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strategy and business
 / Summer 2010 / Issue 59(originally published by Booz & Company)


Preparing for a Demographic Dividend

The discussion, moderated by Booz & Company Chief Marketing and Knowledge Officer Thomas A. Stewart, took place on November 9, 2009, at the World Economic Forum’s India Economic Summit in New Delhi.

S+B: There’s general agreement that the benefits from India’s demographic dividend will depend on its ability to better educate its least wealthy citizens. Two-thirds of Indians still live in villages and work in agriculture, and many are illiterate. What is India doing — what should India do — to close the gap between limited opportunities now and the potential for vast opportunities in the future?

MALHAN: The kind of training — the quality of the training — is more relevant than the sheer quantity of training. India must determine which specific jobs, either in India or in other countries, are most in demand now and will be in the future. And then the educational effort should be focused on increasing the needed skills first and foremost. Without this, people may get a little smarter, but they will not be employable.

BALAKRISHNAN: There is a huge gap between the skills needed to work in the agriculture sector for low wages and those needed for health care, plumbing, brick making, or other more skilled occupations where the wages are higher. The national government of India has been working with state governments to identify the skills needed and provide them. Already, I think about 400 needed skills have been identified. And while quality of training, as Naresh said, is a concern, another issue is the shortage of trainers. So all of this adds up to a training gap that could become a huge social problem. It’s a serious issue when a person spends money at a training center to develop new skills and cannot get a job when he comes out. In our training efforts, we are focusing on having quality trainers who could make sure that the students are not only finishing a particular number of hours and days of classes, but are learning to perform to a particular level.

PRAHALAD: I have a more positive view on what may happen. I am guilty of setting the goal two years ago of India having 500 million skilled workers by 2022. And that goal, seemingly far-fetched when I first proposed it, has now been accepted by the Indian government. But those numbers must force a totally different way of thinking about training. In other words, you cannot start by saying, “We need to build more schools.” My answer to that is, “You have 250,000 public schools in the country. What do they do after four o’clock? Nothing.” So you don’t have to build more schools. You just have to utilize them better and differently. You have to use them to teach workers world-class skills, monetizable skills, and also maybe language skills. If you can do that, you will get an extremely mobile, employable workforce.

The second thing that is becoming obvious and that is important is you don’t have to train people in every field. There are 400 needed skills identified, according to Sudhakar. I would say then that maybe 200 of these fields should be emphasized.

The third point I would stress is that you need to focus a lot more on the capacity to do things than on credentials. For example, to read an echocardiogram, you have to be an M.D. in the United States. But in India, people with a bachelor of science degree can read them. All the successful hospital groups in India have trained people without M.D.s to be more skilled than M.D.s in certain areas. And it’s not because they’re smarter. It’s because that’s all they do. In other words, an M.D. in the United States may see 10 echocardiograms per week in a small general hospital, but here, one paramedic sees 25 of them every day. That’s all they do. So the learning curve is steeper.

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  1. David E. Bloom, David Canning, and Jaypee Sevilla, The Demographic Dividend: A New Perspective on the Economic Consequences of Population Change (RAND Corporation, 2003): A review of the effects of demographic change on economic growth.
  2. Thierry Geiger and Sushant Palakurthi Rao, The India Competitiveness Review 2009 (PDF) (World Economic Forum, 2009): An in-depth analysis of India’s current and future ability to compete in the global commercial landscape.
  3. Yoshito Hori, Jean-Pierre Lehmann, Timothy Ma Kam Wah, and Vanessa Wang, “Facing Up to the Demographic Dilemma,” s+b, Spring 2010: At the World Economic Forum’s summer meeting in Dalian, China, four experts discussed the challenges and opportunities that aging populations present to business in emerging Asian countries.
  4. Nandan Nilekani, “India’s Demographic Moment,” s+b, Autumn 2009: The economic force of a burgeoning population.
  5. C.K. Prahalad, “The Innovation Sandbox,” s+b, Autumn 2006: Explores innovation in India’s health-care sector as a model for commercial creativity in all industries and all economies.
  6. World Bank Group’s End Poverty in South Asia blog: A blog devoted to exchanging ideas on ending poverty and dealing with demographic trends and issues in South Asia.
  7. For more thought leadership on this topic, see the s+b website at:
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