Indian higher education has many critics and few admirers. Graduates of the eight Indian Institutes of Technology (IITs) and the six Indian Institutes of Management (IIMs) are welcomed and respected the world over. But plain vanilla university graduates just don‚t figure in discussions on Indian higher education. Admittedly graduates from IITs and IIMs have demonstrated great skills, talent and entrepreneurial ability in India and abroad. But it‚s also true that graduates from many of India‚s conventional universities have given good account of themselves, especially in the emerging global knowledge-linked economy. Today out of 10.4 million students enrolled in 18,600 colleges and 370 universities, 84 percent are in regular science, arts, humanities, social sciences and commerce degree programmes. A large percentage of post-secondary students opt for general degree programmes because of easy access, the even spread of arts, commerce and science (ACS) colleges across the country and their affordable tuition fees. This trend will persist despite imminent privatisation and rising costs of higher education. Therefore the challenge in higher education is to transform this large pool of ACS graduates into assets valued by the newly emerging knowledge economy. The recent high growth trajectory of the Indian economy is linked with the spectacular and completely unforeseen success of the computer software and related industries. IT- enabled services of the business process outsourcing (BPO) industry ‚ call centres and similar back office support services ‚ are the visible impact of globalisation of the Indian economy. Today around 700,000 young Indians work in the BPO industry, which contributes an estimated $17 billion (Rs.68,000 crore) to the burgeoning Indian economy. In the early years, Indian BPO firms were mostly engaged in low-end front office operations ‚ airline reservations, train schedules information, customer billing, technical trouble shooting and other routine services. Since then Indian BPO firms have moved up the value chain to provide sophisticated back office services related to health and hospitals, consultancy services for multinationals, handling actuarial work for insurance companies, offering investment advice, etc. Today the world looks to India with its huge youth popu-lation as a provider of knowledge-intensive services at globally competitive prices. Moreover, the domestic market for knowledge services is also slowly but surely maturing. The net impact of the rising demand for knowledge services is growing demand for general ACS graduates. India needs around 2.3 million IT/BPO workers by 2010 to retain its current global market share. The domestic retail and BPO market will need an additional 3.2 million and 1.5 million ACS graduates respectively three years from now.According to a Nasscom-McKinsey report (2005), only 25 percent of technical graduates and an even lesser 10-15 percent of ACS graduates are suitable for employment in the IT and BPO industries. Nasscom identifies two basic skills which these industries demand: English language proficiency (verbal fluency, listening ability and language knowledge) and basic cognitive skills (numeric capability, analytical skills, accuracy and keyboard competency). Therefore all mainstream ACS colleges should promptly introduce value-added certificate programmes to train their reportedly unemployable undergraduates in these skills.Two additional sectors on the high growth path are the knowledge processing outsourcing (KPO) and knowledge service industries. According to Evalueserve (an IT industry research firm), the Indian KPO sector will account for 71 percent of global KPO revenues estimated at US$17 billion (Rs.68,000 crore) by the year 2010. This high growth forecast of the global KPO industry presents a huge opportunity for India in terms of employment generation and wealth creation with the number of jobs in the Indian KPO industry predicted to rise ten-fold from 25,000 in 2003 to 250,000 by 2010. Likewise the knowledge services sector, which touches every aspect of human life ‚ health, transportation, communication, food, clothing, home, banking, insurance, entertainment, travel ‚ is also expanding. Both these sectors need ACS graduates to meet the explosive demand in knowledge service industries. Therefore ACS undergrad students should be enrolled in three annual skills building diploma programmes (such as digital literacy, communications, public relations etc) while reading for their degree programmes. If this proposal is accepted, all arts, commerce and science graduates will be equipped with three certified skills which would make them employable. Through the induction of skills development diploma programmes, colleges could become vibrant institutions producing armies of ‚Ëœknowledge workers‚. This scenario can become a reality if we convert all general ACS graduates into national assets. It is not an impossible task. The University Grants Commission initiated these activities in the Xth Plan period (2002-07). They need to be boosted in the XIth Plan.(Dr. Arun Nigavekar is a former chairman of the University Grants Commission and currently, Raja Ramanna Fellow at Pune University)