In the midst of rapid economic and population growth, four subsectors of India’s economy deserve extra attention because of their potential impact on India’s BoP population of one billion. In the previous article, we explored how in the next decade, more than 13M Indian’s per year will enter the workforce for the first time and that India needs to create 35 crore (350M) new jobs by 2022 in order to keep up with the growth of its economy and population. These figures are significant because today India only has the capacity to train 4.4M (versus the 50M they’d need to hit 500M) and to create jobs for 5.5M (versus the 35M needed to employ 350M) en route to the 2022 deadline. Using the informal and unorganized nature of India’s economy as a foundation, we assessed India different sectors forecast for significant growth during the next decade to identify the areas with both the skillset requirements and capacity needed to both meaningfully absorb and gainfully employ India’s BoP.
While the National Skill Development Corporation (NSDC) Identified 21 high-growth sectors of interest, we are particularly interested in the following four sectors: 1) IT, BPO & BFSI, 2) Manufacturing, 3) Crafts and 4) Entrepreneurial Start-Ups. These areas are particularly interesting not only because of their potential for job creation, but also because of the innovative and scalable ways companies are using cutting edge technology and business practices to respond to India’s rapidly changing market realities.
Information Technology Enabled Service(ITeS), Business Process Outsourcing (BPO), and Banking Financial Services & Insurance (BFSI)
India needs 20 million skilled employees in ITeS, BPO, BFSI and related service sectors by 2022. One of the bright spots of India’s development of the past decade, the ITeS & BPO sectors account for 8% of India’s economy and 25% of exports while directly and indirectly employing 12M. More important, these sectors are expected to hire nearly a million new recruits per year moving forward. This is particularly significant because of the employment profile of this sector, in which 5% of the employment is inclusive, a third of employees are women and nearly 60% of jobs are located in are in Tier II/III cities.
Within BPO, there are companies doing impact sourcing like iMerit and Rural Shores, and there is a thriving sub-sector focused on the inclusion of India’s population of 70M PwD. This sub-sector, focused on India’s population of 70M People with Disabilities, has trainers like V-Shesh or Youth 4 Jobs, employers like Vindhya’s whose workforce is made up of 90% ‘differently abled’ employees, and even enablers like accessibility firm Barrier Break Tech who focuses on developing assistive technology for training and employment . Meanwhile, companies like Talent Spring, Anudip Foundation and Edubridge are also addressing the needs BFSI through equipping rural youth with market-linked training and placement opportunities.
In addition to tackling challenging projects such as infrastructure, India’s manufacturing sector is aiming create 100 million skilled jobs during the next decade while increasing its impact on GDP from 15%-25%. This is significant because manufacturing is one of the better cross-over opportunities for those exiting agriculture, especially within skilled positions such as: fitters, machinists, maintenance engineers, and welders. While manufacturing has struggled with low productivity and an inability to absorb the rural exodus of agriculture (explored here) during the past decade—resulting in contractual jobs, low incomes that seldom include benefits—the sector’s massive growth potential is beginning to draw significant foreign and domestic investment interest. For great insight into the macro-level growth opportunities present within Indian manufacturing sector, check out this excellent McKinsey Global Institute article on Fulfilling the Promise of India’s Manufacturing Sector. The article demonstrates how the manufacturing sector can and should mirror the large-scale training approaches utilized by the BPO/ITeS sector in the 1990’s to get to where they are today. At the company level, two great examples of next-generation training can be seen in the remote, mobile and e-Learning programs being deployed by Velu Welder and Tata Autocomp e-Learning in this space. Velu the Welder is an interactive virtual apprenticeship enabling users—armed with a Nintendo Wii remote to mimic an actual welding gun—to step into a game where they receive a crash course in welding as Velu.
This game helps cut training costs in half while the program’s built-in testing makes assessment, certification and therefore job placement much easier.
Tata Autocomp uses an animated story-based e-Learning solution to bridge the gaps between college education and industry needs. Targeting engineers with 0-7 years of manufacturing experience and college graduates, their product reduces the time needed for training or onboarding while providing certification services.
Textile and Handicraft
India’s textile and handicraft sector is India’s second largest employer after Agriculture, employing with 10 core (105M) mostly rural artisans and workers in cottage based labor intensive trades such as: handicrafts, textiles, jewelry, printing and leather (Figure based on 12th 5 Year Plan Appendix 4). As the economy shifts towards mass-produced goods and modern styles, artisans—with skills passed down from generation to generation—are falling behind, loosing demand for the products and unable to adapt to new market trends. With over 90% of artisans landless, they are often among the poorest of the poor and find themselves trapped in inefficient markets and exploitive supply chains without the capital, linkages or market access necessary to succeed. To disrupt these cycles, many companies are connecting artisans directly to:
- Customers via e-Commerce and B2C marketplaces like Fab India, Kashmir Box and Crafts Villa. Aiming to become the ‘Etsy of Asia’, Crafts Villa cuts out the middle-man to offer over 50,000 products from over 1,000 unique sellers. After a recent infusion of venture capital, Crafts Villa is looking to expand to Thailand and Indonesia as well.
- Businesses via web-based platforms and B2B marketplaces disrupting the supply chain like, Indian Artisans Online and Nethaat and GoCoop. A social marketplace for co-operatives and community based enterprises to list and sell their products online, GoCoop is a global collaboration platform that allows enterprises to list and sell their products online. What sets them apart from other B2B marketplaces is they employ a unique algorithm for market linkage between potential buyers and sellers while acting as an aggregator for all listed enterprises.
- Inclusive Supply Chains via training, support services and contracting through companies like Caravan, My Earth Store and Mela Artisans. A luxury lifestyle brand selling fair-trade home decor, jewelry and crafts for social good, Mela Artisans also offers their customers a Live & Loan MFI hybrid. As partners in change, customers are able to finance zero interest loans before ultimately being repaid in Mela Credits.
Entrepreneurship, Self-Employment and SMMEs (Small, Medium or Micro Enterprises)
While entrepreneurship has some area of overlap with the sectors mentioned and others, it is particularly significant given that over 84% of India’s economy is unorganized (unincorporated companies which have less than 10 members). India’s Planning Commission report on Entrepreneurship nailed it when they observed, “India needs to create 1- 1.5 crore (10-15 million) jobs per year for the next decade to provide gainful employment to its young population. Accelerating entrepreneurship and business creation is crucial for such large-scale employment generation.” Their 2012 report goes on to detail that, “India has the potential to build 2,500 highly scalable businesses within the next 10 years” which means 10,000 start-ups will need to be started factoring in the probability of success”. These businesses could generate revenues of Rs 10 lakh crore ($200 billion) while estimates show they could employ an amount comparable to the IT/ITeS/BPO sector.
While India’s growth will come from a number of sectors, the four explored are uniquely situated to impact India’s BoP. While we were able to provide a few interesting companies and illustrations here, for a more comprehensive view of the start-ups in the Livelihood space, check out the next article of our series in which we reviewed 150 companies before narrowing the list down to 75 Companies Transforming India’s Livelihoods.