Integrate higher education in CSR initiatives to mitigate skill gaps

A recent report by the Confederation of Indian Industry (CII) and the Boston Consulting Group (BCG) titled ‘India’s demographic dilemmas’ analyses the looming skill gaps in the country and the need to urgently address them.

The report projects that over the next five years, India will experience a paradox of nearly 90 million persons joining the workforce, but most will lack the requisite skills and the mindset for productive employment, or for generating incomes through self employment.

The report focuses on four service sectors — ITES, banking, retail and healthcare — and suggests various measures, including changes in human resource policies of the public sector banks, to match skills with future job requirements.

The challenges in addressing the skill gaps are multi-dimensional and require cooperative efforts by all stakeholders. However, the primary responsibility for providing the foundation for manpower development, for India’s emerging knowledge economy, must lie with the government.

Nevertheless, corporate social responsibility (CSR) initiatives, through partnerships between business organisations, the government, particularly at the local level, and not-for-profit sector, can play a vital role in enabling increased access to higher education through both demand-side (e.g. provision of scholarships, general awareness programmes) and supply-side measures (e.g. provision of endowments, making corporate staff available as resource persons, funding research and by contributing to infrastructure).

There is increasing consensus that well-designed CSR initiatives could assist companies domestic and foreign, operating in India, to sustain long-term growth and profitability, while increasing acceptability to local population.

The research suggests that CSR initiatives which are integral to the business and reflect enlightened self-interest are more likely to succeed than those undertaken as charity.
Access to tertiary education remains relatively low in India.

Over 550 million of the country’s population is currently under the age of 25 years, but only 11% of those in the 17-23 age-groups (compared with an average of 23% for the world, 55% for developed countries and 31.5% for Brazil, Russia and China) are enrolled in tertiary institutions, producing about 3 million graduates annually.

Moreover, the Indian graduates, more than 60% of whom are from generic, non-professional disciplines, are unsuitable for knowledge economy work without further training.

The report rightly stresses that while the immediate need is to provide bridging training for those graduating from tertiary institutions, a sustainable strategy must focus on strengthening the educational foundations at the primary and secondary levels, increasing access and de-politicising and de-bureaucratising the higher education sector.

Broader social and economic goals of providing access to education are inconsistent with micro managing, crude social engineering such as reservations and quotas set on arbitrary basis without any sunset clauses, and creating unnecessary hurdles in expanding supply in education sector. The current education policies and mindset must be changed if India is to not only reduce the skills gap but also to provide productive livelihoods to the growing number of young persons entering the labour force.

Several Indian corporations have developed synergistic initiatives towards higher education and vocational training. The illustrative examples include Tata’s Institute of Hotel Management at Aurangabad and ITC Welcomgroup’s Hotel Management Institute, HUL’s Project Shakti and other CSR education initiatives, ITC’s e-Choupal, Reliance’s DA-IICT providing graduate and undergraduate education in Gujarat and Intel’s higher education programme.

Innovations in the design and delivery mechanisms, which could be generated by such CSR initiatives, can help provide a solid empirical base for more effective educational policies, as well as provide feedback from the stakeholders for business innovations.

This will, however, require a change in the mindset of all stakeholders in realising the importance of rigorous evaluation of educational programmes and willingness to alter policies and practices in the light of the findings. Some of the corporations have also been found to be unwilling to subject their CSR initiatives to greater transparency and accountability. This must change.

As the business case for CSR gains ground, companies are increasingly incorporating CSR initiatives in their core business strategies. The companies, which are recognised as front-runners in CSR initiatives, also benefit from easier hiring and retention of top talent, improved productivity, improved market shares and lower cost of funds as fringe benefits of their favourable image.

There is also a significant mismatch between the skills needed to manage India’s increasingly complex, urbanised economy and the civil service recruitment and training policies. This, in turn, is contributing to poor governance. Since the government is a vital stakeholder, its lack of capacity to meet the challenges is undermining India’s economic future. So, CSR initiatives are also needed to address the skill gaps in the public sector. One such initiative could be to develop graduate programmes in public policy to rival those for business administration. The regulatory constraints need to be removed to facilitate this initiative.

The CSR initiatives must also aim at a long-term vision of India as a major knowledge economy. In this connection, there is considerable merit for Indian companies to take leadership in setting up world-class full-fledged universities, combining high quality teaching, research and consultancy activities.

In India, education is under state jurisdiction. Therefore, companies with major presence in a state can work together with the state government to enable such world-class institutions of higher learning to be established.

As India struggles to raise the living standards of the bottom half of its population, such institutions can incorporate vocational training institutes to offer practical, livelihood-earning skills to these people. This can supply a ready pool of skilled labour to enhance the manpower resources of the state and therefore also the parent company. Such an institute can also train the increasing population of people over 60 years to remain economically self-sufficient post retirement.

Given the global economic crisis, and the need for India to structure its own developmental path, there is a strong case for setting up institutes of sustainable development. Such institutes can help reorient growth to more fully reflect resource scarcities, including those relating to energy and environment. Such institutes can also be valuable in helping to experiment with more sustainable and frugal social and economic consumption and production patterns.

The role of CSR in higher education and in mitigating the skills gap is therefore multi-facetted, with considerable experimentation, and learning-by-doing along the way. In the process, the affected individuals, companies, and society at large are likely to benefit.

The desire to change the current state of education, and of the current less-than-adequate regard for the impact of business on larger societies are, however, prerequisites.

Mukul Asher is a professor of public policy, National University of Singapore and Vikram Sampat a strategist with a Fortune 500 company. Views are personal.