India's Business Schools Out of Date
Grads Return to Build Up Skills for Fast-Changing

By Rama Lakshmi, Washington Post Foreign Service, Sunday, May 3, 2009

NEW DELHI -- Barely eight months after leaving prestigious Delhi University with an undergraduate degree in commerce, Reena Dubey is back in the classroom, poring over a textbook on debt recovery and taking notes on India's banking industry.

"I studied economics, accounting, trade, corporate tax planning and industrial law for three years. But I was still clueless when I graduated," said Dubey, 22. "All my education was bookish and theoretical."

Hoping to secure an entry-level job as a credit-card collection agent, Dubey enrolled this month in a skills-building course offered by New Delhi's Avsarr training academy for new graduates who want to work in India's booming banking and retail industries.

"India's job market has changed, but my degree has not equipped me for it," she said.

Dubey's deflating discovery mirrors the experience of most of the 3.2 million Indians who receive undergraduate degrees each year. The Confederation of Indian Industry says that 25 percent of technical graduates and 15 percent of other graduates can be readily employed in the jobs that the recent boom has generated in telecommunications, banking, retail, health care and information technology.

"The stark reality is that our education system churns out people, but industry does not find them useful," said T.K.A. Nair, principal secretary to the prime minister, addressing a recent New Delhi conference on linking education to employability. "The necessary development of skills is missing in our education."

About 69 percent of unemployed Indians are educated but lack skills, according to the Confederation of Indian Industry. Only 6 percent of the workforce has a professional certification other than a degree, a figure the Labor Ministry says it hopes to boost to 12 percent within five years. In February, the government announced an ambitious plan to address the skills gap by improving vocational training and encouraging cooperation between educational institutions and industry.

The problem is compounded by demographic changes that experts say will greatly expand the country's working-age population in coming years.

Today, about 54 percent of Indians are younger than 30. Census projections suggest that the proportion of Indians in the 15-to-64 age group will increase steadily, from 62.9 percent in 2006 to 68.4 percent in 2026. By 2020, the average age in India is expected to be 31, compared with 37 in China and 48 in Japan. Census reports say that India is entering the advantageous "demographic dividend" phase just as China leaves it.

In a report last year, however, the Finance Ministry said that if that growing workforce does not develop skills soon, the country could instead face "a demographic nightmare": a surplus of educated people and a shortage of qualified workers as labor requirements continue to shift from agriculture to industry.

"This is the biggest wake-up call for India. Our schools and colleges do not provide the skills that India's new economic drive demands," said Amit Kapoor, a professor at the Management Development Institute in Gurgaon, near New Delhi. "People are graduating without learning how to get things done, without complex problem-solving skills, without knowing how to put their theoretical education into practice, and with poor articulacy. Our schools are centers of rote learning and give out degrees without imparting employable skills."

The problem extends even to India's much-hyped engineering graduates, who have been the backbone of the country's booming outsourcing industry in the past decade.

Every year, India produces about 650,000 engineers. But Pratik Kumar, executive vice president for human resources at the information-technology and outsourcing giant Wipro, says his company considers fewer than a quarter of them employable.

"The biggest problem is the poor quality of teachers," he said. "The teaching profession is unable to attract good talent. It is often the last resort for people who could not make it elsewhere."

In the past three years, Wipro has created several funds to finance grants, research scholarships and sabbaticals for teachers in engineering schools.

"This is not philanthropy," Kumar said. "If we don't do this now, it will hinder the future growth of our industry."

According to a recently released report by the Confederation of Indian Industry and the research group Technopak, "most industries are struggling to achieve their growth targets because of a shortage of skilled labor." The report says some companies have begun hiring skilled blue-collar workers from abroad and recommends the creation of "skill councils" for different industries that would track data, set standards and design training curricula.

But there is a cultural barrier to overcome, as well.

When the Confederation of Indian Industry set out a few years ago to make India the "skill capital of the world," it found that the word "skill" was frowned upon by many educated Indians.

"It is associated with low-level jobs in people's minds. 'Skill' is not meant for educated persons," said Vijay Thadani, who chairs the group's national committee on education. "We have to change that perception, to bring social acceptability and recognition to the word. We keep repeating that skill is a bankable, certifiable asset. Skill is currency."

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