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  1. 1. 5 September 2013 Manthan Boosting Skillsets: Increasing the employability of youth Proposed Solution: Employability Enhancement Bonds and KarmaNet (National OnlineTrainee Exchange) •The Excelators •Abbas Sura •Anindita Das •Bhuwan Mahajan •Gaurav Mahajan •Sanchari Samui •(Indian School of Business)
  2. 2. Government is focusing on various measures to reduce unemployment through introducing innovative ways. Various schemes and plans have been set up by Government over years but such schemes and plans have not been able to reap intended results and India is still struggling with the high employment rate of over 6 %^ •^ Employment annual report 2012 • National Skill development Coordination board was set up in 2013 • Multiple organizations and committees in place to curb the problem • Annual Target for various ministries/organizations for 2012-13 is 7.28 Mn and till June’13 the actual achievement is 0.76 Mn (~10%) Lack of skilled population • Significant mismatch between demand and supply of the skills across industries and regions • India reported a 48% job fulfillment challenges due to lack of employable sources in 2012 higher than the global standard of 34% Demand Supply mismatch for employable skills • Corporates are not actively involved in designing trainings for the youth • lack of check on the quality of training imparted • At the grass root level in the economy there is lack of awareness about the skills required to become employable Low Corporate Involvement in government initiatives UNEMPLOYMENT Problem of Employability and Skill-Development Overview Current Needs • Innovative skill development measures need to be adopted • Reach to the grass root level of the population is required • High involvement of the corporates to bring efficiency and success of the adopted measure
  3. 3.  Outcome-based Payment: The proposed solution invests tax-payer money in only effective programs based on whether they achieve the desired outcomes  Upfront Raising of Finance: Frees government funds which could have been otherwise locked as government pays only when the program is successfully executed  Innovative substitute for grants and loans: EEB would tend to increase accountability of private players towards the government and trainees  Flexibility to Training Providers: EEB concept provides them the flexibility to raise funds based on their needs and thereby, providing room for innovation  Online platform to bridge skill demand-supply gap: KarmaNet will allow an effective platform for trainees and industry to engage  Government , in collaboration with NSDC, to establish an independent body - Employability Enhancement Bond Committee (EEBC)  An online database of unemployable youth to be built to assist in selecting trainees for each program  EEBC to issue bonds to investors for raising capital for the skill-development programs o Training programs to be based on gaps in skill demand and supply  An independent evaluator to determine and assess the outcomes, basis which government will make payments to investors and service providers  EEBs will be an instrument that will allow government to raise capital from private investors through an independent committee for running skill-development programs run by independent third-parties (e.g., NGOs and social entrepreneurs) o Trainees for each program to be selected through an online trainees database – KarmaNet – to be setup by National Skill Development Corporation (NSDC)  Investor returns and third-party service providers’ payments will be based on the outcome of training programs  Thus, EEBs have the potential to ensure utilization of taxpayer-funds for only effective training programs while at the same time mobilizing enough funds upfront to launch skill-development initiatives at a huge scale Proposed Solution: Employability Enhancement Bond (EEB) and KarmaNet Proposed Solution Employability Enhancement Bonds and KarmaNet Implementation Model Innovation
  4. 4. IndependentEvaluationand MonitoringAgency Employability Enhancement Bond Committee (EEBC) GovernmentPrivate Investors Training Providers Employable and Underprivileged Youth • Selected from the national training register, ‘KarmaNet’, based on their existing skills • Will include pool of unemployable graduates Performance –based Disbursement of Funds ROI based on Performance Investment in Selected Training Program Operating Capital Training-program customized to Industry demand •1 •2 •4 •5 •6 Evaluation of Outcomes National Skill Development Corporation (NSDC) Parent Body of EEBC Representing social impact investors, private companies, and development agencies Includes social entrepreneurs and NGOs having past track record in the field •3 Proposed Solution Solution Design
  5. 5. Proposed Solution Key Advantages • Opportunity to achieve financial and social returns through single investment vehicle • Opportunity to invest in transparent social programs that also actively engage them • Promotion of training programs meeting their specific needs • Increased pool of skilled labor trained according to their standards and requirements • Enhanced government and consumer credibility • Investment of government funds in only effective training programs • Improvement in prevalent training infrastructure • Development of credible database of potential trainees to gauge skill demand and supply • Effective mapping of market demand with aptly skilled labor supply, thereby reduction in unemployment • Impartment of effective training in in-demand skill sets • Assured absorption in organized mainstream • Increased probability of finding suitable employment within vicinity of inhabitance • Certification providing credibility, thereby assisting in securing better job opportunities • Reduced burden of job placement as training program directly mapped (through KarmaNet) to skill demanded by industry • Easier access to flexible funding • Assistance in training program development through engagement of industry • Access to repeat opportunities if program executed efficiently • Returns based on transparent evaluation system Advantages of Proposed Solution
  6. 6. Implementation of the Solution Implementation Strategy Implementation Process: An Overview Establishment of Employability Enhancement Bond Committee  NSDC will establish the independent Employability Enhancement Bond Committee (EEBC)  EEBC to be responsible for implementation and monitoring of the program  It will have representation from the government, private players, and NGOs on its boards  NSDC will build the KarmaNet  All unemployable youth in age group 18-35 years can be part of KarmaNet  KarmaNet to enable mapping of training needs with potential skills of registered youth  Youth enrolled in a training program to provide a refundable security (say INR3,000) ImplementationProcessStakeholders  EEBC will identify gaps in availability of skilled labor  Then identify service provider through tender process o Tender process to give high weight to past record  Post selection of service provider, raise required capital by issuing bonds to investors  Then disburse only the operating capital to the service provider  EEBC will select an independent evaluator that will: o Formulate the contract o Assess desired outcomes  Evaluator to establish the threshold outcome-level and ROI-based on outcomes above threshold  Then, provide report to the government for the contract period basis which payment to be released  Government  NSDC  EEBC  NSDC  EEBC  Youth  EEBC  Social Entrepreneurs  NGOs  Social impact investors  Private companies  EEBC  Government  Independent evaluation agency Development of ‘KarmaNet’ and Mapping of Training Needs Identification of Training Providers and Issuance of EEBs Independent Evaluation of Outcomes
  7. 7. Implementation Strategy Development of KarmaNet Supply Side  Unemployable youth in the age bracket of 18-35 years will be able to register on the online database by creating a user account o The database would target both educated and uneducated audience  To create awareness about the database, dedicated camps would be organized across the nation o Computer illiterate youth will be able to register on the database through these camps, supervised by NSDC representatives  Registration process would be fairly easy and require basic demographic and skill-related data  Further, it would be adept in vernaculars of the concerned region and contain images • KarmaNet will be an online platform that will allow employable youth and the industry to engage thereby helping in reducing the critical gap between skill demand and supply • The online database will be owned and managed by the National Skill Development Corporation and will be similar to National Employment Exchange database Demand Side  Employers would be able to register their specific job and skill-set requirements on this database o Including period when skilled-labor required, potential remuneration offered, and the region of placement  Gauging the demand for the skills, EEBC will float EoI and tenders for relevant training programs in the specific region  The database will allow the service providers to submit their EoIs and tenders through the database itself o The tender will be evaluated based on the – past experience in the particular skill-set training, experience in the region, infrastructure, efficacy of course module, and the bid amount
  8. 8. Selection of Independent Evaluation Agency • Independent evaluation agency will be selected through an RFP process • The selection will be based on the following criteria: o Experience in the training program and contract formulation o Credibility of the institute o Price quoted in the RFP Development of Evaluation Metric for Desired Outcome • The evaluation agency will be responsible for determining the desired outcome levels for each training program monitored by it • It will be do so in-consultation with EEBC, investors, and training providers • The agency will develop a scoring metric based on: o Social excellence parameters: % trainees placed, presence of quality manuals, etc. o Financial excellence parameters: E.g., total capital utilized, etc. o Success of the program will be evaluated based on this scoring metric • The evaluation will be done over a long-term horizon (e.g., at lease a period of 2-3 years) Determination of ROI based on Evaluation Metric • The evaluation agency will determine a threshold score below which the program will be deemed unsuccessful o Investors and service provider will not be offered any payment in such a case • Further, the agency will set discrete outcome-levels above the threshold based on which the return will vary o E.g., for a score of 80, the investor will be given a return of 8%, while for score of 85 a return of 12% will be offered Implementation Strategy Evaluation Criteria and RoI Determination
  9. 9. NSDC EECB Board Independent Director (Nominated) NSDC Representative Corporate Representative Chairman-EECB EECB Team Corporate Relation Team Recruitment Team Marketing/ Media Team Finance Team IT Team Evaluation Team Stakeholders Investors (Corporate and others) NGOs and Other Institutes Potential Workforce (Society) Implementation Strategy EEBC Organization Structure
  10. 10. Impact of the Solution Impact across Stakeholders and Society •Greater involvement of Corporate •Increase in Number of Vocational Skills Institutes •Poverty Reduction •Balanced Regional Growth •Demand Supply Matching •More Employment Generation •Economic Growth EECB •Funds Skill Requirement •1000+ new corporate joining the cause each year for next 9 years (Pan India) •1000+ new institutes join the initiative each year to teach vocational skills •Each new player imparting vocational skills to 1000+ new persons across India •1 million+ additional trained people across India per year •81 million + additional trained people across India by 2022 with ready market to for employment •Reduction in Unemployment by 81 million+ people and reduction in regional employment imbalance
  11. 11. Risks Involved Mitigation Measures Low Awareness Failure to create awareness about KarmaNet among masses Launching dedicated promotion through national TV, social media, and in- person physical camps Reputation Loss Consistent under-achievement by institutions to attain expected results, leading to loss of reputation, credibility, and trust Proper due-diligence prior to finalizing a contract with an institution Economic Condition of Market Dampened market conditions leading to potential investment-aversion sentiment Bond committee to ensure market return by measures such as adjustment of interest rates, provision of tax exemption as incentives, etc. Investor Interference Interference by investors due to their vested interests in the training- impartment processes Regulations to be incorporated to regulate the level of interference in the process by corporates Sustaining Focus Without additional resources, maintaining focus on the EEB structure may become a challenge in the long-run Dedicated personnel should be employed to create awareness about advantages of EEB Risk and Mitigation Strategy An Overview
  12. 12. References  Social-Impact Bonds : Social, org,  Data on Employability, target of employability : IMaCS Aon Hewitt and NSDC,,  Data on Skills Management – FICCI_skill_Report_2012  Data on investors, for-service-providers :  Employment report :  Labor related data :, Appendix