Hide this You're reading Entrepreneur India, an international franchise of Entrepreneur Media.
Business Education

Why Corporate Training in India Is A $100 Bln Domestic Market in the Making

Why Corporate Training in India Is A $100 Bln Domestic Market in the Making
Image credit: Shutterstock
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

Subrata, who is the founder and CEO of Redstone Learning, talks about the opportunity that exists in the corporate training and learning space in India.

“In a time of drastic change, it is the learners who inherit the future” - American author and philosopher Eric Hoffer once said.  This timeless adage holds true for both organizations and employees across the globe.

Digitization, AI and globalization are disrupting the status quo at an unprecedented pace in every industry. If one looks at what is happening with Transportation (on-demand, electric, driver-less), Commerce (online, on-demand, personalized), Healthcare (AI assisted diagnosis), etc. – the future is very uncertain, and yet full of opportunities for those who can adapt.

Large economies like the US have always stayed ahead of such disruptive cycles in business and technology, by sustained focus and large strategic investments in research, innovation and human capital. On the human capital front, as per industry reports, US companies on an average budget 8-10% of their total employee spend on training, with a total annual outlay of over $100 billion. This is also a market that has been growing at 15% year-on-year since 2012.

India on the other hand, is currently a much smaller economy at about a tenth of the US. However, even at this size the corporate training market is disproportionately small, with estimated spends of only 1-2% of employee costs and a total outlay of less than $1 billion. So what ails this industry in India?

Low corporate training budgets

Indian organizations have traditionally seen low investments in longer-term initiatives like R&D – and employee training is no exception. This is further complicated by high employee turnover (of about 15-20% across industry), which leads to a perceived loss of the training investment incurred by the employer.

Career planning with a generalist mindset

Employees in India tend to move towards generalist ‘managerial’ roles fairly quickly, as compared to long stints to hone specialized skills that is common in US and similar economies.

Significant focus on entry-level skills training

Given the inadequacies in India’s current education system that does not adequately provide for vocational and employment-ready skills, a significant portion of organizational training budgets, even at leading IT services companies, goes towards entry-level skill building. Infosys, for example, has vast resources and an entire campus in Mysore, dedicated to training 25000+ fresh recruits for 3-6 months every year.

Even the government’s skilling initiatives are entirely focused on imparting employability-related skills for millions of working-age youth. There is an ambitious initiative underway to impart job-skills to 500 million people by 2022 under the Skill India Mission.

The road ahead

At a macro-economic level, according to the IMF, India is projected to become the 6th largest global economy by 2020 and the 3rd largest (behind China and the US) by 2030. To put this in perspective - currently India is home to only 7 companies in the Global Fortune 500, compared to 128 based in the US and 98 in China! So the next decade and a half will see the number of Indian companies in the Global Fortune 500 list growing to at least 100.

Such phenomenal growth is unlikely to happen by focusing on employability-level skilling alone – rather, Indian companies will have to lead from the front, develop high-end expertise and set global benchmarks. What this naturally entails, is that significant investments will be made in long-term initiatives including R&D-led innovation and organizational capability-building via training. Such investments will grow to far higher levels than at present, rivaling the spending by today’s leading economies like the US. For employees, there will be a much stronger focus on higher-end skills and specialized career paths.

The lower end of this training spend is likely to be on self-paced technology-driven and cost-effective solutions - while at the high-end, solutions that involve global expertise tailored to an Indian context will be seen. And thus a domestic training market of $100 billion will be created!

 

 

 

Edition: December 2016

Get the Magazine

Get the monthly dose of Entrepreneur delivered to you.
Subscribe Now