Daybreak - Why the PM's internship scheme is stressing out corporate India

Episode Date: October 14, 2024

The PM’s internship scheme wants to provide 10 million internships to freshly minted students over the course of the next five years. Students from premier institutes like IITs and IIMs or students with professional degrees like CA, CMA or masters are not allowed to apply. The idea is to address India’s problem of youth unemployment by making students from lower socio-economic backgrounds employable and giving them real world exposure.  It sounds great. If it is implemented well, the scheme has the potential to challenge deep-rooted hiring biases that exist in the job sector in India.  However, 10 million interns in five years is making corporates uneasy. They’re overwhelmed because they don't know how many interns they can hire. Two million interns per year between 500 odd top companies is a lot and corporates are unsure if they have the resources and the bandwidth to train and retain these interns and then deal with another two million pool the following year.  The scheme opened up for signing up to students on Saturday, Oct 12. Within one day more than 1 and a half lakh students had already registered according to news reports.  But because the scheme doesnt really have a sector specific approach, it is highly likely that we have a problem-solution mismatch coming our way. Tune in.Daybreak is now on WhatsApp at [phone]. For next Thursday's Unwind, send us your recommendations to us as texts or voice notes. The theme is "favourite folk songs."

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcasts, you've probably heard me, my interruptions, my analogies and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too. It's for a special announcement. For the last few months, I and Sita Raman Ganeshan, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission. We want to tell the secret sauce stories of India's greatest companies. Stories of how they were born, how they fought to survive, how they build their organizations and culture,

how they manage to innovate and thrive over decades, and most importantly, how they're poised today. To do that, Sita and I have been reading books, poring over reports, going through financial statements, digging up archives, and talking to dozens of people. And if that wasn't enough, we also decided to throw in video into the mix. Yes, you heard that right. Intermission has also had to find its footing in the world of multi-camera shoots in professional studios, laborious editing and extensive post-production. Sita and I are still reeling from the intensity of our first studio recording. Intermission launches on March 23rd.

To get alert, as soon as we release our first studio. episode, please follow intermission on Spotify and Apple Podcast or subscribe to the Ken's YouTube channel. You can find all of the links at the ken.com slash I am. With that, back to your episode. The idea is pretty noble, to be honest. The Prime Minister's internship scheme wants to provide 10 million internships to freshly minted students over the course of the next five And students from premier institutes like IITs and IAMs or students with professional degrees like CA, CMA or Masters are not allowed to apply. The idea is to address India's problem of youth unemployment by making students from a diverse range of backgrounds more employable and giving them real world exposure.

It sounds great. If it is implemented well, it really has the potential to challenge. challenge the deep rooted hiring biases that exist in the job sector in India today. However, 10 million interns in five years is making some folks uneasy. The corporates. They are overwhelmed because they don't know how many interns they can hire. Two million interns per year between 500 or top companies is a lot. Corporates are unsure if they have the resources and the bandwidth to train and

retain these interns and then again deal with another set of two million in the next year. The scheme opened up for registration to students this Saturday on the 12th of October and within one day by Sunday, one and a half lakh students had already signed up. But because the scheme does not really have a sector-specific approach, it is highly likely that we have a problem solution mismatch coming our way. Welcome to Daybreak, a business podcast. from the Ken. I'm your host, Nickda Sharma, and I don't chase the new cycle. Instead, every day of the week, my colleague, Rahal Philipos and I will come to you with one business story that is worth understanding and worth your time. Today is Monday, the 14th of October. A general manager at an Indian IT company spoke to my colleague, the Ken reporter, De Banjali Biswas, and they went to the extent of saying that their firm is unlikely to participate in the scheme. Why? because the roles that they need talent for does not really match up with the scheme.

The Ken spoke with at least 15 people from across IT and software, banking and financial services, insurance, accounting and consulting and manufacturing sectors, and while they confirmed their participation in the scheme, it is worth noting that they were pretty clueless about it at least till the end of late September. Diversified conglomerates like Lawson and Turbo and Emmer, and more than a hundred other companies have reportedly placed nearly 50,000 job postings already. And while it is up to the companies to decide whether or not to participate, there is a growing sense that it is going to be a bigger ask than anybody thought.

Anin Sahasrabud day, the chairman of the National Education Technology Forum and the National Assessment and Accredition Council, told us that there may be a soft pressure to comply. with the scheme. Now, even if the companies figure out how to onboard these interns, it might come at a cost. The government has said that it is going to fund 90% of the $5,000 stipend for these interns, which comes to $4,500. But there are some hidden costs that could hit the company's bottom lines. Some companies are even saying that they might have to rethink their entry-level hiring strategy altogether. Because think about it. They have to figure out how to redistribute work, increase managerial support and accommodate these interns within a tight hiring headcount.

A talent acquisition professional at one of the big four accounting firms told us that now, wherever possible, they may have to swap less intensive work done by entry-level employees with the new interns. And even if employers bear the cost of, restructuring their workflow and invest in training these interns, we don't know how this will work out when the next batch of interns comes in next year. Which is why the industry seems divided on the future prospects, both for the companies and the interns. Stay tuned. If you do the math, each company will have to hire about 4,000 interns on an average. But the pilot project which just launched a few days ago takes a more reserved approach.

We're talking about onboarding only about 125,000 youths across banking and financial insurance, consulting, manufacturing, pharmaceuticals, FMCG, tech and other sectors. Their internships are set to begin on 2nd of December. Now, the big concern is mainly to do with the consequences of hiring such a large cohort of interns on a company's functioning. Each company has a fixed headcount for the number of people that they hire ever. every year. And that is usually decided at the beginning of every financial year. With these internships lasting a year, which is longer than usual, companies will have to ensure that they provide enough

work to make it a meaningful experience for these interns. The talent acquisition in charge from a big four company told DeBanjali that an influx of interns beyond what the headcount can accommodate could impact the kind of roles that people are hired for. Not just that, The head of talent skilling at an MNC tech firm said that the pressure to train so many interns cannot be ignored either. It requires immense leadership bandwidth with dedicated teams engaged to deal with them. And that is because interns need time and patience to flourish. If internships are simply done to tick a box, it will throw up its challenges in the future, both for the company and the intern.

Many of the industry stakeholders that the Ken spoke with pointed out how currently there just isn't enough infrastructure in place at most companies, think managers, mentors, designated tasks and training modules to manage this huge influx of interns. And that is not it. There is another side to this problem. There just isn't enough skilled talent to fill positions. You must have heard lately how corporates are saying that fresh. graduates do not have the right skills to fill the gaps in the workforce. According to Krishna

which, the vice president at Staffing Services Form Team Lease Digital, one in four workers in the tech sector lacks the essential skills for their role. That is 25% of the entire tech workforce. Pretty concerning, right? Apparently, it is even worse in non-tech sectors where that share is over 40% which says that bridging this. skill gap requires more than just internships alone. A strong academic foundation where educational programs align with market demands, especially in fields like AI, data analytics and cloud computing is a must. A software development engineer working with an e-commerce marketplace said that this is why a majority of interns are hired directly out of top-ranking university campuses. But as far as the

scheme is concerned, the government is trying to bridge that gap as well. The eligibility for application to these internships is limited to people from lower socio-economic backgrounds without the leverage of premier institutes. But pushing for internships in a landscape where there is no uniform job availability without considering market conditions may lead to a problem solution mismatch. Anup Shivastava, a labor specialist at an international thing, tank told us that for the scheme to really be successful, it has to take a holistic approach. Right now, it is only looking to place interns at companies without assessing if they've developed a sound knowledge base. Also, let's be real.

5,000 rupees monthly as a stipend is not going to cut it for these interns. It can barely cover their transport costs. Forget about living expenses. Daybreak is produced from the newsroom of the Ken, India. India's first subscriber-focused business news platform. What you're listening to is just a small sample of our subscriber-only offerings. A full subscription unlocks daily long-form feature stories, newsletters and podcast extras. To subscribe, head to the ken.com and click on the red subscribe button on top of the Ken website.

Today's episode was hosted by Snigda Sharma and edited by Rajiv Siyah.