CSR in Skill Development: Avenues, insights and impact

We are delighted to present a Skill Talk by Dilip Chenoy, Independent Advisor – Startups, Social Enterprises, CSR and former CEO, NSDC – explaining how corporates can positively impact ‘Skill India’ mission by implementing strategic CSR projects. Corporate Social Responsibility (CSR) is one of the ways to actively contribute in transforming India through job-ready workforce for domestic and international industry.  Let’s read on to know more about how wholehearted support from corporates can help achieve speed, scale and sustainability of various skill development initiatives.

Corporate organizations have a crucial role to play in accomplishing the national agenda for skilling India. Besides meeting their demand for skilled and talented workforce, they also address requirements of the industry and engage with the larger community. The Companies Act 2013 has mandated corporates to spend at least 2% of their profits on CSR. First, let’s look at the big picture of CSR and then discuss the 5 models that can be used for skill development and vocational training in India.

Section 135 of the Companies Act provides the threshold limit for applicability of the CSR to a Company i.e. (a) net worth of the company to be Rs 500 crore or more; (b) turnover of the company to be Rs 1000 crore or more; (c) net profit of the company to be Rs 5 crore or more. Further as per the CSR Rules, the provisions of CSR are not only applicable to Indian companies, but also applicable to branch and project offices of a foreign company in India.

According to the recent NextGen Report*
Spend of top 91 firms in NSE in 2015-16 Rs. 6033 crores vs Rs 4760 crore by top 100 in 2014-15
26 firms in 2015-16 vs 21 firms in 2014-15 exceed the 2% limit.
Top 5 spenders: Reliance : 651.6 Crore; NTPC : 491.8 Crore; ONGC: 421.0 Crore; TCS: 294.0 Crore, ITC: 247.5 Crore

According to the recent CSR India Report*
Spend of 250 firms in BSE in 2015-16: Rs. 7143 crores vs Rs. 5563 crores in 2014-15
93 firms in 2015-16 vs 78 firms in 2014-15 exceeded the 2% limit.
Top 5 spenders: Reliance : 651.6 Crore; NTPC : 491.8 Crore; ONGC: 421.0 Crore; TCS: 294.0 Crore, ITC: 247.5 Crore

*The spends from non-listed firms is not captured in these reports.

It is interesting that these numbers from NextGen, or CSR India, track the top 100/250 firms in the NSE, or BSE. However, there are several SMEs who don’t report this data even though, they have done a lot of work in the CSR space.  So, if you look at the total CSR spend in the area of skill development it will be far greater than the numbers tracked by NextGen or CSR India. Apart from the quantitative data on CSR we are waiting for reports from Economic Times and Futurescape who will be ranking the best companies in CSR. Many of the Tata Group companies, L&T, Infosys and Mahindra and Mahindra, figured in top 10 in terms of ranking and each one of them supports projects in skill development. Each of the top five spenders Reliance, ONGC, NTPC, TCS and ITC have skill training programmes in their portfolio. Perhaps going forward the percentage of such spending could increase. NTPC has a MoU with NSDC for skill development based on the success of the initial programmes this could scale.

I would like to mention three reasons to capture both the smaller spenders in the top 100 or 250 or the companies doing CSR as well as the small companies spending on skill development.

• It will act as a foundation or a base for others to follow
• In terms of the projects and the actual spend in the CSR, it will help in understanding the spread and nature of various activities under the guidelines.
• Some small industries might be using state of the art or innovative ways of doing things; their best practices will be available for larger firms to follow

CSR in Education and Skill development

Education and skill development are fast emerging as preferred choice for CSR initiatives in India. If you go by recent trends, we find that many corporates have integrated their business goals with CSR and there’s a strategic contribution to capacity building and community development through partnering with training partners, NGOs and other organizations.

5 models of supporting skill development through CSR initiatives

One, set up own foundation or fund training organizations and NGOs that are imparting skilling and employment options for differently abled, underprivileged, socially and economically challenged sections of society:  For example, corporate houses that have set up their own foundations include names such as, Dr. Reddy’s Foundation, Axis Bank Foundation, ICICI Bank Foundation among others. The other option is to fund training organizations, NSDC training partners and NGOs; for example, Godrej Green initiative, Hindustan Unilever and L’Oreal. In the area of manufacturing and agriculture there are several companies, especially those in the fertilizer and other agricultural product space that are doing a lot of skill development including working with grassroots level agricultural organisations.

Two, modernise the ITIs and vocational training institutes with latest tools and technology, software and support services such as training of trainers. Corporates can adopt the existing institutes and help them through knowledge transfer, finances or infrastructure. They can also set up new institutions that provide state-of-the-art facilities for imparting training and hands-on learning. To cite an example, Mercedes Benz sets up an ‘Advanced Auto Body Repair Training Center’ in association with Don Bosco ITI in Pune or the work done by Tata Motors in the Northeastern part of India. In the Automotive sector Maruti, Ashok Leyland and Tata Motors have also adopted a number of ITIs. Software companies like Adobe, Microsoft and IBM offer training software at subsidized prices to both training institutes as well as educational establishments. This support could also be extended to engineering colleges as well.

Three, enable livelihoods in rural areas by creating opportunities to work without migration.This is where corporates can provide market access for products and services, facilitate micro finance in order to supplement training and skill development. For example, HSBC and Mann Deshi Foundation support micro finance and have built in training and skill development in their lending programmes. e-Commerce ventures such as Snapdeal and Flipkart provide access to producers as well as artisans for selling their products online. Since the HRD Ministry is expanding the provision of vocational training in government schools across the country, some of the education projects being supported by corporates under their CSR programmes could be expanded to include the vocational education component as well.

 Four, contribute towards scaling up skill development initiatives by funding activities across the skill development value chain, capacity building and managerial support. Corporates can also sponsor professional counselling for building awareness and mobilising people for enrolling in skilling courses with the right mindset. Given that there is a huge impact on NGOs as a number of corporates are setting up their own Foundations, or hiring CSR professionals so the existing NGOs are facing a challenge of scaling up and meeting requirements of qualified  human resources etc. Corporates could provide specific funding for capacity development. There are many examples of firms encouraging their employees to provide volunteering services and support to projects run by NGOs to help them scale up and or  to be able to manage the projects effectively.

Five, encourage startups, self-help groups and micro enterprises through seed funding, mentoring and incubation support. Besides sharing knowledge and best practices, corporates can sponsor projects that have demonstrated high impact through innovative models and technology-enabled initiatives in skill development and vocational education. They can also support entrepreneurs who are working on initiatives to support work-integrated training through entry level skilling and upskilling. Specific skills intervention for self-help groups could increase their efficiency and outcomes. Innovative ideas that could help scale at the village level could be supported through the incubation phase and also mentor support be provided.

A number of large MNCs are also including India in their global projects or partnering organisations in India in the space of skill development. Some Examples of such CSR projects in skill development are

• Accenture has a global ‘Skills to Succeed’ program customised for India
• Boeing has skilling programs in high-end engineering space
• Cognizant has tied up with NSDC Udaan besides empowering women and PwDs through other projects
• Uber and NSDC tie up for training drivers and focussing on skills in the logistics sector

While the progress so far has been good, there is a need for synergy and scaling. I would like to reiterate the need for aggregating the disjointed work being done right now. One way could be to look at the various initiatives being done in a particular geography and connecting the dots so that scaling could be done. Further there is a need for a comprehensive strategy to conduct impact studies and monitor the projects and these impact studies should be shared in the public domain. The challenge is to scale and sustain the project; hence the need to share data of suitable models and outcomes that can help channelize additional CSR funds becomes all the more critical!.