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Plan in Works to Recognise Skill Certification of MNCs, Top Cos

Government Initiative to Standardize Corporate Skill Certifications: Impact on Investors and Industries

Analysis for Layman

The Indian government is working on a new initiative to formally recognize skill training and certifications provided by large multinational corporations (MNCs) and top Indian companies to their employees. The main aim of this initiative is to standardize these corporate certifications and align them with national and international skills frameworks.

Several companies, including Microsoft, IBM, and CII, have agreed to participate in this initiative. The National Council for Vocational Education and Training (NCVET), responsible for Skill India development programs, will provide official validation for these corporate certifications.

This initiative is designed to enhance the credibility and mobility of workers who hold non-academic credentials. It also enables the alignment of these certifications with the National Credit Framework, allowing academic institutions to recognize transferable credits for each training program.

The plan is expected to facilitate the portability of worker skills between companies and benchmark India’s talent pool against global standards, potentially attracting more employers.

Plan in Works to Recognise Skill Certification of MNCs, Top Cos

Impact on Retail Investors

Potential Benefits for Indian IT Services Companies

For retail investors, this initiative could bring incremental benefits to Indian IT services companies that heavily rely on corporate training programs. Companies like TCS, Infosys, Wipro, and HCL Tech can showcase the certified credentials of their large workforces. This can help them attract global clients and projects that depend on demonstrating the availability of specialized skills.

Additionally, these IT companies may experience minor cost savings as standardized national certifications eliminate the need for duplicate in-house testing. However, there may be some expenses associated with mapping internal training to official skill units and frameworks.

Investors should closely monitor statements from IT company executives regarding the adoption of the new credential recognition system and its potential impact on human capital development and international recruitment effectiveness. These updates can provide indirect signals about long-term competitive positioning.

Impact on Industries

Implications for the Corporate Training and Ed-Tech Industries

The corporate training industry is expected to see a significant impact from the recognition of credentials, potentially leading more enterprises to develop internal learning programs tied to tangible certifications under the national skills system.

Ed-tech firms that offer business skilling solutions, such as Simplilearn and UpGrad, are also likely to benefit as aligning their modules and certifications with the National Credit Framework becomes essential to maintain portability and value in the job market.

Furthermore, the news is likely to benefit the human resources and recruiting industries, as standardized skills credentials will enable better workforce mapping, external candidate screening, and internal mobility prioritization within companies.

Testing and assessment firms, as well as e-learning platform providers, may find opportunities to partner with MNCs and Indian corporates in mapping their programs to official frameworks, opening up new growth channels.

Long-Term Benefits & Negatives

Long-Term Benefits

In the long term, integrating corporate training credentials into national skills systems offers several advantages. It allows Indian workers to accumulate recognized certifications over time, enhancing mobility across jobs and geographies, as these credentials align with global ISO standards.

It also provides greater visibility to academia, policymakers, and businesses regarding the precise in-demand skills available domestically across industries, facilitating better alignment of educational programs with job market needs.

Additionally, seamless skills interoperability supports technology adoption and innovation across sectors, as talented Indian workers move more freely between MNCs and domestic companies based on competencies rather than just academic degrees.

Long-Term Risks

However, there are potential risks associated with increased reliance on corporate credentialing. There is a concern that worker skills may become overly shaped by the narrow commercial interests of businesses rather than holistic development needs. Certifications tied to proprietary technology platforms may also lose relevance over longer periods.

Short-Term Benefits & Negatives

Short-Term Benefits

In the short term, employees who receive formal credentials that align with national standards gain enhanced mobility prospects across top Indian firms and global companies with operations in India. Various IT and digital economy employers also gain visibility into accredited talent pipelines, improving human capital access efficiency.

Short-Term Disruptions

However, there will be transitional costs over the next 1-3 years as corporate programs are revamped to conform to NCVET framework standards instead of just internal criteria. Change management efforts will be needed to help employees embrace new assessment models. These short-term disruptions may temporarily slow down specialized skills development within some large Indian IT services players if learning platforms encounter integration challenges with Skill India’s credit recognition infrastructure.

Nevertheless, overcoming these initial hurdles will set the stage for Indian employers to brand themselves as having world-leading certified talent pools, attracting investment and stimulating both foreign and domestic recruitment.

Impact of Recognizing MNC Skill Certifications:

Indian Companies that may gain:

  • Large Corporates with Existing Training Programs:
    • Reliance Industries Ltd.
    • Tata Consultancy Services Ltd.
    • Mahindra & Mahindra Ltd.
    • Companies with robust internal training programs can benefit from government recognition, making their certified employees more marketable and potentially reducing internal training costs.
    • Market sentiment for these companies could be positive due to increased employee retention and potential cost savings.
  • Education & Skill Development Companies:
    • Apollo Skills Ltd.
    • NIIT Ltd.
    • TeamLease Services Ltd.
    • The increased focus on standardized skill training could create opportunities for these companies to partner with MNCs and government agencies for program development and delivery.
    • Market sentiment for these companies could be positive due to potential revenue growth and wider market reach.
  • Recruiting Agencies & Job Platforms:
    • Naukri.com
    • Monster India
    • LinkedIn
    • The standardized skill credits will provide a clearer metric for assessing candidate skills, potentially benefiting platforms that utilize skills-based matching algorithms.
    • Market sentiment for these companies could be positive due to increased user engagement and potential platform differentiation.

Global Companies that may gain:

  • MNCs with Indian Operations:
    • Microsoft
    • IBM
    • HCL Tech
    • MNCs already involved in the initiative will gain recognition and a standardized framework for their internal training programs, potentially enhancing their employer brand and talent pool.
    • Market sentiment for these companies could be positive due to improved employee satisfaction and potentially stronger recruitment pipelines.
  • Global Skill Standards Setting Bodies:
    • ISO
    • World Organization of Skills Development (WSDO)
    • The Indian government’s focus on aligning with international standards could lead to increased adoption of global skill frameworks, benefiting these organizations.
    • Market sentiment for these organizations could be positive due to expanded reach and influence in the global skills ecosystem.

Companies with Limited Impact:

  • Small & Medium Businesses (SMBs):
    • The initiative primarily focuses on large corporates and MNCs. SMBs might face challenges adapting their training programs to NCVET standards due to resource constraints.
    • Market sentiment for these companies might be neutral, with potential indirect benefits from a more skilled workforce but challenges in adapting to the new framework.

Note: These are potential impacts based on the given information. Actual outcomes may vary depending on policy implementation, industry feedback, and individual company strategies.

Source:

Sharma, Yogima Seth. “Plan in Works to Recognise Skill Certification of MNCs, Top Cos.” Economic Times. Published Dec 23, 2023.

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