Draft Report of the High Level Group on Services Sector

6.4 Development of human capital and skills

The financial sector as a whole is estimated to employ between 3.5-4.0 million people, including direct employees and agency forces. To support the GDP growth aspiration of 9-10%, the financial sector would need to grow by 25-30% annually over the next five years. While the relationship of employment with sectoral growth would not be a linear one, employment in the financial sector should double over the next five years.

At the same time, the demand for human capital is not restricted to financial services alone. There is increasing evidence of the low availability of manpower with relevant skill sets that may lead to erosion of the competitive advantage of Indian industries. A recent survey indicated that over 80% of corporate executives believed that talent would be a significant constraint on the growth of their company over the next five years. Companies are finding that less than a quarter of graduating students have the necessary skills for service occupations.  Even among graduates in urban and semi urban locations, where the bulk of hiring typically occurs, less than 30% of graduates have a reasonable command over English. The present college and university education system uses curricula which have undergone only incremental changes over the last several years. The substantive thrust of the curricula continues to be to prepare students for administrative jobs or for jobs in industrial sectors, not for new sectors of an economy that operates in an increasingly globalised environment.  There is an over investment in management studies and no development of service sector vocational institutes.

  

The growth of the Indian financial services sector will be hampered by shortage of qualified people, unless we invest in educating and training professionals. There is a need to continuously plan ahead by revamping curricula, improving service delivery especially in the rural areas and expanding teaching facilities through use of technology.  There is a need for vocational training to equip those with high school and graduate level qualifications with skills required for financial sector jobs. This would help equip our large young population with the relevant skills that will enable them to contribute to and benefit from the growth of the financial sector. The Indian financial sector is already taking steps to build in-house training capability as well as partnering with academic institutions to create this knowledge and skill-base. It is necessary to strengthen and extend the industry-academia partnership to reshape curricula and create employment-ready finance professionals.