Nano degrees: Make skills development a profitable business model

We all basked in the warm glow of Prime Minister Narendra Modi's visits to the US and Japan, and his focus on accelerating development in the country. His "Make in India" is an attractive pitch because of our "3Ds" of Democracy, Demand, and Demographic dividend. I want to take a closer look at whether demography is indeed a dividend, and how we could make skill development accessible, convenient and affordable for the masses.

Demographics: Dividend or bomb?

Having run a start-up, I can tell you that the lack of skills for entry-level positions is a huge issue. Graduates from beyond the top 30-50 colleges of India just do not have the basic skills that one would expect from looking at their degrees or diplomas. According to a recent study, only 34 per cent of India's 5 million graduates are employable in any industry. This is a shocking state of affairs, and makes one wonder if demography will be a dividend or a bomb.

The challenge is to provide vocational training to almost 500 million people by 2022.  However, the truth is that the current plans are just not sufficient to fill the gap. As this Business Today piece pointed out, India can train only 1.4 million of 8.5 million people who need vocational training. And if we continue with the conventional means of scaling up - setting up training institutes, hiring teachers - there is little hope that we will even come close to meeting the goal.

Skills development: Profitable business model to up skill the youth

To bring focus to this, the Prime Minister has announced Shramev Jayate and set up a Ministry of Skill Development. There are also private-public organisations like National Skill Development Corporation, besides private training institutes. With all due respect to the capabilities of the government, I believe till someone in the private sector does not figure out a profitable business model to scale this up, we will not meet the goals.

The classic case is the mobile phone industry. First, growth was driven by the private sector, not government. And second, new technology, mobile phones, was critical to completely change the cost and profit dynamics of the industry. Third, and most critically, once the private sector figured out the profitable business model, there were no barriers to expansion. The growth in telephone density has been astonishing, rising from 1.94 telephone connections per 100 in 1998 to 76 telephone connections per 100 currently.

To cover the skills gap, we need a similar private sector-led model that is profitable, and leverages technology that can upend our conventional mindsets of costs and time to scale. We need a disruptive business model that can step-change the reach, price and access to quality skill development programmes.

That being said, any programme will need to be mindful of three issues that a youth faces when making the choice to get trained.

One, what is the economic benefit from training? Or more specifically, will she get a better paying job than her current one? This implies that the courses, accreditation and company partnerships, are all geared towards getting a job immediately after finishing the course.

Two, it has to be part-time. Most students will be from economically disadvantaged backgrounds, whose families depend on their earnings.  And it is not feasible to expect them to step out of their jobs to get trained. The training has to be available to them when they want, without disrupting their jobs.

Three, the training would need to be widely accessible, especially in the rural and small towns. Most potential students are in these places, and expecting them to come to a city for training is neither feasible nor affordable.

Nano-degrees: Credentials built and recognised by industry leaders to advance your career

A promising business model is that of Nano-degrees launched by online education provider Udacity in partnership with companies like Google and AT&T. Nano-degree is an online accreditation course for entry-level technology skills. The courses are very focused, and have been jointly developed by the partner companies. Significantly, the partner companies have promised entry-level jobs to those with Nano-degrees. It is a win-win, because companies get people with exactly the right skill-set (they after all designed the course!), and the students know that they can get a job.

Nano-degrees have the potential to disrupt the conventional skills development programmes. First, it is clearly linking the programme to getting a job by involving the companies not only to design the course but also to commit to hiring graduates. Two, it does not involve going to a physical classroom; you can do it even while working at your current job. Three, it is hugely scalable, as it leverages technology to enable anyone with a computer (or probably even a mobile) to get trained no matter where they live.

Can this be the next telecom revolution?

One can imagine this to be a very attractive business opportunity for a lot of organisations, and which would not require government investment. I can imagine conglomerates like the Tatas, Birlas, Ambanis, Bhartis that can pull this off. They all have the different pieces within their groups - reach, companies in sectors like retail, manufacturing, sales that need skilled entry-level graduates, and resources to scale this up.

Udacity's nano-degrees have just been launched, so we need to hold judgment on it and the model will obviously need to be customised for our country, including use of mobile phones, venues for hands-on training, choice of courses (Udacity is more focused on technology skills), but at least it provides us a direction on how to rapidly scale up skill development.

Looking at the scale of the challenge, potential and resources needed, I believe that we need to encourage the private sector to build profitable business models, as that is the only way to meet the goal of training 500 million people by 2022. We need to revolutionize skill development, just like we did for telephony in the late 1990s.

Akshay Mehra is a Partner at InvYramid Innovation Strategy Consulting.

Follow Akshay Mehra at @akshayinvyramid

Mail: info@invyramid.com