FSG is a nonprofit consulting firm specializing in strategy, evaluation, and research. The firm was founded in 2000 as Foundation Strategy Group by Harvard Business School Professor Michael E. Porter and Harvard Kennedy School Senior Fellow, Mark Kramer. Today, FSG works across sectors in every region of the world—partnering with corporations, foundations, nonprofits, and governments to develop more effective solutions to the world’s most challenging issues. FSG’s ideas are frequently published in journals such as Forbes, Harvard Business Review and Stanford Social Innovation Review.
Despite recent estimates of “slowed” economic growth of 5-6% for 2012-13, India’s growth continues to outpace most developed countries. One of the key questions on many people’s minds is whether India can effectively train its youth to fuel expected future economic expansion.
It is estimated that India’s economy will create 500M jobs in the next decade – 75% of which will be skills based. Today, workers with vocational education only comprise 2-4% of the trained workforce ; this large gap between existing supply and projected demand will pose a large challenge in the coming years, driven by two main factors:
>The training industry faces capacity constraints, placing an upward bound on how many skilled workers are available to industry; according to the Ministry of Labour’s estimates, the current vocational education system can only train 25% of those workers joining the workforce each year
>A mismatch exists between industry demands for skilled labour and current development programs, which can be traced back to program design and quality control
To be prepared for future skilled job growth, India must improve the skills of the existing and future workforce by increasing the capacity of skills training providers while simultaneously making programs more employer-driven to ensure higher quality, more appropriate training at scale. Matching this supply-demand issue at scale makes workforce development an incredibly complex issue. Through our research, we have seen real progress against complex social issues when stakeholders come together and employ the five conditions of collective impact (as described in our previous post ) – a common agenda, a shared measurement system, mutually reinforcing activities, continuous communication among stakeholders, and a backbone organization to support the effort.
Collective impact offers a powerful potential approach for the various stakeholders – government, nonprofits, the private sector, and social enterprises - working to advance India’s workforce development. Only through coordinated efforts will the skilled labour supply-demand gap be closed at a systemic level and ultimately improve India’s competitiveness.
During the first phase of collective impact, an important step is to understand the landscape of key players and the existing work underway in order to identify gaps and opportunities for more effective coordination. India has many examples of isolated success in the workforce development space that should be celebrated and which can inform future systemic change, including:
>Private sector training programs. In some industries, the private sector has taken training into its own hands to ensure competitiveness in the face of the projected labour supply shortfall. Larsen & Toubro (L&T), a major construction company, improved its workforce quality by providing vocational training through Construction Skills Training Institutes (CSTI) . Over 5,000 youth were trained in topics critical to construction (carpentry, masonry, welding) through CSTIs in 2009-10, with future targets set at 15,000 trainees annually. With 100% placement rates, trainees are guaranteed higher-earning jobs than unskilled alternatives, while L&T secures a high-quality, consistent labour supply .
>Nonprofit training programs. In many communities, nonprofits and social enterprises have played a critical workforce development role. Lend-A-Hand-India (LAHI) complements secondary schooling with skills education to ensure employability of rural school children. LAHI leverages existing school infrastructure and complements academic education by honing vocational skills (e.g., carpentry, fabrication) and encouraging entrepreneurship.
While these are successful efforts that demonstrate the critical roles that employers and social sector actors can play in workforce development, they fall short in achieving system-wide change.
A more coordinated, collective impact approach could enable the various stakeholders to significantly expand access to training programs, and ensure that training is closely aligned with specific industry demands. This might include developing a clear common agenda around access and quality of workforce training, with clear shared measures that are tracked by industry or region. Government, the private sector and nonprofits could more actively coordinate their currently fragmented efforts, and ensure that training programs are designed to meet specific industry needs. In particular, this would require greater coordination between industry and the vocational education system and nonprofit training providers, so that training programs are high quality and remain directly aligned with the evolving needs of industry.
One emerging example of collective impact is the Government of India’s (GoI) recent launch of the National Skills Development Corporation (NSDC) – a public-private partnership to develop skills programs at scale per industry requirements. For example, NSDC is working within the manufacturing sector to ensure that the 100M new high-quality jobs that are projected by 2025 will be filled by trained workers. In order to tackle an industry as colossal as manufacturing, NSDC has developed Sector Skills Councils (SSCs) which will coordinate activities of all actors within a sub-sector of the manufacturing industry such as textiles and food processing. Acting as a “backbone” organization, the SSCs proactively coordinate actors within specific industries, work with employers to understand needed skills, research current workforce supply, improve the quality of training providers, and accredit training programs per industry standards.
Greater coordination among the various players of the workforce development landscape will enable the vast masses of India’s unskilled labour to have access to the tools necessary to not only increase their individual income, but contribute to India’s overall poverty reduction, economic growth, and global competitiveness.
We invite you to contribute your thoughts on what it will take to achieve the training required for India’s youth that will fuel future economic success.
By Fay Hanleybrown, FSG Managing Director, and Melissa Scott, FSG Consultant
(Fay leads FSG’s Seattle office and Collective Impact approach area. She consults, publishes and speaks regularly about philanthropic effectiveness, including collective impact and shared measurement. Prior to FSG, Fay was a consultant at McKinsey & Company. Melissa is a consultant in FSG's Mumbai office).