we where we are?

SR: So the problem is different in this case, Govind, for engineers and non-engineers, right? So for engineers, for example, the focus is largely on hard skills. And the issue is that today, all this while the engineers are very high on hard skills, the engineering schools, the IITs actually taught them fairly well. Today the concern is that these engineers possibly lack some sort of soft skills and a combination of this is being asked for. But if you look at the larger masses of graduates, people who are graduating from these Indian schools today, I think employers today have very low bars. I mean, they still look at those four basic skills, reading, writing, arithmetic and relationships. If you're good at four of these things today, then is an employer who's willing to hire you. I think the challenge is where traditionally the world of academia did not talk to the world of employers, the world of work, and the chasm between both of them actually kept on going bigger and bigger. That I think that's where the challenge is.

GE: And I'm going to come to you, Arindam, in a moment because we'll talk about the automotive specifically and that's being an industry that contributes 7% to GDP, it's an important industry. How are you seeing this conundrum, if it is so, Siddharth?

SS: You know, I think for very long, we've always said there's a gap between industry and academia, right? And that's reflective in our graduates of today. But I think the present day government is doing a lot to bridge formal education, skills and soft skills. The ability to create a new breed of universities, which are skill tech universities, which are focused on 21st century skills, which are industry related, I think will change the way the graduate product that is coming out. These changes obviously don't happen overnight, right? Because if you have a graduate today, it takes four years till you churn out a new graduate. So I do see that, yes, there is a challenge between industry and academia. And I think that also the chasm is increasing because the rate of change of technology, new technologies come in, you need the right faculty in place to develop students who can adapt and deploy these technologies. But I do think overall, India is moving in the right direction, where industry and academia are coming close together. And most importantly, I would say that with the whole digital ecosystem coming online, the students have many more opportunities to upskill themselves than just their formal education. And I think that's where you'll see a bridging of the gap happening.

GE: And what's an example of an area that you are working on, Siddharth, where you're trying to, let's say, bridge or meet a gap that is in a way just unfolding right now?

SS: So I think digital skills, because if you look at India, and we're not a big manufacturing hub, we've always been a services economy. Really, if you look at the tectonic shift that has happened post-COVID, whether it's design, whether it's AI, whether it's ML, how do we make sure the graduates of today have the right digital skill set to build value for corporations across not only India, but the globe as well?

GE: Arindam, can I come to you now? So from your vantage point, how are you seeing the demand-supply equation for skills in two contexts? One, I think, is automotive in general, which itself is fast evolving. I mean, in a lot of industries today, most car manufacturers, two-wheeler manufacturers are highly mechanized and roboticized. And the second, of course, is the more sort of tectonic shifts almost, which is the electrification and newer technologies when it comes to fuels.

AL: So thankfully, the automotive industry has moved ahead from only being a petrol and a diesel engine or an IC engine kind of an industry, and doing the same work over and over again. Today, even if you look at the IC engine vehicles, they are much more advanced than what they used to be even maybe 10 - 12 years back, with a lot more of electronics, electricals, software, all integrated. And you know, surprisingly, software accounts for a significant amount of purchase value of a car actually today, whether you are an electric vehicle or a non-electric vehicle as well.

So looking at the industry per se, if we look at the skills required, I think one of the fundamental shifts that has happened is being just a vertical engineering focused kind of an industry, whether it was just mechanical or slowly moving to electromechanical at some point in time. Today, we are a multidisciplinary engineering industry as far as the automotive application is concerned. And I think our academic systems are currently still segregated on the standard divisions of mechanical, electrical, etc. And therefore, the output that we are getting is not something that is readily usable in the industry, because a mechanical engineer today needs to know as much of electronics as much of software, and a software guy needs to know as much of mechanical if he were to work in an automotive industry. And therefore, that kind of an integration, integrative approach in academia today is missing, and which is why we see today an organisation like ASDC coming in with many of the higher education institutions where they say that: Hey, we want to make sure that we give these students the right exposure, what kind of courses, curriculum should we kind of bring in, because our internal strength is not able to foresee this kind of a requirement, and what exactly is required in the industry. So it is a significant gap when we are talking about graduation, whether it is a degree or diploma.

And our industry in automotive also requires a lot more people which are below this level, which is the ITI and the operator and the technician level. So the kind of problem that you are hopefully referring to in terms of one single company has got to do with the lack of right technicians. So today you take your hybrid vehicle or an electric vehicle to an authorised dealership, even there you will find technicians struggling and have no clue.

Leave alone, God forbid, if your vehicle gets stalled in the middle of the road itself, you will have no way to fix it till you can get it towed away by somebody. So it is a real-time challenge. And the biggest challenge in terms of skill training itself is the fact that you do not even have enough trainers available to do this kind of training.

So that also is a huge challenge that we are trying to grapple with.

GE: And can you tell us a few words about ASDC itself in terms of what are the kind of courses that you have right now, and what are the industry needs that you are trying to meet in the present and near future?

AL: Yeah, so ASDC has been set up with the help from three of its promoting bodies—Society of Indian Automobile Manufacturers (SIAM), Automotive Component Manufacturers Association (ACMA) and Federation of Automobile Dealers Association (FADA)--which are the core industry associations in the automotive world. So it takes the entire value chain of the automotive industry. And the kind of courses that we design are designed with the help of industry experts themselves. So people who are currently working in the industry actually formulate these courses. These are right from 30 to maybe 60 hours at the lower end, which is like a very short module on something very specific to maybe 600 hours or even 1200 hours, which is the kind of today's national credit framework policy mandates as the number of notional learning hours that you need to cover in one year of learning.

So we are working across the board, across domains, right from engineering, manufacturing, sales, service, and even driving. Even driving has become very challenging today because the driver needs to be able to handle the new generation vehicles. And we've done multiple such programs where existing drivers were….you know, car companies are today, every other day, there is a new feature coming in, you know, and that has a level one, level two, level three. So how does one actually use these features? I mean, the driver is the one who is actually going to use this more. What are the kind of, you know, symbols that flash on his clusters? And how does he interpret, he or she interpret that, those warning symbols to go forward? So it's that way, that much more complex.

GE: Shantanu, so, you know, this is the automotive industry and you deal with many more industries. And there's something interesting you said the other day, which was about, you know, the shop floor being the classroom now. And I found that interesting because that in a way suggests that the responsibility of learning is now more with companies than it's with academic institutions. Can you build on that and maybe with some examples?

SR: So if you look at it, Govind, today, after post-COVID, we have started reimagining skill development because of five different design principles. That's what we have identified. The financing of skills has always been a challenge because employers do not want to finance for training, but they're willing to pay a premium for a trained candidate. Candidates do not want to pay for the training, but they're willing to pay for a job today. So there has always been a challenge of first design principle, which worked post-COVID is earn while you learn. Learning and earning has to go together. The concept of merging apprenticeship, internship, along with a formal degree ensures that there is a stipend being paid out, which actually goes along with subsidizing somebody's course fees, for example. The second one is about learning by doing. Today, employers just knowing something is not good enough in a world where Google knows everything. Employers want evidences of you being able to apply those skills on day-to-day work. Today, because of all the disruption that is going in the world of work, employment has not remained a lifetime contract. It has become something like a taxi-cab relationship, which is very intimate, which is loving, but then it's also short and finite. So to mix, to meet all of these together, learning by doing, where you practice everything that you learn in theory is going to be important. Third thing is learning with flexibility to ensure that people are able to learn at their own pace. And the equivalence of learning online versus on-site, on campus, or on the job is something which is being enabled by NEP.

Learning with modularity, where you start doing a particular programme, you get a certificate, which then becomes an opening balance to a diploma, then becomes an opening balance to a degree, is being reimagined today because of NEP today. And lastly, learning with a lot of employer signaling value. Today, interning at HDFC is great, but in turn, who is from HDFC is being more valued. So the employer signaling value attached to a degree today has a great value today in anybody's career. So there are universities today, we worked with the Automotive Sector Skill Council, and we created this program together called BSc in Automotive Mechanics, just for your example, Govind. So this is a program which we created along with the Sector Skill Council, and now we planted that program in four different universities. Now these universities are running this particular program, but the student, right from day one, gets two different letters. One is an admission letter of the university, and second is an offer letter from an employer who commits that if you learn the theory from the university and do three years of internship or apprenticeship with me. So the student is being co-parented, one side by the university, second side by the employer. If you learn both of these together, right, so one side teaches your theory, second side teaches you practical hands-on skills on a day-to-day basis. You graduate with three years of work experience, you're fresher with three years of work experience, you almost have a job at the end of the tunnel. I think those are the new models which are being experimented.

Automotive Sector Skill Council was one, we are working with other manufacturing companies, we are working with retail, BFSI, but the employers and employer bodies are coming together, willing to partner with these universities to co-create program, co-parent the program, co-own the student, finance skill building and the degree put together, and ultimately take accountability and responsibility of the kid who is passing out from these programs.

GE: Siddharth, what are your popular courses at this point of time, and what are you setting or designing for, let's say, three years later?

SS: So, I think currently we see UI, UX, digital design, animation, VFX as very popular programs. We're also seeing a lot of uptake for programs around AI and ML, right, so those are the different reasons that we're seeing.

I think moving ahead, we're going to see a different sort of programs coming up, so whether it's about cybersecurity, I know there are a lot of programs already to do with cybersecurity, but given that technology evolves so quickly, what does the future of cybersecurity look like? There's a lot around ESG and climate change. Our university is more on the, I would say, the business, service, and innovation type of skills, not the hard vocational skills. But I just wanted to add to what Shantanu was saying, is that what we're actually seeing is that industry is coming forward. And industry really needs to help universities in two ways. One is mentorship for graduates, because really, you know, no matter as much knowledge, information you put into someone, how do you build the life experiences, because every scenario is different, right? And it's really what experience teaches you how to deal with that. So really, mentorship is important.

I think corporate mentorship programmes are very, very important. And second is to create, you know, as many non-formal employment opportunities for the students, right? So in the first year, for example, I know the students have just come in, they may not have all the knowledge that they need to succeed, but can you give them a one-week, two-week observership? So are they, you know, can they habituate to place of work? As they grow, can industry come forward and give some of their most pressing challenges? Can we bring people from different backgrounds to solve those challenges? So really, for us, I think, around the design digital area, we're seeing a lot of interest. Of course, we're situated in Mumbai, in the heart of BKC, so a lot of focus on FinTech, you know, risk management, corporate risk. So those are the types of programs we're actually seeing an uptake in.

GE: Right. Arindam, how are things looking? You know, if one were to now look at, let's say, the automotive industry in India, which is obviously growing in terms of both sales, capacity addition and so on, though maybe last month may not have been so good, but in general, the industry is growing. How are you seeing, let's say, the skill availability versus the supply of skilled labour or the right skilled labour to industry? And what's the gap if there is one?

AL: So you know, as you mentioned initially itself, that it's an industry which is growing and which is also being disrupted by multiple fuel applications today, integration of different technologies into the vehicle itself. So the challenge is that as far as the traditional skills are concerned in the industry, which is around, let's say, assembly, machining, you know, production engineering, core production engineering, we do see a significant availability of resources, as I mentioned earlier. The challenge is some of these resources, can they be more multidisciplinary in nature is what the challenge is.

The challenge becomes, the skill gap becomes a lot more when we look at the newer technologies coming into the vehicles. You know, if I talk about connected vehicles, if we talk about autonomous vehicles, we are having significant challenges because like Siddharth was talking about, you know, cyber security or AI ML. Now there are people who are picking up those base level courses, but if they were to come into an automotive industry, they need to understand the application in the context of the automotive industry.

So we have courses now designed around that as far as automotive is required, but we still have a struggle in terms of getting the right kind of resources, training partners, training providers who would be able to deliver those courses on the ground. You know, there is a significant need of such people. And the other piece I would say, as far as specific engineering skills are concerned, we also are seeing a lot of growth around the global capability centers or GCCs in India now, as far as the automotive industry, while other industry also there is a lot more happening.

But in automotive also we are seeing these GCCs growing and there also there is a significant challenge of getting the right kind of manpower for meeting their growth requirements in terms of adding a few thousand engineers every year in different upcoming domains, not only for Indian market application, but for global market application.

GE: So Shantanu, when you look at the demand today for people who go through your courses, is there more demand than there is supply or is supply ahead of demand, again from your specific vantage point?

SR: From a national statistics perspective, Govind, it may look very different. But from a TeamLeases’s perspective, we have always seen a supply challenge more than a demand problem, right? So if you look at our servers at any point in time, we'll have close to about 200,000 open positions where we are looking for candidates. But today…

GE: What areas would that be in like typically?

SR: So India is growing all the way, but then the majority of the open positions will be in the typically in the areas of sales, logistics, customer service. Those are the areas which are possibly those job roles are the ones which are growing the fastest in the country. And hence, employers will have a large number of open positions there. Even manufacturing, for example, today has got a large number of open positions available with us. They are waiting for candidates who are willing to take up some of these interesting opportunities which are coming up there.

GE: But would it be like what, for example, Arindam said, you know, that, you know, where there is a intersection of mechanical and electronics and computer science, which is something that neither discipline is perhaps ready for?

SR: So today, most, if you look at anything today, enables something called a multidisciplinary type of thing. Students are being able to look at most of the electives and they can pick up anything that they wish. Today, most students are understand, they actually understand that digital skills are something like it's almost like operating system for anybody. So students today are fairly aware of what the employers are looking for. They're choosing the electives fairly, you know, well today.

And if you look at it from an employer's perspective, there has been a lot of unravelling which is happening there.

Employers today are actually looking for candidates who have diametrically different types of skillsets. The combinations like software coding with psychology, becoming a very interesting combination today. Technology with creative skills, becoming very important today. Risk taking, whereas, along with the risk management skills are becoming very important today. Leadership with teamwork is becoming very important skill sets today. Employers appetite for diametrically different skill sets today is fueling a lot of experimentation which is happening in the student side. Pick up any electives as long as you can demonstrate your adaptability. It's just not a mind condition, but being able to fit into multiple job roles. I think as long as you can showcase that there is a job role waiting.

GE: So when you say 200,000 open positions and this you're saying is at any point of time. So, and how long would these take to fill typically? Because I'm assuming that these are people who will wait for the right person and then take them in because it's of the nature of specialisation.

SR: So today, if you look at it, we have been able to fill a maximum of 15% of the rolling open positions that are available with us Govind today. And consider Team Lease is a scale where over the last 20 years, we have been placing one person every five minutes in this country. With that, our agony of the fact is that we have been only able to place 5% of the people who actually come back to us. That talks about the unemployability that you spoke about in the beginning. We have been facing a lot of these students possibly or candidates who are coming across and do not fit into these small open positions that employers have to offer. We realise that India at this point in time has been focusing a lot on some of these prepared solutions where they are fixing government schools, looking at NEP and stuff like that. But we also have to recognize the fact that just an eight weeks of training required for a cell phone assembly line operator tells us that even repair positions, repair solutions are important too and that possibly can fix in about 20 million kids going into manufacturing today in the country.

We need all of the continuum of repair, prepare and upgrade where this possibly can be sorted.

GE: But you are saying people are not taking these courses, the repair courses?

SR: I am saying that I am not too sure whether we have enough of these focused areas. So the skill infrastructure today which is focusing on, which is around NEP, there is a lot of work happening in the higher education segment, we as a country will have to focus on all of these three solutions, prepare which is talking about fixing schools, fixing government schools and things like that. We will focus on the repair solution where existing graduates or existing candidates can be provided a shorter upskilling program, which can fit into a specific job roles and a continuous upgrade, bold and frequent upskilling which actually improves your ability to change occupation which are being disrupted by automation. I think all of these three has to coexist and that is the way India possibly will better scale.

GE: I don't know, what is the equivalent number or situation for you when Shantanu talks about 200,000 open positions, now I know you are a university and not a skilling company like TeamLeasees but how do you see, what are the opportunities for real jobs where people are asking for let's say all these skills and your ability to supply them at the pace that they want?

{Not sure} So you know I also want to talk about the mindset of the student a little bit because we have this fair challenge where we have students, we need to place them, we have companies coming to us, still the matchmaking is not made in heaven because though they are jobs, they are still students unemployed and it's not that the students are not being selected, they are being selected but this whole piece around skills and entrepreneurship is also picking up.

So we see a lot of our students who have now skills can actually freelance and make a lot more money from their skill sets than being placed in jobs. So I think when we look at it from an India perspective, it's not only about employability but I also think it's about entrepreneurship and how do we build an ecosystem for entrepreneurship because they will be the job creators of the future.

So we don't see, there is definitely a mismatch between what the expectation of the employer is and what the students want from a job perspective. But I think this has been channelized into some very, very healthy entrepreneurship and I think that is the trajectory that we will be talking about fairly shortly in roundtables moving forward is how do you connect the skilling ecosystem and the entrepreneurial ecosystem.

I see that across the continuum, not only just at the so-called high value skills but also the necessary skills because if you just step outside our university and if we're talking about phone repair, you see the number of shops that have repairing phones. It's almost an industry but it's unorganised. And if you look at, you know, Viacom or Netflix who come to us looking for animation graduates, our graduates are happier doing, you know, freelancing for the Pixar's of the world at a time zone that works for them. So I think balancing all of that is important at the moment.

GE: And that's an interesting point. People are not necessarily looking for jobs because they may well earn more going this route. Last couple of questions and Shantanu, I'm going to come back to you. So if you, I mean, this is obviously an ongoing conversation and there are no magic or silver bullets right now, but at this point of time where we are, what are the broad policy or other interventions you feel are necessary to get more people into, let's say, the skilling ecosystem. Second is of course to match them faster to the jobs that there are, to the extent that there are.

SR: Three different solutions here, Govind. I mean, we said that first one is fundamental, which is about fixing government schools. In India, about 45% of the kids are going to government schools. There has been some work done, which in terms of today, we have seen smaller class sizes, for example, teachers are being better paid today.

Teachers are being better qualified in government schools today, but there's a necessary condition, not sufficient. For example, we need to see better governance there, better performance management, that there's a hope of rising and a fear of falling. So I think that's number one. Number two, reimagining this entire skill development ecosystem, which is about those five design principles. Learning while earning, learning by doing, learning with flexibility, learning with modularity and learning with employer signaling value. And third, but not least, which is NEP 2020 needs acceleration.

We have seen multiple such committee reports, 1948 Radhakrishna report, 1968 Kothari commission report, we'd seen 1986 new education policy and NEP 2020 possibly brings across, cuts the barriers between education and employment, right? Holistic education system, Poorna Swaraj to universities, expands apprenticeships. I think some of these things are there, but the rate at which employer, the world of work is changing the pathway to implement NEP in 15 years possibly is overstretching it. We need to bring forward that 15 years implementation to five years time. I think if we focus on all of these three together, India possibly be able to move a lot more people from farm to non farm.

GE: Last word, Sidharth. Then I'm going to give the closing words to Arindam.

SS: Sure. I think if we can bring educational institutions and technology companies closer and find a right playing field or ecosystem for them, I think in India our challenge is always scale. We have 1.4 billion people. 65% of them are of the age of employability. So the ability to put education on technology and really build access is something that I think all of us need to work for, because individual solutions are not going to work. If you really want to solve the challenges that we have today.

GE: Okay, Arindam, how are you seeing it?

AL: So, I think, you know, industry needs these skill, manpower, and industry has to be an active, has to have an active engagement in the whole learning process. It has been like always expectation on each side is that we will do what we want to do in our end. And, you know, let's. We don't need to talk to each other, but today is a time where we need to collaborate and collaborate and collaborate, and where we see a lot more close collaboration happening between the learner, the academic institution, the industry and the government. We are seeing great results. We need to make this up on a scale which incentivizes everybody to do the work in that direction, not only incentivizing only one part and not incentivizing the other, because then they don't synchronise and move together. Therefore, the alignment of this wholly skill ecosystem, like Shantanu said, and we've seen this in our work with team lease in mechatronics kind of program where we see everybody benefits, the student benefits, the industry benefits, the academic institution benefits, and the government benefits because everybody is getting a job and they are continuing to get into a job now, tomorrow, whether they want to do freelance or whatever it is. But if they have got the right skills, they will be more equipped and better positioned to do those kind of gig-work or whatever you want to call them. But eventually they need to have those hard skills available and that is very, very critical.

GE: You know, Arindam, just before this, Siddharth talked about what his plea to industry, saying that they should come forward more. Of course they are already, but they should come forward more. Collaborate. If I would ask you, what would you tell aspiring students or those who want to, let's say, get skilled? I mean, how should they be calibrating their expectations or their requirements?

AL: So I think students sometimes when they get into academic institutions, get overawed by the academic rigour, discipline, etcetera, and they sometimes lose track that …event. So everything starts happening around the third year, I mean, final year or pre final year, kind of a situation where they suddenly remember that, Oh, I have to get out of this place and go to somewhere else. So let me focus on it. But if they are focused on that, this is the pathway or a start of a journey where they eventually get into a work environment and they get exposed to it right from first year.

And of course, the academic institution also has to play a very enabling role in that process. Today, the policy structure in terms of NEP and national credit framework allows a lot of flexibility for both sides to work together in that kind of a format. So I think the government has done a very significant part of their work. It's up to the individual industry and the academia to kind of ensure they start talking about somewhat similar language, if not exactly the same language, and try to communicate with each other. Because so far I think it has largely been an academic vocabulary on one side and an industry or a practical vocabulary on another side, and not trying to match their requirements on the ground at the same time.

GE: Right. And that's a good note to end on important lessons for both academia industry as well as students who are students or those who are skilling themselves as they try and upscale, or you know, enter the world of advanced skills which really industry needs.