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The Talent Vacuum

Prerna Srivastava
10th May 2008
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Many of our prior posts have spoken to the urgent need to overhaul, or at the least, significantly revamp the education system in India, as evidenced by the massive rise in demand for both primary and higher education institutions in relation to dwindling supply (not to mention the relatively low quality of instruction/infrastructure at pre-existing schools, particularly those in rural areas). The following except from Ramesh Menon’s, “The Talent Crunch” speaks to the gravity of this problem in explicit (and horrifying) detail:

Sam Pitroda, chairman of the National Knowledge Commission says that of the 90,000 MBAs that come out every year, only around 10,000 are worth employing. Kiran Karnik, former NASSCOM president, puts the blame at the door of India’s education system, saying that only 25 per cent of the country’s engineering graduates deserve jobs. No wonder companies today have to invest heavily in training fresh graduates, helping them to unlearn and pick up skills. As there are dramatic changes in politics and business as well as international scenarios, there is a need to keep updating the syllabus almost every year. Manohar Chellani, Secretary General, Education Promotion Society for India, New Delhi, points out that there is tremendous scope for improving the quality of education in India, and delay in doing it will cost us heavily.
The National Knowledge Commission has said that India will have to bring in education reforms if it has to emerge as the workforce of the world. India today needs at least 1,500 universities, but has only 370. There are more than 550 million young people in need of education but do not have educational institutes to go to. India also needs around 1,500 IITs, 1,500 management institutes, and 1,500 medical schools. A million good schools are also required. All that the present education minister, Arjun Singh, has done in his tenure is to fool around with reservations and suggest that Rahul Gandhi be made prime minister.
Though the IT industry needs 3.5 lakh engineers a year, only 1.5 lakh are available. This could lead to a shortage of over five lakh engineers in the next few years. A recent Nasscom-Crisil report says that the IT industry is expected to create about 11 million jobs by 2010. In another two years, the II sector would need half a million professionals. Presently, it employs over 350,000 but is short of around 90,000 workers. In another year, the shortfall is expected to cross 200,000. In 2007, the job market was vibrant. 2008 promises to be better as India goes on to vitalise its various sectors, which require over 1,000 CEOs across industries.

Are you alarmed yet? If you’re not, well, you should be.

The statistics presented by Menon present a serious problem – we are facing a gap in skilled labour that has the potential to widen exponentially over the course of the next few years. I would argue that this article presents a compelling mandate (along with the research conducted by Pratham) for taking serious steps towards educational reform.

So why aren’t we seeing significant tides of change? Atanu Dey argues the following:

Upton Sinclair had noted that it is difficult to get a man to understand something when his job depends on not understanding it. That is a specific instance of the more general principle that economists consider to be a fundamental truth about human behavior: “Incentives matter.” The system does not provide the policy makers an incentive to improve the educational system. Conversely, they have an incentive to keep the system dysfunctional. Given the current structure of incentives, they would lose whatever advantage their gain from the existing system.

In other words, if the system rewards ineptitude and ineffectiveness, then there can be very little hope for change. What Dey does counter-argue, however, is that the scope of the problem is large enough to have the potential to spur the need to act. Think of who the “skills deficit” impacts – not just individuals, but key stakeholders as well – corporations, small to medium sized enterprises, academic institutions. If these forces combine, there is potential for large-scale, sustainable change.

As with most things, however, the mandate needs to come from within in order for the system to change. How can we reach this crucial tipping point?

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