India: Business partnerships for a skills revolution
India: Business partnerships for a skills revolution by Shiraz Engineer
With a booming young population that is approaching working age, India’s demand for quality education and training is expanding at a significant rate.
The country has more young adults aged 18–22 years old than anywhere in the world —this tertiary-education-aged population is projected to peak at 126 million in 2026.
And as the economy grows at 7-8 percent, the need to skill and upskill India’s workforce of the future has never been more pressing. It is at the core of the Indian Government’s national ‘Skill India’ campaign, which aims to upskill 400 million workers by 2022.
India is aware that it cannot meet this ambitious target alone – quality partnerships will be essential. Opportunities in the university sector have become more widely known in recent years —attracting India’s best international students, for example, has become a global competition. But the prospects are also promising for high-quality international vocational education providers that are willing to collaborate and focus on the long term.
Unpacking the vocational education and training opportunity
As part of its skills strategy, India estimates it will need another 120 million skilled workers within four years.
But currently, only an estimated 7 million Indian students per year are enrolled in any form of vocational training. This is comparatively low, when compared with 90 million in China and 11 million in the United States.
And only 2 per cent of India's total workforce has received any formal skills training.
There is a pressing need to lift vocational education and training (VET) to meet international standards and ensure India’s millions of young people are equipped to enter the workforce and able to adjust to rapid technological change.
With this rising demand, countries such as Australia and Germany — which are held in high regard for the global employability of their vocational skills training — could be well positioned to partner with local operators and help bridge these market gaps.
These opportunities for foreign vocational education providers are often niche.
For instance, one promising area is the need for high-quality vocational trainers and assessors. Currently, poor assessment and certification systems can make it difficult for employers to distinguish the quality of institutions and graduates. Opportunities exist for reputable international providers to help India develop a large pool of qualified trainers and assessors capable of imparting industry relevant skills and knowledge.
Another new area of opportunity is the provision of tailored and bespoke courses focused on getting ‘job ready.’ For instance, in a recent survey of India’s top 50 companies, 88 percent of businesses said they were actively investing in skills development, but many indicated a preference for tailored solutions rather than longer, more generic accreditation programs.
Where to focus: States and sectors
For vocational education providers that are new to the market, as with other aspects of doing business in India, it is important to develop a sector and state-based approach to market entry.
The sector of focus will often influence the best state to focus on. For instance, Australia’s landmark India Economic Strategy, released in 2018, suggests that providers in health care could focus on the states of Kerala and Karnataka, given their history of exporting health care personnel and the presence of a developed health care market respectively.
Meanwhile, the strategy suggests hospitality providers could consider Kolkata in West Bengal because of its status as a hospitality training hub for students from the north-east, who comprise a substantial proportion of the Indian hospitality industry nationwide.
One existing example of this sector and state-based approach is Australian technical institute, Kangan Institute, which has began working with India’s Government of Gujarat and Maruti Suzuki to build the country’s first international Automobile Centre of Excellence.
Scalable solutions
Technology driven solutions are critical to achieving scale and meeting both India's university and vocational training needs. Already, 18 of India's 36 entities (29 states and 7 territories), are home to more people than Australia.
India's largest state, Uttar Pradesh, is bigger than Brazil, the world's fifth most populous country.
The United Nations predicts that India’s population will reach 1.6 billion people within the next two decades.
Over 66 percent of the population are of working age, with a median age of just 27 (compared to a median age closer to 40 in countries like Australia).
These demographics combine to give India a massive population dividend — an unrivalled young and mobile domestic workforce.
This is particularly the case in rural and regional areas. By 2025, India is projected to have 850 million online users, many of whom will have moved from lower-generation network connectivity (2G) to higher-generation (3G, 4G and 5G). Half of these users, or 425 million people, will be in rural areas.
As a result of this rising digital connectivity, the number of students enrolled in online programs is expected to reach 9.6 million by 2021, up from 1.6 million in 2016.
Providers from countries like Australia have world-leading distance education platforms and may be well- placed to offer flexible study options that are scalable and can reach geographically isolated students.
Partnerships for success
In most instances, these vocational and broader educational opportunities will need to be pursued through a partnership model.
International providers will need to spend time on the ground in India to understand the labour market requirements and tailor their offering to India’s market requirements.
This means delivering high volume, low cost offerings, without sacrificing on product and training quality.
It will also require careful alignment of training programs with industry needs. To date, many existing training options have had only limited involvement from local business and industry, leading to a mismatch between skills and workplace demand.
Helping India meet its surging skills demand is obviously not without challenges. For instance, Australian providers are often wary of diluting the quality of Australian qualifications to meet the cost needs of Indian consumers.
International providers will also need to be prepared for complex negotiations with potential partners in India that may seem protracted. There is a need to understand the differences at multiple levels, in particular national culture, organisational culture and individual attitudes and
beliefs, that impact on negotiation style and strategy. International operators will need to develop the capacity for multi-stage negotiations.
These challenges aside, it is clear that India will not have the capacity to meet its future education and training demands on its own. This is particularly the case in the government’s priority growth areas of health, education and infrastructure development.
To date, many international organisations may have put India in the 'too hard' basket.
But continued efforts by the Indian Government are delivering significant improvements in the business environment: India has risen 53 positions in the last two years in World Bank’s Ease of Doing Business rankings, and 65 positions in the last four years. It is currently ranked 77 out of 190 countries, sending a strong signal to the international market that India is ready to work with international businesses.
It certainly takes time and resources to understand the Indian market and invest in developing long-term partnerships. But for quality international vocational educational providers that are prepared to partner with India for the long term, the opportunity to be part of India’s remarkable skills revolution will be once in a lifetime.
If there was ever a time to make a strategic shift and focus on India’s dynamic vocational education and training sector, then that time is now. Research the market, review the options and respond to the opportunity.
By Shiraz Engineer - Shiraz is Associate Director of Capability Development and Research at Asialink Business, Australia’s National Centre for Asia Capability. He has over 15 years of industry and consulting experience assisting clients across Asia to find solutions to their complex business problems.
India’s Mission to Create 100 Smart Cities
With many of its cities creaking under the pressure of poor infrastructure and a burgeoning urban population, India’s government has pledged to invest in 100 smart cities around the country.
First launched in June 2015, this ambitious urban renewal initiative, funded jointly by central and state governments, aims to transform urban development, improve the quality of life for citizens and stimulate economic activity.
Whilst recognising that the concept of a smart city will differ from city to city and region to region, India’s Smart Cities Mission leverages the latest smart technologies to enhance infrastructure and social connectivity, with a focus on security, transportation, water, energy and solid waste.
While there is still some way to go to achieve the 100 cities targets, a number of early adopters are leading the way.
Known as the ‘Pink City,’ Jaipur, the capital of Rajasthan, in India’s northwest, offers one example.
Boasting the finest examples of Rajasthani architecture and history, Jaipur is best known for its rich heritage, famed forts, temples and places, and its architectural beauty. But it is also blighted by urban problems of traffic, congestion and choking pollution.
A key feature of Jaipur’s smart city renovation is the establishment of smart roads. Located within the city’s historic walls, the smart road network includes an integrated traffic management system, intelligent lights, and an environment monitoring system. This is complemented by other ‘smart’ and practical initiatives to improve the city’s congestion, such as 3D modelling and the introduction of smart sensor bins throughout the local community.
These smart initiatives are also being rolled-out across Jaipur’s tourism sector. Jaipur’s smart city plan also includes the creation of a smart heritage and tourism precinct. The precinct features a range of initiatives to enhance the quality of the tourism experience, from an eco-friendly cool corridor to a roll-out of QR codes at major tourism sites and the innovative ‘reuse’ of heritage buildings. Tourism is a key industry for Jaipur, as one of the key destinations on India’s ‘Golden Triangle’ tourist circuit, along with New Delhi and Agra.
And with Jaipur just one out of the hundred Indian cities set to undergo transformation, there are multiple opportunities for skilled international companies to support this massive urban renewal, in areas ranging from sustainable development and planning, intelligent transport systems, integrated transport planning, environmental services, health and more.
Getting started in India: Q&A with Shiraz Engineer
If you have decided to launch your business in India, you must carefully plan your next steps. India’s profound diversity inevitably brings with it a range of diverse needs and tastes, as well as a multitude of different regulations, industrial relations laws and tax legislation. It is essential to invest time to become familiar with the culture and business practices, develop a thorough understanding of the specific market and understand your target customers — Asialink Business Associate Director Shiraz Engineer explains
Question: What are the top factors international businesses should consider when expanding in India?
Shiraz: It is essential to do your research before you launch into India. Speak to industry experts, connect with other international businesses that are already operating in India. Get involved in industry events and information seminars, and it is always recommended to seek professional advice from experts.
It is also important to build your awareness of cultural differences and ways of doing business in India, the best way to make that happen is to spend time on the ground in India. Taking time to understand the local culture and business etiquette will help you to negotiate successfully and form long-term relationships with potential partners, customers or suppliers.
Question: Is it necessary to have an India strategy before you launch your business there?
Shiraz: Yes, you need to develop your strategy before entering the market - but ensure it is flexible to adapt to the dynamic landscape. Special care is needed when selecting advisers, partners and contractors.
It is also necessary to choose a business structure based on your specific industry, your objectives and the product or service you are offering — there are multiple options you could consider.
You should also allow time for bureaucracy — both filling in forms and waiting for approvals — as bureaucratic complexities are often inevitable. That said, India, through continued efforts by the Government, has considerably improved its ranking in the World Banks Ease of Doing Business report to currently number 77 out of 190 countries.
Question: Which is the best city to locate your business?
Shiraz: India is not a single market. Profound differences exist from state to state, with different growth rates across cities and industries. Look to consider each state like a country, especially given India’s scale and diversity.
This diversity will not only affect how you do business in a particular area, but where you choose to locate your business in the first place. Different cities and regions are becoming more specialised in their economic and business functions. For example, Mumbai is the financial centre and Bangalore India’s Silicon Valley, while Pune is the automotive hub of India and also has a rapidly growing IT sector.
Unless your product or service is specifically targeting more regional communities, it can be advantageous to set up in an urbanised area, in spite of potentially higher operating costs and more expensive labour. Less urbanised areas also tend to have lower-skilled workers and poor infrastructure.
Question: When should you seek support?
Shiraz: Lack of adequate advice, in the early stages of research and planning is one of the most common reasons why some international businesses fail in India. It can lead to mistakes such as picking the wrong partner, failing to adapt to local tastes and preferences, inadequate understanding of the competitor landscape, and a failing to understand India’s regulatory and strategic business environment.
In contrast, the most successful foreign companies in India are usually highly informed, armed with comprehensive market entry planning, and able to adapt quickly and flexibly to the realities of their industry and market.
For more information
For more on the 100 Smart Cities initiative, click here
For practical resources on doing business in India, click here
For more on getting started in India, download the Asialink Business India Country Starter Pack, here