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How the gap in India Career Skilling Market creates an opportunity for private companies/ ed-tech to thrive in India?

May 22, 2023
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In India, the need for career skilling platforms among graduates and working professionals has been steadily increasing over time. The need for career upgrading platforms to make these graduates in India was underlined by the lack of comprehensive courses and career counseling at the college level, as well as disappointments from employers on the attitude, skill, and knowledge misalignment among recruited entry-level graduates.
Here is an insight into how the demand and supply gap creates an opportunity for ed-tech companies to build a successful business model in the country.

1. Present Day Pain Points of College Grads, Higher Education Colleges and Employers…

Students Disappointments

  • Lack of tie ups of tier 2, 3 and 4 colleges with placement Agencies/ employers hinder job opportunities
  • No skill match audit framework by college authorities to align student interest to relevant job role requirement
  • Limited guest lecturers/ workshops/ conferences by college authorities with the seasoned professionals that can guide their career choice
  • Lack of course comprehensiveness / counselling that can guide them on how to perform the job KRAs

College Pain Points

  • Every year 9.2 mn3 students graduate from colleges, ~70% looking for formal job but only 25-35%4 are able to secure one, underscoring that higher education is no guarantee to a secure employment
  • Problem severe among tier 2,3 and 4 colleges/ b-schools with 95%4 facing problems in placing students. Poor placement ratio of 40-50%
  • Placement process is also not being professionally managed & prioritized (handled by faculty rather than hired seasoned professional).
  • ~47% of Tier 2 - 4 Colleges faced challenges in developing technology infrastructure to support their journey of upskilling students to be placement ready.

Employer Disappointments

  • ~73% employers believe that there is gap between talent available vs talent employable
  • Employers felt that nearly 50%1 of all students screened lack direction, with almost zero clarity on the role, industry and company they aspire for.
  • Employers invest high on an average ₹ 1.5-2 lakh1 on hiring & training a fresher
  • Employers face continuous challenge of attitude, skill and knowledge alignment among hired freshers, cited high attrition of over 40%2 due to expectation mismatch.
Source: 1 Interviews with 400 hiring managers in startups, SMEs and Large scale companies, Indiaemployerforum.org | 2. Linkedin Study | 3. MHRD | 4. Ken Research Analysis - Placement stats of tier 2, 3 and 4 colleges compared with total available pool that sat for the interview| 5. College Interviews

1.1 highlight the need for Career Skilling programs among the large & young talent pool.

Identifiable Customer Cohorts

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Key Takeaways and their Personas

    UG

  • Every year ~30 mn College Going Students require skill development to be Job Ready
  • >95% students of the total Graduates are from Tier 2-4 Colleges
  • Constant Requirement for summer training programs of <2 months (~8 weeks) and career programs of 3-5 months for interview prep, finding internship opportunities and resume building

    • PG and Working Professionals

  • Annually ~4.1 mn people pursue traditional PG Programs (MA, M.Com, MSc, MBA, Ph.D) who require constant job placement support and corporate-ready skills (Ref Slide 52)
  • Out of 5-6 mn 0-1 yr. exp. Graduated working professionals, ~ 40%5 are interested and have taken part-time Specialized Up-skill courses
  • Need underscored by Freshers, Sales and Marketing Professionals & Domain Experts for Digital Marketing, Soft Skills, business analytics, Goal setting and storytelling programs (ref slide 66)
  • Need observed by Young Leaders and Professionals for Business Management, Finance, HR and Supply Chain Management Programs

    • GIG workers

  • GIG workers highlighted need for Soft skills, business etiquettes and career development programs to move to formal job sector
Source: 1. MHRD including UG, PG degree, PG diploma, PhD, Certificate students across all streams | 2. Career Power, UPSC, SSC, GATE website including UPSC, Bank/ Govt. Office, GATE, SSC Test takers for 2020 | 3. Payroll additions in EPFO in 2019-20 | 4. ET Government | 5. Survey on Future of Workspace by Kronos | 6. Source: Global Entrepreneurship Monitor Report

2. Additionally, there is a Void in ‘employers-only training mode’ to meet Young Professional’s Learning Need

Working Professionals’ Dilemma

    Rapid Job Change & Family Dependency

  • ~25-35% freshers’ residence period in first job is just around 12-18 months1. Almost 2-3 career hops within first 5 years of working span.
  • Lack of continued learning and career growth opportunities causes 1/3rd 6 of India’s working population to feel stagnant in their job
  • Most Working professionals are not able to quit and go back to college for up-skilling

    Unsatisfactory Training

  • 68%3 Working Professionals prefer to learn at work but 50% of employed felt unsatisfied with current level of skills & trainings imparted
  • Employees who feel they cannot develop in the company & fulfill their career goals are 12 times6 more likely to leave the company

Companies & Entrepreneurs hustling with Sustained Corporate Training

  • Most companies esp. SMEs realize that they don’t have enough resource/ time/ cost to Design & Deliver Up-skill programs for their employees and expect employee to learn on-the-job
  • Most employers’ L&D programs overlook the hired freshers forgetting curve (employee will forget 75% of learning if not applied in just after 6 days7) and put crore of money into what amounts to transfers of quickly forgotten information.
  • Gradual decline in average learning hours per employee, leaves employees to resort to alternate learning avenues

‘EMPLOYERS ONLY’ Training Not Enough with clear Visibility of Employee Spend on Upskilling/ reskilling course Supplementing Employer spend

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How Employers Tieup with Edtech platforms is solving the problem?

  • Able to hire ready-trained workforce that can be deployed on projects
  • Minimal training cost incurred post recruitment
  • Lesser churn as learners develop more ownership in their roles
Source: 1) Ken Research Analysis Survey/ Estimates | 2) Survey by Kineo, CNBC Results | 3) Workplace Report by LinkedIn Learning | 4) Previous Report by Ken Research Analysis | 5) Career Pathways Survey by LinkedIn * Corporate Training Spend by Employers | ** Spend by Employer/Employee on Ed-Tech SPOC/ MOOCs platforms | 6. IBM Study | 7. HBR |

3. Skill Needs are also evolving among sectors along with training spend

    Major Sectors Workforce Required by 2022 (last 5 yr. CAGR) Jobs Added Every Yr Anticipated Hiring Intent for Freshers1 Spend in ₹ crore (Share%)2 Skill Stacking for Hired Freshers (ranked by degree of importance - % indicate skills requirement)
    FMCG/Retail 56 Mn (4.4%) ~2.2 Mn 12%4 (264K) 420 (12%) 80% Soft Business Communication, Client Facing, Customer Facing Skills, Negotiation Skills, Presentation Skills, & 20% technical skills- MS Office, Digital Tools & Channels, Critical Thinking, R, Python etc.
    Pharma & Healthcare 11.0 Mn (8.5%) ~740K 11% (81K) 70 (2%) 55% Soft Skills- Business Communication, Client Facing Skills, Customer Facing Skills, Ability to sell & 45% technical skills like Electronic Health Record, Imaging and Visualization, E-prescribing Software, Hospital Management Software etc.
    IT & ITES  5.1 Mn (5.5%) ~250K 26% (~65K) 1,330 (38%)* 30% Soft- Business Communication, Client Facing Skills, & 70% technical skills- AI, ML, Software Development & Data Analytics
    BFSI   4.3 Mn (5.6%) ~220K 23% (51K) 490 (14%) 60% Soft Skills- Business Communication written & Verbal, Interpersonal Skills, Negotiation Skills, Customer Facing Skills & 40% technical skills- Fin-Tech, Block-Chain, Financial Analytics, Cyber-Security etc.
    Manufacturing  16-17 Mn (2%-2.5%) ~340K 15% (51 K) 105 (3%) 50% Soft Skills including Business Communication, Interpersonal Skills, Client Facing Skills, & 50% technical skills- Project Management Software,
    Automobile  14.9 Mn (3.9%) ~420K 10% (42K) 175 (5%) 50% Soft Skills- Customer Facing Skills, Client facing Skills, Ability to sell, Negotiation & 60% technical skills in Operational Analysis like Six-Sigma and LEAN methodologies, information security etc.
Source: India Skills Report 2020 by CII, Ken Research Analysis | 2. Ken Research Analysis – India Corporate Training Market Outlook to 2025 Report | * includes spend on BPO, KPO, IT/ ITeS | 3. Economic Times Article| 4. Employment Outlook Report by TeamLease | 5. Article by MET Technologies

4. Government is trying to Bridge the Professional Skill Gap but needs private companies/ ed-tech support

Initiatives by Government to Bridge Professional Skill Gap

chart5 chart6 chart7
  • Indian Government allocated ~ ₹ 17,000 crores towards Skill Development & Employment Generation, yet a lot of efforts are required to meet the target of training people.
    PMKVY Scheme
  • Out of 64.27 lakh people who where trained under Pradhan Mantri Kaushal Vikas Yojana (PMKVY) scheme, only 22.4% (14.43 lakh people) got placed.
  • People were trained in one role and were placed in another

Government though trying to solve Skill-gap problem through its platform require private companies/ ed-tech platforms support to bridge the targeted gap

Source: 1)Article by Indian Express Industry Articles, Interviews with Industry Experts, Ken Research Analysis

5. The demand and Supply Gap in the career skilling market presents an opportunity for an Ed-tech Platform to build a scalable business model in India

An opportunity for an Ed-tech Platform to enable graduates to be job ready along with bringing jobs to them in collaboration with Colleges and Employers.

BENEFIT TO EMPLOYERS
Low training cost

Train the hired freshers and sustain learning at lower training spend

Easy Availability

Pool to hire ready- trained workforce that can be deployed on projects

BENEFIT TO JOB SEEKERS/ FRESHERS
Counselling

Guiding students on Career Options, Industry Knowledge, Salary Expectations & guidelines & Right fit Roles

Simplify Pace of Learning

Access to Industry relevant course on Blended Mode (self paced+VILT) for students to pace their learning as per need

Placement Assistance

Match the skill with numerous job opportunities available

These benefits when offered via digital platform using robust LMS, content authoring and assessment tool will build a scalable business model

Source: Interview with Industry Experts, Ken Research Analysis Notes: VILT – virtual instructor led training
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Some of the Intelligence Curated by Ken Research in Career Skilling Market Space:
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