Sunday, July 08, 2012

A College in India 2: What Should It Do?

In India, the number of colleges have more than doubled in the last half decade. So, why do I still think that I should try set up a college? In fact, if anything, there is some sort of oversupply in India's Higher Education, with growth in college numbers as well as the number of degree granting institutions outstripping the growth in student numbers. Coupled with onerous and unnecessary regulation, India's Higher Education is almost an impossible business: Last year, more than 100 approved business colleges notified the regulator about their intent to wind up.

My thinking is that India has a distinct quality problem, rather than quantity problem (I have written about this before). India's Higher Education so far is a money-laundering mechanism for politicians, at least in most cases, and hence most of the development in the sector was of poor quality. Besides, everyone jumped into the field wanting to offer Business Administration degrees at Undergraduate and Postgraduate level, and the regulation allowed them little differentiation and little value to offer to students. Under these circumstances, the college closures are only to be expected.

Looking at the spread of Higher Education, however, one would find it difficult to connect to India's maturing service economy, where the buzzword is KPO (Knowledge Process Outsourcing, or skilled work outsourcing) rather than BPO (Business Process Outsourcing, or Outsourcing of Grant Work) and the companies are trying to move up the value chain. The skills gap remains acute and professionalisation of trades, except in the case of Accounting and Medicine, is virtually non-existent. These opportunities, however, are ill-served by most new generation colleges, which sells the dream of managerial jobs (which, given India's deeply embedded caste system, essentially means no hands on work!). The recent disillusionment with private sector colleges come from the fact that college degrees or diplomas given by these schools can hardly get any premium, and their graduates end up doing the same job that someone attending a state funded college, where fees are cheap but teaching is inconsistent, can get. 

In this landscape, I see three distinct opportunities. First, I see the opportunity for high end, high fee institution, which can differentiate itself with distinguished teachers and links abroad and with employers. Such an institution needs to be highly selective and offer in-country options for the talented Indian students who go abroad. Indian School of Business in Hyderabad has done this, and is highly successful. However, the opportunity remains to set up such institutions in other geographical areas as well as in other subject areas.

Second, I see the opportunity at the lowest end of fee spectrum, where, with committed teaching, smart technology and pedagogic innovation, vocationally relevant qualifications can be offered at a reasonable price. The training sector already does some of this work; however, there is an opportunity to do it within the scope of formal education, and I am sure it would be possible to receive government support in doing such a thing. These colleges, operating at an undergraduate level, may also offer integrated High School options, may be as a separate business, but possibly with shared infrastructure. 

Third, I see the middle market opportunity, where it is supposed to be most crowded, in niche segments, like Design, Journalism, New Media, Entrepreneurship etc. The sector is dominated by everything-under-one-roof mentality and niche positions remain wide open. 

The second and third proposition is geography independent and can easily be developed into a nationwide network. It is a space Indian training companies wish to get into, but formal education has a different appeal to the new Indian middle class and the proposition of a college is seen as quite distinct from the local training outlets. 

My idea, which I discussed earlier, is to develop a niche offering in the middle market segment, but I do think that we shall see exciting developments in the other sectors as well. I do think a private model will evolve, we shall possibly see life beyond entrepreneurial outfits and private equity, and smart companies, like NIIT and Aptech from the generation before them, will soon emerge. 


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