You are on page 1of 14

Vocational Training – India (Part I)

March 2009
Executive Summary

 Private sector
 Estimated worth USD 1.6 bn in 2008
Market
 Growth of 25% p.a. to reach USD 4 bn by 2012
 English language training is the largest segment followed by Financial Services, Retail and IT
 Government encouraging private sector participation although latter are not regulated

 Drivers: Demand for skilled labour in service and IT/ITeS industries; inefficient public education
Drivers &
system; competitive business environment
Challenges  Challenges: Poor perception and lack of support from financial institutions

 Partnerships between corporates and vocational training institutes


Trends  Public private partnerships (PPP) for government-owned Industrial Training Institutes (ITI)
 Rising demand for online training modules and correspondence courses in language training
 PE/VC firms bullish on Indian education sector; investing in vocational institutes as well

 A highly competitive market with players focusing on specific areas and expanding across India
 Major players:
Competition English Financial Services Retail Information Technology Aviation/Hospitality
VETA ICA IIRT NIIT Frankfinn
English Center IFBI K10 Aptech Air Hostess Academy

VOCATIONAL TRAINING – INDIA.PPT 2


•Market Overview
•Drivers & Challenges
•Trends
•Competition
•Key Developments

VOCATIONAL TRAINING – INDIA.PPT 3


Indian education system comprises of formal and informal
network of educational institutes
Indian Education System

Formal Education System Informal Education System

Professional Coaching Vocational


Schools (K12) Pre- Schools
Colleges* Classes Training

Multimedia
Public Private Public Private in schools Books
and colleges

• Under the purview of the Ministry of Human Resource


Development • Institutes under the Government: Regulatory control
• No central governing body for K12; Ruled by state boards/ remains solely with the Ministry of Labor and Employment
ICSE/ CBSE/ International Boards • Institutes under the private sector: No regulations in terms
• Higher education comprises graduate/ diploma/ of establishment, standards maintained and course fee
professional courses regulated by University Grants charged
Commision (UGC) and All India Council of Technical
Education (AICTE)
Note: * Graduate and Post-graduate courses
Source: Angel Broking; CLSA; SSKI

VOCATIONAL TRAINING – INDIA.PPT 4


The government has played an important role in developing this
market by providing financial and infrastructural support
Directorate General of
Employment and Training
Governing Body
under the Ministry of
Labor and Employment

Public sector undertaking: Private sector undertaking:


Institute Industrial Training Institutes (ITIs) – 1913 Industrial Training Centers (ITCs) – 3552
such institutes such institutes

Two year courses:


• Dairying, farm machinery and equipment Certificate level courses on crafts training -
• Accounting and auditing Engineering:
• Electrical technology, air conditioning and • Manufacturing Sector – 22
• Service Sector – 27
Courses refrigeration
• X-Ray technician, health care and beauty Non-Engineering Trades:
• Manufacturing – 8
• Preservation of fruits and vegetables, • Service Sector - 41
food services and management

Students in 11th and 12th standard in


Students leaving school after completing
Applicability schools affiliated to Central Board of
anywhere from grades 8-12
Secondary Education

National Council for Vocational Training (NCVT) and Central Apprenticeship Council (CAC) are advisory bodies and create policies for
development and also maintain training standards at the institutes

Source: India Edunemws “Streamlining vocational training for skill development”, Sep 2008; “Creating Skills for 2008”; Sep 2008

VOCATIONAL TRAINING – INDIA.PPT 5


The private vocational training market is in its nascent stage and
is highly fragmented with strong growth prospects
Overview Market Size and Growth
• Vocational training market is estimated to be worth
USD mn
USD 1.6bn in 2008 4,000
4,000 +25%
• Expected to grow at 25% CAGR to reach USD 4bn by 3,180
2012 3,000 2,540
• A developing market with strong opportunity for new 2,030
2,000 1,624
players
1,000
• Private players operate free of any regulations i.e. no
governing/ regulatory bodies 0
2008 2009e 2010e 2011e 2012e

Private Education Industry (USD 40 bn) Market Segmentation


2% K-12
3%
Professional colleges 3% English Training
4% 2%
4% 2% Tutoring
9%
28% Financial Services
Test preparation
12% 14% Retail
49% Vocational training
Stationery IT
Child skill Airlines
17%
development 20% Others
Pre-school 26%
E-learning etc
Note: Corporate training programmes not included in this report
Source: Ernst & Young “India Focus on education”, November 2008

VOCATIONAL TRAINING – INDIA.PPT 6


•Market Overview
•Drivers & Challenges
•Trends
•Competition
•Key Developments

VOCATIONAL TRAINING – INDIA.PPT 7


Drivers and challenges

Drivers
Demand for skilled workforce Challenges
increasing with the growth in services
sector Individuals perception

Strong demand from the IT boom


Lack of financial institutions support
Inefficiency in public education
system
Increasingly competitive business
environment

VOCATIONAL TRAINING – INDIA.PPT 8


Growth in services sector increasing the demand for skilled
workforce
Demand for skilled labor increasing with the growth in various sectors Impact
• High growth in services sector will generate demand for a skilled workforce and is expected to
boost demand for enhanced technical/ soft skill training programmes
%
Growth in
30 Services Sector
20 Growth in GDP

10

0
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

• Growing employment levels and the need for high efficiency will demand adequate training

Employment
Sector CAGR (%)
2008 2011e
Airlines 60000 269528 65
Hotels 70000 192090 40
Retail 880000 3953070 65
Financial Services - Direct 220000 541283 35
Financial Services - Agents 600000 1476225 35
Source: IMF, CLSA

VOCATIONAL TRAINING – INDIA.PPT 9


Huge requirement for technically skilled individuals in the IT
sector will benefit players in the market
Demand due to the IT boom Impact
• Constantly growing demand for a large workforce is expected to enhance the IT training market
which is valued at USD 224 mn

Workforce Demanded by the IT sector


mn
2,500 2.2
+22% 2.0
2,000 1.6
1,500 1.3
1.1
1,000 0.8
500
0
2004 2005 2006 2007 2008 2009e

• The number of non-IT graduates employed in the IT sector has been growing faster than the
number of IT graduates.
• This creates an opportunity for private players offering computer courses including hardware
and software training, computer networking and multimedia
• Demand for English language courses also increasing with the growth in IT Enabled Services
(ITES) and Business Process Outsourcing (BPO) sector
 ITES and BPO sector constitute 67% of the total IT industry and witnessed growth of 33 % from 2004-08

Source: SSKI; NASSCOM; INBICS “IT Sector Report”

VOCATIONAL TRAINING – INDIA.PPT 10


Inefficient public education system and competition in the job
market will drive vocational training programmes
Inefficiency in public education system Impact
• Low enrollments and high dropout rates across various levels of the education system has led to
inefficiency in the supply of workforce
Grade Dropout Rate %)
Grade 9-12 62
Grade 6-8 50
Grade 1-5 29
• 80% of the graduates in general streams (BSc/ BA) are unemployable as they lack specific skills
• Inefficient education system is creating awareness among students regarding importance of
channelized skill building

Increasingly competitive business environment Impact


• The dynamic nature of the business environment has made it imperative for individuals to
develop their skill sets in order to compete effectively
• Prospective and existing employees continuously work on enhancing their skill sets as
productivity is demanded from the time of induction
• Corporates across industries are interested in upgrading the skill sets of their employees at all
levels in order to compete with their global counterparts

Source: SSKI, CLSA

VOCATIONAL TRAINING – INDIA.PPT 11


Existing perception among individuals regarding vocational
training..
Individuals perception Impact
• The levels of vocational skills imparted to the workforce in India compares poorly with other
countries

Share of labour force receiving vocational training


%
100 96
85 86 88
80
60
40 25
20 8
0
India Korea Japan Germany Canada Mexico

• Individuals prefer to invest in traditional forms of learning in order to attain employment rather
than using vocational training as a route
• Individuals are not keen on vocational training courses as a diploma course in India is not
comparable to a degree course at the time of employment

Source: Efficiency training Study Report by ILO

VOCATIONAL TRAINING – INDIA.PPT 12


.. and lack of aid from financial institutions acting as a barrier to
growth
Lack of financial institutions support Impact
• Financial institutions like banks provide financial support to the students for taking admissions
in the formal education system like colleges and universities
• Financial support is not available to students interested in entering vocational training
programmes for which institutes charge a huge fee

Source: CLSA

VOCATIONAL TRAINING – INDIA.PPT 13


Thank you for the attention
The Vocational Training report is a part of Research on India’s Education Industry Series.
For more detailed information or customized research requirements please contact:
Natasha Mehta, CFA Gagan Uppal
Phone: +65 8448 0449 Phone: +91 98364 71499
E-Mail: natasha.mehta@netscribes.com E-Mail: gagan.uppal@netscribes.com

Research on India is a product of Netscribes (India) Pvt. Ltd. Research on India is dedicated to disseminating information and providing quick
insights on “hot” industries in India and other emerging markets. Track our new releases and major updates in these industries on

About Netscribes
Netscribes is a knowledge-consulting and solutions firm with clientele across the globe. The company’s expertise spans areas of investment &
business research, business & corporate intelligence, content-management services, and knowledge-software services. At its core lies a true
value proposition that draws upon a vast knowledge base. Netscribes is a one-stop shop designed to fulfil clients’ profitability and growth
objectives.

Disclaimer: This report is published for general information only. Although high standards have been used the preparation, Research on India,
Netscribes (India) Pvt. Ltd. or “Netscribes” is not responsible for any loss or damage arising from use of this document. This document is the
sole property of Netscribes (India) Pvt. Ltd. and prior permission is required for guidelines on reproduction.

VOCATIONAL TRAINING – INDIA.PPT 14

You might also like