Millions of graduates and very few of them employable : Indian nightmare

Call-center company 24/7 Customer Pvt. Ltd. is desperate to find new recruits who can answer questions by phone and email. It wants to hire 3,000 people this year. Yet in this country of 1.2 billion people, that is beginning to look like an impossible goal.

So few of the high school and college graduates who come through the door can communicate effectively in English, and so many lack a grasp of educational basics such as reading comprehension, that the company can hire just three out of every 100 applicants.

India projects an image of a nation churning out hundreds of thousands of students every year who are well educated, a looming threat to the better-paid middle-class workers of the West. Their abilities in math have been cited by President Barack Obama as a reason why the U.S. is facing competitive challenges.
Yet 24/7 Customer's experience tells a very different story. Its increasing difficulty finding competent employees in India has forced the company to expand its search to the Philippines and Nicaragua. Most of its 8,000 employees are now based outside of India.

In the nation that made offshoring a household word, 24/7 finds itself so short of talent that it is having to offshore. "With India's population size, it should be so much easier to find employees," says S. Nagarajan, founder of the company. "Instead, we're scouring every nook and cranny."

India's economic expansion was supposed to create opportunities for millions to rise out of poverty, get an education and land good jobs. But as India liberalized its economy starting in 1991 after decades of socialism, it failed to reform its heavily regulated education system.

Business executives say schools are hampered by overbearing bureaucracy and a focus on rote learning rather than critical thinking and comprehension. Government keeps tuition low, which makes schools accessible to more students, but also keeps teacher salaries and budgets low. What's more, say educators and business leaders, the curriculum in most places is outdated and disconnected from the real world.

"If you pay peanuts, you get monkeys," says Vijay Thadani, chief executive of New Delhi-based NIIT Ltd. India, a recruitment firm that also runs job-training programs for college graduates lacking the skills to land good jobs.

Muddying the picture is that on the surface, India appears to have met the demand for more educated workers with a quantum leap in graduates. Engineering colleges in India now have seats for 1.5 million students, nearly four times the 390,000 available in 2000, according to the National Association of Software and Services Companies, a trade group.

But 75% of technical graduates and more than 85% of general graduates are unemployable by India's high-growth global industries, including information technology and call centers, according to results from assessment tests administered by the group.

Another survey, conducted annually by Pratham, a nongovernmental organization that aims to improve education for the poor, looked at grade-school performance at 13,000 schools across India. It found that about half of the country's fifth graders can't read at a second-grade level.

At stake is India's ability to sustain growth—its economy is projected to expand 9% this year—while maintaining its advantages as a low-cost place to do business.

The challenge is especially pressing given the country's more youthful population than the U.S., Europe and China. More than half of India's population is under the age of 25, and one million people a month are expected to seek to join the labor force here over the next decade, the Indian government estimates. The fear is that if these young people aren't trained well enough to participate in the country's glittering new economy, they pose a potential threat to India's stability.

"Economic reforms are not about goofy rich guys buying Mercedes cars," says Manish Sabharwal, managing director of Teamlease Services Ltd., an employee recruitment and training firm in Bangalore. "Twenty years of reforms are worth nothing if we can't get our kids into jobs."
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Cheating aside, the Indian education system needs to change its entire orientation to focus on learning, says Saurabh Govil, senior vice president in human resources at Wipro Technologies. Wipro, India's third largest software exporter by sales, says it has struggled to find skilled workers. The problem, says Mr. Govil, is immense: "How are you able to change the mind-set that knowledge is more than a stamp?"
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The average graduate's "ability to comprehend and converse is very low," says Satya Sai Sylada, 24/7 Customer's head of hiring for India. "That's the biggest challenge we face."

This kind of teaching might have helped D.H. Shivanand, 25, the son of farmers from a village outside of Bangalore. He just finished a master's degree in business administration—in English—from one of Bangalore's top colleges. His father borrowed the $4,500 tuition from a small lending agency. Now, almost a year after graduating, Mr. Shivanand is still looking for an entry-level finance job.

Tata and IBM Corp., among dozens of other firms, turned him down, he says, after he repeatedly failed to answer questions correctly in the job interviews. He says he actually knew the answers but froze because he got nervous, so he's now taking a course to improve his confidence, interviewing skills and spoken English. His family is again pitching in, paying 6,000 rupees a month for his rent, or about $130, plus 1,500 rupees for the course, or $33.

"My family has invested so much money in my education, and they don't understand why I am still not finding a job," says Mr. Shivanand. "They are hoping very, very much that I get a job soon, so after all of their investment, I will finally support them."

A report in Wall Street Journal by Geeta Anand. More Here