India's Business Schools Out of Date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

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."