Empower Pragati, providing vocational training for low-income youth

The company: Empower Pragati

The inclusive business initiative: running vocational and skills training programmes for low-income youth in India. 

Social impact: trained 75,000 young Indians so far providing wage employment to approx 70% 

With an ambition to help young, disadvantaged Indians at the Base of the Pyramid secure gainful employment, Rajiv Sharma founded Indian social enterprise Empower Pragati in 2010. Catalysed by the government’s ambitious social agenda of providing employment, developing an asset-light business model, ensuring quick execution of programs and overcoming sensitive cultural biases towards vocational training through committed counselling sessions, Rajiv and his team are well on their way to empowering 1 million low-income people by 2020. This is the Empower Pragati story.

How did your inclusive business come into being? 

We set up Empower Pragati in 2010 when the National Skills Development Council (NSDC) was established by the Government of India. NSDC is a massive PPP initiative that aims to skill 150 million youth and transform the skilling landscape in the country. It provided us with investment and technical support. Empower Pragati is a “for profit social enterprise” and a key criteria for us to select a project is, whether it has an element of social transformation & potential for scale/broader impact.

We are one of the very few NSDC supported start-ups that has become financially sustainable. We reached breakeven last year and made net profits this year. This validates our organisational vision and strategy.

How does your business work in practice?

We are predominantly skill training providers and proud to take this training to where it is needed most and extend support for livelihoods through jobs and self employment. The training is free of charge for our beneficiaries. Our revenue comes from three other sources:

1. Employers, who pay when they hire a trainee.

2. Large corporates that fund training programmes through CSR investments. Sometimes this is done with a view to then hiring the trainees themselves, and in that case the corporate can shape the training to be company-specific. Other times the CSR investment is done with a view to social good and there is no direct link back to them.

3. The government through PPPs wherein we implement the state’s social agenda. Funding is milestone based which means we receive payment at completion of training, at placement, and after a certain retention period. At present, almost 70% of funding comes from the government/PPPs, 30% from corporate CSR programmes and a very small proportion from employers. Next year, we hope to see this change with a majority of our funding coming from corporates & other employers.

We are also currently piloting a ‘self paid’ programme in Delhi where participants pay 2,500 rupees for a course. In the market, this would normally cost 5 times. We are offering this at a very low margin with an expectation of high volume in time. Increased demand for our courses should come from growing brand recognition and demonstrated results but we’ll also need government help along the way. There is a huge demand for paid training. People aren’t really attracted by “Free” training. People don’t value it. But if it’s expensive, then they say it’s too expensive.

What is the one factor that has been critical to your success?

A recent change in government regulation has allowed Empower Pragati to get going. Earlier the government was the largest spender in the social sector with around 20-40% spent on skilling. But this could only be channelled through non-profits such as NGOs and Foundations.

Four things have changed in recent years. Firstly, for-profit companies can now be supported by the government to conduct this work. Secondly, corporations can get involved. Thirdly, training providers are now engaged in policy development and dialogue with the government. Finally, new government is implementing reforms to streamline the skills development sector. For example, a new Ministry for Skills Development has been set up to integrate a previously fragmented range of Ministerial agencies. Studies done around 2007 found that around 500 million people aged between 18-35 years would need to be skilled to meet the workforce demand in coming years. NSDC was established with target of skilling 150 million people. They called for proposals and this is what led to us starting Empower Pragati.  

What challenges have you faced in setting up your inclusive business?

We have had to tackle a number of cultural issues. Vocational training is not aspirational in India. Academic skills are more highly valued. ‘Work’ traditionally means working in agriculture or working in government – work in an office or factory are not respected. Our trainees are faced with a number of difficulties when they move from a rural to urban environment. They find it hard to afford housing, food, establish social networks etc. We work with employers to be sensitive about these issues so that they understand the trainees’ situation. We provide ongoing counselling and follow-up calls to check how our trainees doing. We also ask the project funder to provide a stipend to new employees to get them through the first critical month or ask the employer to give them an advance so the person has money to establish themselves.

All these challenges are multiplied when it comes to gender issues. For unmarried women there are issues of safety, security, social pressure and mobility (not being allowed to travel outside their home geographic area). For married women, mobility is also an issue. For example, recently we had lots of women apply for a training program but they could only then work in a specific geographic area. To counter these problems we offer family and community counselling with role models to change cultural norms and mindsets. We have developed some case studies of ‘success stories’ to show examples of where it has worked and the benefits to the women and their families, trying to use these case studies to influence attitudes.

What commercial success have you seen so far?

We have reached break-even through an asset-light model. We ask partners to contribute in-kind resources including for capital costs. For example, one partner contributes training space. This has enabled us to reach breakeven so quickly.

What social impact are you having?

We have so far trained 75,000 people and should be able to train at least 1 million by 2020. Approximately 50% of our trainees are women. Our employment rate is approximately 70%.

We are diligent in data collection. We gather data for all our trainees. At the time of training enrollment, we gather data on everything from gender, caste, income group etc. When they are employed, we get data on wage levels, duration of employment etc. We also get copies of first salary payslips.

What key lessons have you learnt in your inclusive business journey so far?

I would say that that we have learnt three key lessons:

The first is that low-income people are very concerned about dignity. Given the big need for skilled workers, and high unemployment, we thought it would be easy to make vocational training work. But actually people are much more choosy. They don’t want free training. They don’t want to work in specific occupations. Even though people are poor, they don’t always want everything that’s offered to them. They also have preferences and desires, and these have to be respected.

The second is the importance of quality. We have struggled to find good quality trainers. If Empower’s business is to transform lives, then the trainers have to be motivated and motivational enough to transform others’ lives. Getting this right has cost a lot of time and money.

The third is a financial lesson. That is not to invest a lot in capital. Instead, we have opened centres through partnerships where partners invest in cash or in-kind. This asset-light model has enabled us to grow quickly.

In this series, we speak to some of the ‘Breakthrough SMEs’ identified in the Business Call to Action’s (BCtA) Flagship report Breaking Through: Inclusive Business and the Business Call to Action Today. These are all small and medium enterprises that are emerging as influential actors in inclusive business. These interviews will uncover the stories of these SMEs – what sets them apart from other businesses, how are they overcoming the many challenges at the BoP and what factors are driving their success?