1. Corporate training market: from slow growth to opportunities ahead, all you want to know

Corporate training market: from slow growth to opportunities ahead, all you want to know

Breakthroughs in technology have enabled digitisation and globalisation at an unprecedented scale in almost every industry.

Updated: November 23, 2016 4:20 PM

Breakthroughs in technology have enabled digitisation and globalisation at an unprecedented scale in almost every industry. For example, look at transportation (on-demand, electric, driverless), commerce (online, on-demand, personalised) or healthcare (artificial intelligence assisted diagnosis), and it is clear that several existing business structures are being dismantled. At the same time, there are new innovators who can leverage these changes.

Large economies like the US have always stayed ahead of such disruptive cycles in business and technology, by sustained investments in research, innovation and human capital. On the human capital front, according to industry reports, companies in the US, 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.

On the other hand, India is currently a much smaller economy—at about a tenth of the size of the US. However, the corporate training market is disproportionately far smaller as a percentage, with estimated spends of only 1-2% of employee costs, and a total outlay of less than $1 billion.
So, what exactly ails this industry in India? There are several reasons for slow growth.

Low corporate training budgets: Indian organisations have traditionally seen low investments in longer-term initiatives like research and development (R&D)—and employee training is no exception. This is further complicated by high employee turnover (of about 15-20% across development (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 investment incurred by the employer.
Generalist mindsets in career planning: It has been seen that employees in India tend to move towards generalist ‘managerial’ roles fairly quickly—as compared to ‘specialist’ mindsets in countries like the US, where professionals plan long stints to hone specialised skills.
Significant focus on entry-level skills training: Given the inadequacies in India’s current education system that does not sufficiently provide for vocational and employment-ready skills, a significant portion of organisational training budgets, even at the leading IT services companies, goes towards entry-level skill building. In fact, the leading IT companies have significant budget outlays for training thousands of fresh recruits for 3-6 months every year.

In addition, even the government’s skilling initiatives are mostly focused on imparting employability-related skills for millions of working-age youth. There is an ambitious initiative under way to impart job-skills to 500 million people by 2022 under the Skill India Mission.
The opportunities ahead

According to the IMF, India is projected to become the sixth-largest global economy by 2020, and the third-largest (behind China and the US) by 2030. To put this in perspective—currently the country is home to only seven companies in the Global Fortune 500. Compare that to 128 based in the US and 98 in China. So, the next 10-15 years could see over 100 Indian companies in the Global Fortune 500 list.
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 be made in long-term initiatives, including R&D-led innovation and organisational capability-building via training.

Such investments, it is hoped, will grow to far higher levels than they are at present, rivalling the spending by today’s leading economies like the US. For employees, there will be stronger focus on higher-end skills and specialised career paths.
The lower end of this spending 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. All this points to a huge corporate ed-tech market in the making in India.

Subrata Ghosh

The author is CEO, Redstone Learning, a global ed-tech firm

Please Wait while comments are loading...

Go to Top