{Follow up to part 1 and part 2.}

I think that anyone who is not horrified at the terrible state of Indian education is not paying attention to what’s going on in India. One person whom I met recently clearly gets it. Manish Sabharwal was one of the speakers that impressed me at the TiE-ISB Connect ’08 a couple of weeks ago at the ISB in Hyderabad. He started TeamLease in 2002, India’s leading staffing company.

TeamLease Services is India’s leading staffing company and provides a range of Temporary and Permanent manpower solutions to over 1000 clients.

The Temporary staffing group establishes a co-employment relationship with clients and takes responsibility for all compliance, HR and administrative of employees on assignment. The Permanent staffing group undertakes turnkey and recruitment mandates for permanent fulfilment. We view ourselves as a liquidity provider that enables better matching of demand and supply in labour markets.

I consider the function of a company like TeamLease to be what I call an intervention in the second best world. A state of the world without any distortions is a first best world. In the case of the labor market in India, distortions are introduced by the government in terms of labor laws that retard employment. This is a second best world of employment and employability. To improve the functioning of the labor markets then requires additional effort. As Manish points out, his business is “illegal.” A significant portion of his time goes into trying to influence public policy.

Manish naturally recognizes the importance of education. In a recent opinion piece for Livemint, “Fixing Education’s Cholestrol,” he wrote:

When I began engaging with public policy on employment and employability, I didn’t pay much attention to education. I thought I was a dispassionate observer in that debate because repair is different from prepare and I didn’t have a “dog in the fight”. But I now realize most children are not “work ready” and we can’t teach them in six months what they should have learnt in 15 years. At a recent conference organized by the Gujarat government on making education more children-centric, a vice chancellor of a traditional university got very upset when I suggested we needed to reorient to “learning for earning”. He said learning was for living and felt a commercial perspective would ruin education. I find it hard to believe we could ruin it further, but I think he misunderstood my point; we can teach somebody to be a plumber, electrician, salesperson, mason or bartender in six months, but we can’t teach them to be curious, confident, creative, risk-takers and team players. I couldn’t agree more with Einstein’s definition of education as what is left behind after you’ve forgotten what you learnt in the classroom. Work skills are about getting the “neev” or foundation right and today we fail with 58% of our youth suffering some degree of skill deprivation.

He has a “ringside view of the education tragedy” and notes the need for reforms.

The reform agenda is complex—reversing over-regulation and under-governance, separating financing from delivery, linking financing to outcomes, creating infrastructure for information asymmetry, recognizing multiple intelligences, toning down rote learning and much else. But the most important step is the formation of the Education Regulatory Authority of India (Erai). As the global crisis painfully demonstrates, harnessing markets does not mean the absence of regulation. But as the father of Greek medicine, Paracelsus, said, “the dose makes the poison”. Anything powerful enough to help has the power to hurt. Today’s education regulatory regime is friendly fire that reinforces the status quo and hurts the very people it pretends to protect. An independent, professional and balanced regulator would bring objectivity, effectiveness and scalability.

I had proposed the formation of a “Education Regulatory Authority of India (ERAI)” just four years ago here (“A Modest Proposal for Making India Fully Literate in Three Years“, Oct 2004):

The private sector, given the right incentives, will deliver because firms driven by the profit motive do astonishing things. Of course, oversight and regulation is essential for socially-optimal outcomes in market places. Around the world countless examples exist of institutions that oversee and regulate the private sector. In our case, the appropriate regulatory body needs to be constituted. We could have something like an Education Regulatory Authority of India — (ERAI).

The private sector will deliver like it eventually does when all other things fail.