Friday, January 23, 2009

Day 6 & 7: Moving Forward in a Maelstorm

I actually had a good day today. Relatively, at least. This is the first time in many weeks a Friday evening feels like a Friday evening, when I can cosy up with a book somewhere for a well-earned rest after a hard day's work. I know why this is happening. I travel too much, run around too much. It upsets my routine - I work odd hours at different time zones - and while I am working so hard, the work never actually ends. It keeps coming as I hop from one place to another, one project to another. Then, when I come back, I am like a Zombie for at least a week. I fail to allow myself the rest, or if I try to do this, others jump in. So, I live on unmade beds and dusty kitchens, my car does not start and often important mails get lost in the interminable pile.

I am feeling settled now because I was in England for a while now. I did go to Ireland for a couple of days, but that was not too long to disturb my schedule. I am more or less coming back in step in now, though I can see mountains of work as I look around. Besides, this week was productive, full of ups and downs, but in the end, I got somewhere.

One thing I do not like in what I do is the focus is too much on short term. The more difficult the market becomes, the more short term everything becomes - resulting in a frenzy, almost a stampede. I lived as a NIIT salesman for a number of years, and that was not cosy at all. There were constant pressures to achieve growth, all the time. But I remember Raji Pawar talking in one of his conferences [with us, regional managers] where he talked about how funding for education ventures should be different from the funding of software businesses. Basically, he was saying that these two businesses give different types, and levels of return. Hence, the investor expectation should actually be different in these two businesses. Those days, NIIT used to be one business - training and software - but later they split it into two. I would think this short term/ long term investment objective was one of the key drivers for that decision.

Even after I have left NIIT, and it is five years now, I remembered that discussion. And, that sets the perspective of my thinking when I see the privately funded education spreading fast in India. In fact, this will probably be one of India's biggest growth industries today, and after the global financial crisis, as money leaves real estate and stock market investments, education is becoming the next hottest destination. I believe in the power of enterprise and the individual investor's ability to innovate and improve, while government bureaucrats are unable to do either, by design. However, one of my over-riding thoughts is how sustainable is the model of private investment in education in India.

This is an interesting point. No doubt, private investment in education is needed. This is needed for capacity building and the country's long term competitiveness. Government can not, would not be able to create the kind of explosion of capacity that we are going to need. So, some kind of private participation is inevitable. The question is how much and in what form.

My fear is this: If you look at the education market in major Indian cities, there seems to be a glut in business schools. There are dozens of business schools. All of them charge quite a bit of money, though there seems to be a price pressure forming on how much an MBA can go for. However, even more are being initiated. This is more because of economic reasons: education is big business, and there is a lot of capital on flight from the stock and real estate markets.

However, we have seen this before, there will soon come a point when education institutes will fail. They sure fail in every country, but in India, before they close their doors, they will do silent harm by offering low quality teaching and selling degrees. This is obviously because the regulatory framework is flawed - too lax where they need to tighten the belt and too tight where innovation and enterprise need to be allowed in.

But I think the key point was what Raji Pawar told us. He thought investments in education should be made with an expectation of steady long term returns. He thought investors who seek such return, like pension funds who would want to invest in predictable, no-surprises business, will be ideal for an education venture. However, looking at the current spread in India, you can see the problem in the 'quality' of capital. Besides, this quality of capital issue also distort the market and bad capital drives away good capital from business sectors. I am sure the government is doing a lot, but it sometimes feels that they are trying to do too much.

And, we unfortunately have a fairly unimaginative HRD ministry, which is unlikely to change even if there is a change of government after the elections. HRD ministry, unfortunately, is seen as a retirement place for ministers in India. Unfortunately, that too is short term thinking.

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