Perspectives from "India's Manpower Crunch"

This months Bloomberg magazine has an interesting article by Abhay Singh and Subramaniam Sharma titled "India's Manpower Crunch". The article details a major potential stumbling block on the road to continued strong GDP growth (>9%) namely the country's problematic education system. Singh and Subramaniam lay out the dilemma that faces India's major firms in recruiting and training enough educated staff to meet demand of their global and domestic customers.

Key points from the article include:

• Rapid demand for skilled staff has created an environment of rampant wage inflation where established domestic and international firms are battling for talent. The impact has been an environment of 20%+ wage inflation in 2006 and a turnover rate of 20%+. One example of the direct economic impact is the delay in major infrastructure projects at critical points due to turnover.
• No end in sight to wage inflation - with forecasts of 14.5% inflation in 2007
• An education system struggling to keep up. The article highlights the lack of a universal education system and a funding scheme where federal and state governments cover a portion of schooling costs contributes to the challenges.
  

While its clear that there is a dilemma and education is a major challenge to the future of India what is not clear is what the solution is and whether the political will exists to solve these problems.