'One of things that we really need to do in India is nurture talent'

One of things that we really need to do in India is nurture talent. We talk a lot about our so-called demographic dividend and I think it is widely acknowledged that it is not an automatic dividend and something that we will need to earn as a country. Unleashing the potential entrepreneurship inherent in this talent is something that can really move India to the next level. Entrepreneurship is not just the province of start-ups and new companies. There's room for entrepreneurship in all walks of life - whether you take civil society, political life, government and even in mainstream companies. I think our mainstream companies have lost that script. For most part, I am not sure that many of the top 500 or 1,000 companies would merit the epithet 'entrepreneurial'.  There are opportunities to nurture entrepreneurship both within themselves and in the system within which they operate.

What are the things companies can do to nurture talent? When you ask conventional companies how do you nurture talent, they will present a well-developed human resource protocol, a fairly routine and stylised way of sourcing talent, particularly from universities and colleges, some of which will be nationally branded and some from their immediate vicinity. That's fine but when you step back and look at it, in India, you have a fabulously dense ecosystem of colleges, training institutes of all sorts. The fabric which stitches these together is very underdeveloped. It is very hard for an HR person to know, for example, whether college #992 is any good. Or, if I find someone in college #362, how does she compare with someone else in college #625? How do you get comparability of talent across different locations? These sorts of serious informational limitations prevent us from hiring from other than known institutes. That means that talent which is distributed across the country is mostly disenfranchised, disconnected from the economic mainstream. Companies complain that they can't find enough people while continuing to fish in the same waters as their compatriots, while vast numbers of young employable people can't find their way to these doors. Clearly, something needs to be done.

Corporate Role in Skill Development
What can companies do? Let's take a couple of examples. Companies can sponsor colleges to create apprentice programmes between the colleges and the companies. The student spends some time in the college, some in the company. That makes sure that the constituent skills that are available to the graduates are actually usable by the companies almost immediately. This is well-established around the world - in Germany, apprenticeship is a way of life for example, as are so-called 'work study' programmes in the US and Canada - and a good number of companies here are doing that. Second, companies can work with colleges and develop training curricula. Some of them may be for two-year programmes, some for three years, some vocational, some degree-granting.  The point is that there are several ways in which corporate India can get engaged with education in a much more systematic and condensed way. Some companies are already doing this in India - Wipro is doing it, TVS is doing it - and they should make their examples public so that others can copy them. Because it is no skin off their back if others do so. It's really just about spreading the word.

The third example I'd give is of Aspiring Minds, which I had helped start. Today, it is clearly India's leading talent assessment company. Amongst its earliest users were companies from the IT and BPO space - companies like HCL, Genpact. (Now, Aspiring Minds serves hundreds of mainstream corportes from most major sectors  of the economy.) Basically, what we told them was that you hire from a few dozen colleges; why don't we take you to hundreds of colleges, by using algorithms to test people in a way that is comparable across locations and across time so that you have genuine comparability of talent. You extend your reach, cost-effectively. It doesn't matter who you are, where you were born, what degree you have. You just take the test and you find where you stand versus others. Over time, we built what is branded the AMCAT test.

Making the Market
HCL, Genpact and numerous others, by agreeing to use this, have helped themselves access talent in a far more democratised way. What they also did unwittingly was create what economists call a 'public good'. By being early users, they helped Aspiring Minds become a viable, commercially successful entity, backed by Omidyar Networks. They [HCL and Genpact] have facilitated the creation of an intermediary that now allows a better matching of talent, a better clearing of talent in the market. Earlier, you had companies that were desperate to access talent and you had talent desperate to access companies, and here comes someone like Aspiring Minds to make the market, so to speak. You made the market only because some early corporates decided it was worth a bet and worth a try.

 The point I am making is that companies can be on the lookout to plug holes in the entrepreneurial ecosystem. We should be trying to upgrade our entire institutional fabric for re-education over time. Now, the companies [like HCL and Genpact] could have said that there isn't enough in it for us, and that we are creating a public good that should be created by the state; the state should create some way to rank all colleges. That's a nice academic argument but it does not really work well in practice in India. You can see that the role that the state plays is not particularly well functioning in our country today. Not because the state is not capable of doing it, but it needs some catalysis from the corporate sector and civil society.

It's not that the state is entirely asleep.  Take a look at the government's fabulous initiative, National Skill Development Corporation (NSDC), for example, which takes skilling seriously, and is intelligently mobilising corporates in different sector-skill councils and using its resources to egg on (corporate) change.

 NSDC strikes the right note by working with the private sector. Similarly the private sector has to work with the state, proactively.  In effect, as suggested by the example of early-user corporates helping Aspiring Minds plug a hole in the entrepreneurial ecosystem, ultimately India's corporates will have to engage in the partial private provision of public infrastructure.

Tarun Khanna is Director, South Asia Institute, Harvard University and Jorge Paulo Lemann Professor, Harvard Business School

(As told to Josey Puliyenthuruthel)