Friday, January 26, 2007

Western nations face skills gaps that Indian workers can fill

This is a new article that I did in The Economic Times Global Indian section with my colleague in London. It was in print on Monday, January 22.


Western nations face skills gaps that Indian workers can fill. The govt is now pitching in to increase supply from India, find Ishani Duttagupta & Sudeshna Sen

HISTORY, in the making and in hindsight, has a peculiar habit of throwing up surprises to blindside experts, politicians, economists, and the general public. Globalisation, everyone is agreed, is the future. When we talk globalisation, we usually talk about Indian MNCs, we talk growth rates, outsourcing, access to capital, reforms. What we don’t often talk about is what globalisation doing to the peoples of the world - the labour markets, the demographics, the societies.

Continuing integration of markets, says the World Bank, will make jobs around the world more subject to competitive pressures. “As trade expands and technologies diffuse to developing countries, unskilled workers as well as some lower skilled white collar workers will face increasing competition across borders. Rather than trying to preserve existing jobs, governments need to support dislocated workers and provide them key opportunities. Improving education and labour market flexibility is a key part of the longterm solution,” says Uri Dadush, director of the World Bank’s Development Prospects group in the bank’s latest economic prospect report. At the same time, a recent global UK government and EIU survey of global CEOs has the lack of adequate talent as the single biggest problem facing the world, both in developing and developed countries.

Now consider this: The world, especially the developing world, is ageing. Public pension plans in some countries, especially in Europe which leads the ageing population league tables, has created incentives for older workers to retire, this exacerbating the financial problems of ageing populations, and creating huge skill gaps. Meanwhile, higher education vacancies in areas like science, technology and research is going a-begging in developed countries. In the UK, the government has mounted a huge campaign to entice its youth back to the ‘hard’ stuff.

India - but not China - has 54% of its population under the age of 25. At the same time, ask any HR manager, trained talent is not as easy to come by as people would think, especially globally competitive managerial talent. As the pressure on India’s higher education institutes is crushing and ensuring that these young people have skills enough to stay ahead of the rest of the world is getting harder and harder.

If we were talking, say, steel, the answer is obvious. Get the raw material from India, or Brazil as the case may be, add value in Rotherham or wherever, and then export it to the rest of the world, from Canada to New Zealand. But the voices that argue for open borders and free movement of labour and skills are still few and far between. As one side-effect of globalisation, protectionism - against outsourcing, against migration - is rising across the world. The integration of the EU has seen one of the largest cross-border east to west migrations in recent history, which is not making things any easier for either the host or sender countries.

Many years ago, we called it a brain drain. Then we discovered the value of an overseas diaspora. At one time, population was India’s biggest problem. Now we flaunt it as our biggest strength. Today, India’s unique selling point in the global marketplace is its youth demographic. Add to that students are generally more welcome in almost all countries (as long as they pay) than, say, software engineers or doctors who compete for local jobs. The US took in almost 600,000 students last year, the UK took in about 20,000. Vijaya Khandavilli, country co-ordinator, educational advising services of the US Educational Foundation in India (USEFI) feels that Indian parents have always gone an extra mile to provide the best of overseas education to their children. “This is in keeping with the national character and now with double income parents and availability of education loans more and more Indian parents are opting for education overseas. Indian students form the largest foreign group of students in US classrooms, obviously their global employability quotient increases considerably,” she says.

Just as the IT industry has worked around the anti-outsourcing brouhaha by near-shoring — moving their call centres closer to the customers, but keeping the backoffice and shareholding at home — the labour market can do the same. Send the kids out to study, and then maybe to work, and keep the remittances coming in. Inward remittances from Indians working abroad have surged from $2.1 billion in 1990-91 to reach $24.6 billion in 2005-06. Inward remittances have offset India’s merchandise trade deficit to a large extent, thus keeping current account deficits modest through the 1990s. India is the highest remittance receiving country in the world. And now, the government of India is waking up to the need for a comprehensive outlook to out-migration of skilled workers.

The ministry of overseas Indian affairs (MOIA) is creating a framework to deal with migration related issues. International migration is one of the pillars of the Indian government’s globalisation drive and this is in keeping with other countries around the world where too, the importance of cross-border migration is driving policy initiatives. The thinking within the ministry is that the World Population Report which builds on the theory of demographics needs to be taken very seriously. MOIA now recognises the fact that developed nations face an ageing population and the Indian government’s new migration policy framework needs to take into account India’s youth advantage. Given India’s unique position, the MOIA is, in fact, gearing up to address the issue of global skills gaps and the need to fill them. The 2020 Migration plan that the government is drawing up takes into account the fact that even as the working age population doubles by 2020, a lack of jobs in the domestic market will hit the economy and the fact that the job market overseas provides the solution for skilled Indian workers. The new policy addresses the need to prepare a pool of skilled workers within the available window of time to address the emerging needs of the global labour market. What this will involve is providing potential migrant workers with skills upgrades, foreign language training and familiarisation and exposure to destination country cultures with the ability to assimilate it.

How’s this going to happen? Easily even if the government starts teaching say, Italian (Italy leads the ageing nation lists) in Bangalore, it’s also easier for younger students to assimilate into host countries. The Indian student population of the erstwhile Soviet Union, for instance, is now grown up, and has emerged as powerful business lobby and economic force in Russia and East Europe.

Rakesh Sondhi, a consultant doctor, with Hero Honda and Maruti in Gurgaon, says that foreign universities often help Indian students to acquire specialised knowledge as well as foster allround development - which is not possible in the Indian system. His daughter Mira Sondhi is an award-winning student of engineering in UK. “We feel that after this, an opportunity to work in the UK will help her to gain experience, vision and independence. She is a very talented student and a global career is what my wife and I wish for her,” says Dr Sondhi. Ruchika Castelino, head, education promotion, India Education UK, British Council feels that the opportunity to acquire skills that enhance global employability is the pull factor behind increasing numbers of Indian students going overseas to study.

“While our classrooms are diverse and multicultural so is Canada as a country. Besides the country also attracts top global employers and there is a huge need for talented and skilled workforce,” says Ashok Raghupathy, MBA student at Canada’s Queen’s School of Business. For him the main advantage of studying overseas is the access to huge resources. His class mate Biswajit Das, who worked for five and a half years in India with TCS and Infosys before joining the MBA programme feels that: “I would be able to combine the best of both worlds and would become a successful global manager. Most of the companies in North America understand the importance of India as an emerging market and are scouting for talent with Indian experience,” he says.

Sheila M Embleton, professor and vice-president academic at Toronto’s York University feels that the shortage of skilled, knowledge workers in Canada is making India a very important market to attract students. “When colleges from Canada give admissions to Indian students, the underlying advantage is that many of them will stay on and later become Canadians and contribute to the skills pool in Canada,” says Ms Embleton. She feels that Indo-Canadians who were very prominent in Toronto in different walks of life, also helped in attracting skilled in-migrants from India. “Canada is not very rigid about Indian students proving their non-immigrant intent,” she adds. One big challenge the MOIA is having to addressing in its out-migration plan is that of global security concerns when it comes to movement of people. The second is ensuring the availability of a skilled pool of acceptable migrants from India. Students, as a class, are usually extremely acceptable. And we’ve got a global supply of them.

India is the highest remittance receiving country in the world Remittances include repatriation of funds for family maintenance and local withdrawals from the non-resident Indian (NRI) deposits Inward remittances from Indians working abroad have surged from $ 2.1 billion in 1990-91 to reach US $ 24.6 billion in 2005-06 North America is the most important source region of remittances to India (about 44% of the total remittances), while the Asian region (Gulf and east Asia) contribute about 32%

On the policy front, the ministry of overseas Indian affairs (MOIA) is creating a framework to deal with immigration issues. International migration is providing one of the pillars of the globalisation drive and this is in keeping with other countries around the world where too, the importance of cross-border migration is driving policy initiatives. with inputs from Gayatri Nayak

OIA Vyalar
10:24 PM

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