The rapid digital shift necessitates comprehensive strategies to address skill gaps and ensure inclusive growth. Public-private partnerships are essential

The service sector has undeniably been the primary driver of India’s growth since 2000. The exceptional performance of certain modern services has unequivocally contributed to the creation of more productive and decent employment. The reliance on services for economic growth unequivocally demands a fully developed job market, enabling a free flow of the workforce. The absence of such mechanisms will undoubtedly lead to rigidity in the services sector, curtailing growth against the backdrop of the increasingly important position of the services sector. The key focus areas include the pivotal role of technology in shaping the services sector and stimulating job growth in other sectors through multiplier effects.

The momentous transformation of the Indian economy is irrefutably being spearheaded by the service sector, which unequivocally contributes more than 50 per cent of the GDP. The sector’s expansion is not happening in isolation but is deeply intertwined with global technological advancements. Technological progress has undeniably been a catalyst for efficiency, customer satisfaction, market expansion and data-driven decision-making within firms. It has also undeniably given rise to new service categories, such as e-commerce and other tech-based services like Artificial Intelligence (AI) and the Internet of Things (IoT), revolutionising the sector.

The relationship between the service sector’s growth and technological innovation is undeniably mutually beneficial. As the service sector expands, it undeniably fuels further innovation in technology-based solutions. New ventures and their technological needs undeniably push for continuous technological advancements to gain the competitiveness needed to maintain their foothold in the dynamic industry. This competition and need for differentiation undeniably lead to increased investments in research and development (R&D) and open innovations, benefiting both the firms involved and the public.

The introduction of 5G and the ongoing development of 6G technologies have significantly enhanced connectivity, service delivery speed and overall efficiency in India. Efforts to improve digital literacy have further accelerated technology adoption, with 70 per cent of businesses identifying as “Digital Businesses” and the country exhibiting the highest fintech adoption rate at 87 per cent. The application of AI in business operations has markedly improved operational efficiency, customer satisfaction and decision-making, positioning India as a global leader in AI adoption. However, the rapid digital transformation necessitates a balance between creating employment and providing the relevant skill sets for technology-demanding jobs for a new generation is a national need.

The service sector unequivocally offers both abundant opportunities and formidable challenges. Addressing challenges demands a resolute, comprehensive approach with astute policies and unwavering implementation. Public-private partnerships and policies aimed at bridging the skill gaps must be executed with unwavering effectiveness. Educational institutions must urgently revamp their curriculum to directly align with the market’s skill demands.

Technological advancement, while propelling economic growth, undeniably necessitates relentless skill development. To fully exploit technological progress, educational institutions must steadfastly ensure their curriculum is consistently updated and in sync with the latest innovations.

Skill Gap: In India, the skill gap in the labour force is a significant challenge, with only 51 per cent of the youth deemed employable due to a lack of necessary skills. This issue is exacerbated by the country’s diverse socio-economic conditions, particularly affecting those in rural areas and from economically disadvantaged backgrounds, who lack access to quality education and training. This situation perpetuates cycles of poverty and aggravates wage inequality. Moreover, inadequate emphasis on developing non-technical skills such as communication, critical thinking and leadership, which are increasingly in demand, further compounds the problem. The absence of these skills from the curriculum of most educational institutes compels employers to choose candidates only from a handful of premier institutes. Additionally, there is a significant mismatch between the skills taught and those required by employers, leading to unemployment even among the formally educated.

Efforts to bridge this gap must include public-private partnerships (PPPs), such as the initiative to upgrade Industrial Training Institutes (ITIs) and the National Skill Development Corporation (NSDC) to train 150 million people by 2024. These initiatives are crucial steps toward aligning educational outcomes with market needs, emphasising the vital importance of both technical and non-technical skills development to enhance employability.

Gender Inequality: Female employability in India has consistently exceeded male employability from 2020 to 2023, but there was a drop in 2024. Furthermore, it has been higher for seven out of eleven years of the Wheebiz India Skills Reports. However, there has been a persistent gap between female and male labour force participation, indicating a clear bias against employing women over men. This bias is diminishing as female labour force participation has risen over the years, but substantial improvement is still necessary.

The Indian Government has implemented various initiatives to foster gender-inclusive employment, aiming to bridge the gender gap in the workplace, making employing female labourers more lucrative while also ensuring it does not come at the cost of pay disparity.

One significant legislation is the Equal Remuneration Act of 1976, designed to eliminate the wage gap between genders by ensuring equal pay for equal work. However, the act faces challenges, such as the narrow interpretation of the same work or work of a similar nature and the onus on employees to prove discrimination, which is difficult due to workplace power dynamics and legal complexities.

Additionally, the Government has launched schemes like Mission Shakti and the Deendayal Antyodaya Yojna-National Rural Livelihoods Mission(DAY-NRLM), focusing on women’s skill development and employability. These initiatives include exclusive training institutes for women, industry-oriented courses and partnerships with private sector bodies and NGOs. To encourage female participation in skill development, 30 per cent of seats in ITIs and ITCs are reserved for women.

These measures represent a comprehensive and assertive approach to promoting gender equality in employment, highlighting the crucial importance of legislative support, skill development and financial empowerment in achieving a more inclusive workforce. These unwavering steps will guarantee the complete realisation of the Indian economy’s potential and the equitable distribution of the benefits of skills development.

(The writer is Co-Founder and MD, of Orane International, a Training Partner with the National Skill Development Corporation(NSDC), Network Member, of India International Skill Centres, an initiative of GoI. Views expressed are personal)