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From local talent to global force: Bridging the skills gap for India's overseas workforce

Manoj Kharb, Partner, Grant Thornton Bharat
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Manoj Kharb
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India's skilled workforce powers economies worldwide, but a critical gap exists – their skillsets don't always perfectly align with global market demands. This mismatch hinders their career advancement and earning potential.
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Indian professionals are making their mark across industries around the world. In 2023, remittances sent back home by these workers reached a staggering $125 billion (World Bank, 2023), an impressive 12.3% surge from 2022. Translating to 3.4% of India's GDP, these remittances highlight the significant financial contribution of overseas workforce.

However, a hidden challenge lurks beneath this success story. A skills mismatch hinders career advancement and earning potential. While India boasts a robust skilling ecosystem churning out millions of skilled workers each year, the traditional focus often leans towards theoretical knowledge rather than the practical application and industry-specific skills craved by global employers. This gap leaves some Indian workers unprepared for the fast-paced demands of international companies.

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Data from the World Bank (2023) reveals that India is the world's leading recipient of remittances, followed by Mexico and China. In 2023, India received a significant portion (66%) of all remittances flowing to South Asia, exceeding the previous year's figure of 63%. Notably, inward remittances to India have witnessed a substantial increase (78.5%) over the past decade.

One of the key factors contributing to rising remittances to India is declining inflation and strong labour markets in high-income source countries, including the United States, United Kingdom, and Singapore. These three countries account for 36% of total remittance flows to India. Another factor is the higher inflows from the Gulf Cooperation Council (GCC), especially the United Arab Emirates, which accounts for 18% of India's total remittances, the second-largest source after the US.

There's been a gradual shift in both the destinations Indian migrants choose and the types of skills they possess. Traditionally, Indian migrants in GCC countries often found themselves in low-skilled, informal work. This trend is changing, with a growing number of migrants landing high-skilled positions in high-income nations like the US, UK, and East Asia (including Singapore, Japan, Australia, and New Zealand). As new destinations in Europe emerge for Indian workers, a more comprehensive understanding of the specific skill requirements in each region becomes crucial.

The Indian government is trying to address the skills gap through various initiatives. For instance, NSDC International collaborates with many countries to assess job demand. Similarly, Pravasi Kaushal Vikas Yojana (PKVY), a joint initiative by the Ministry of External Affairs and Ministry of Skill Development & Entrepreneurship, equips workers with cultural skills for international integration.

While these initiatives are beneficial, there is a need for a more localized approach. Skilling initiatives should be prioritized at the state level, with dedicated schemes to address the manpower required for overseas opportunities conceptualized in consultation with local partners, recruiting agencies, and embassies. States such as Uttar Pradesh, Bihar, Haryana, Odisha, and Assam have the potential to benefit tremendously, given their young population. However, this potential can be fully realized only with the support of conducive ecosystems for international markets provided by the respective state governments. Studies show a clear correlation between remittances and improved economic indicators in several Indian states. Punjab and Kerala, for instance, have witnessed a rise in overall income levels due to remittances sent back by migrant workers employed overseas.

A Holistic International Skilling Model

Developing a comprehensive skilling model or scheme is crucial to effectively bridge the skill gap in the workforce. This model should encompass various elements:

Identifying Pre-Skilled Candidates: Assessing the existing skill sets of potential emigrants through standardized tests and certifications enables targeted training programs focused on specific skill gaps.

Finishing Schools with International Standards: Finishing schools need to be established across states, adhering to standards aligned with international industry needs. Incorporating technology upgrades and engaging internationally qualified trainers will ensure the effectiveness of these schools.

Language Training: Fluency in the language of the destination country is essential for successful integration into the workforce. The skilling model should include language training programs that go beyond basic conversational skills, focusing on business communication and industry-specific terminology.

Integrated Support Services: Additional support services should include assistance with work visa applications, travel arrangements, and financial literacy programs to empower workers to make informed decisions regarding their earnings and investments.

Financial Literacy: Incorporating financial literacy programs further strengthens the skilling model. Equipping workers with financial management skills empowers them to maximize the benefits of overseas employment and make wise financial decisions.

Corporate Social Responsibility (CSR) Funds: Skill development is a key objective mandated by CSR, but it's predominantly focused on domestic placements. Corporates could expand their support to include overseas markets that offer greater income-earning potential. However, this expansion requires increased multistakeholder involvement. Strategic partnerships with private companies can provide financial resources for setting up crucial components of the skilling model.

The future of work demands continuous learning and adaptability. A well-rounded skilling model, encompassing the elements discussed above, can pave the way for a more competitive and globally relevant Indian workforce, leading to increased remittances, economic growth at the national and state levels, and a stronger global presence.

This article first appeared in ET Government on 13 June 2024.

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