Written by: B Ramalinga Raju (Founder and Chairman, Satyam Computer Services)
Capacity building: It is an industry
The last couple of decades have seen India emerging as the knowledge capital of the world. A phenomenon that started with India providing qualified talent pool to the developed economies has now assumed titanic proportions. The world’s largest and most prominent companies are sourcing technology, process and engineering services from either their own captive services centres or from global and Indian-origin, third party vendors.
One of the key transformations that the world is witnessing today is in the breadth and depth of services that India is engaged in. As India inches towards critical mass and supply-side constraints begin to surface, it is very important to put in place appropriate measures to ensure that India’s biggest asset, its human resource base, is leveraged to serve the global market effectively. By doing so, we will establish the path towards enhancing capacity, so that the world is not ‘supply’ constrained.
Opportunity size is usually underestimated, and this is because we perceive opportunities in the areas we are currently engaged in or are familiar with. We tend to apply what may be termed as a ‘push from the past’, rather than a ‘pull from the future’ approach. There is a shift in the way value is created across the globe, and knowledge has emerged as a primary driver. The ‘pull from the future’ approach would involve starting with a zero-base approach in demand estimation, looking at the services sector holistically and determining those which are distance independent. It would also mean looking at the ‘services components’ in the manufacturing sector. For example, services such as production planning and scheduling — which are typically considered location constrained — can now be remotely delivered. Estimates put the size of global GDP at about US $47 trillion, about 60% of which is in services. Out of this, about 45% to 50% would be distance agnostic, and could be delivered from anywhere.
Comprehensive demand assessment has to be undertaken across all competencies in IT (like application development, enterprise software, etc.), and all processes in KPO/BPO (like analysis of financial statements, finance and accounting, payables, etc.), and all possible services in the manufacturing sector (like production planning, warranty management, etc). At this stage, we have to be as comprehensive as possible, and envision into the future rather than look at the past, to evaluate what all services can be delivered remotely. The skill streams and associated demands can be derived from this approach.
The current focus on education and training and enhancing the capacity in that area, is perhaps not the right or only answer to this. The Nasscom Strategic Review indicates that out of the 3.2 million graduates that India generates every year, only about 50% of the engineers and 15-20% of other graduates are readily employable.
Turnaround time in skill building can be significantly compressed using technology. Technology also enables a significant level of automation in job elements. All of this enhances efficiency and effectiveness and results in greater productivity and zero defect delivery.
It is very important to get ordinary people to do extraordinary things, as this can increase manifold the size of the talent pool. This can be done by giving the right kind of training, tools, processes and other support infrastructure. Knowledge can be demystified by asking the right questions.
‘Capacity building’ is distinct from the current models of education and training. It is focused, on-the-job training which ensures that the trainees go through ‘real world’ projects in simulated environments. The ‘capacity building’ industry will need to recreate training environments for the identified skill streams in IT & ITES. It could be done using shadow processes (Maintaining customer confidentiality and protecting intellectual properties of respective organisations is of utmost priority). The private industry should take the lead in providing the environment for this training and supporting the capacity building industry. Monetary models can be worked wherein at a fraction of the cost of hiring from competition, resources can be developed and appropriately skilled to meet the demand. And the savings in this model can be used to nurture the capacity building industry. The mature services sector can further support this industry by providing proven and qualified training resources, on a rotation basis.
The ‘capacity building’ industry can then impart skills in the appropriate areas in a focused manner with reasonable assurance of off-take. Intellect should be nurtured in a disciplined environment, focusing on commitment to learn and acquire rather than on knowledge. Knowledge is perishable, unless kept current and this will be the focus of the capacity building. ‘Capacity building’ as an industry presents significant opportunities to entrepreneurs. While the IT industry deals with market saturation in Tier I cities and diversifies to key Tier II cities, the smaller towns in India still remain largely untapped. Youth in rural India can also significantly contribute to this sector, given the right kind of training, and this presents an abundant source of latent talent. The ‘capacity building’ industry can focus on and tap this effectively, by building in programmes which focus on the demand streams, and blending these with adequate training on soft skills.
One of India’s greatest achievements has been in laying a robust telecommunications infrastructure across the country. This can be a great platform to launch ‘finishing school’ courses that can address the employability issues with a well laid out curriculum that may be customised to the needs of each industry. At the outset, the government would need to recognise the importance of focused skill building, as differentiated from education and training. The government can make crucial interventions in making this successful. It should recognise that employment generation in the services sector is significantly higher than in the manufacturing sector. Worldwide, 67% of all jobs are in the services sector. The addressable IT and ITES market for the areas currently being serviced, is estimated to grow to $1 trillion by 2020 (the size of India’s economy today), if it grows at 30% year-on-year, and it has the potential to grow at that pace, given conducive conditions.
The government should re-look at the education and training paradigm and help in conceptually evolving this industry. It needs to evolve/help in defining appropriate standards, benchmarks, and metrics which ensure consistency across institutions operating in this space. This could be in the form of monitoring content, standardising examinations, issue of certifications, etc.
Further, the government must invest in industrial training institutes (ITIs) and polytechnics in enabling them to be forerunners in building focused skills for the services sector; essentially, expanding the scope of such institutions and opening more such institutions dedicated to the services sector. It should also create a conducive environment for entrepreneurs to invest in this opportunity, by providing tax breaks, and other incentives.
While it is good to have consumer spending driving the economy, it is important to focus on all aspects driving economic growth, and significant among them is the opportunity to serve the global market for services and deriving new business opportunities from it. Besides the direct benefits, it also boosts income levels of the people employed in serving the global economy, and thereby further drives consumer spending.
There is a real threat to India’s competitive position in the global business landscape, if the right things are not done. Supply-side concerns have indeed begun to emerge. Wage inflation concerns are becoming voiced more vociferously. There is a need for all stakeholders; local, state and central governments, industry, educational institutions, faculty, students to come together on a common platform to ensure that India continues to be able to position itself as the knowledge capital of the world.
