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Some object lessons

Collaboration with foreign universities needs a pragmatic business model

Written by Amitabha Ghosh |
October 21, 2011 12:24:41 am

At the first India-US education summit that took place last week,the aim was to solicit American cooperation (read investment) in India’s higher education sector. The intent is praiseworthy but the action represents a lack of understanding of India’s problem and how the US can be made to realistically help. First,the problem,as enunciated by HRD Minister Kapil Sibal: to provide college education to about 30 million young people,India needs to build 1,000 universities and 55,000 colleges in the next 10 years. To solve the problem,the HRD ministry is reaching out to the US — to solicit investment in setting up foreign universities,to attract teaching talent and to set up collaborations with Indian counterparts.

First,some ground realities of how the higher education business works. The US higher education system owes its success to the quality of human resources it attracts. Walk the corridors of an Ivy League university and you see the best from across the world employed there. This is a business sector where the primary asset is quality human resources. The salary structure with the Sixth Pay Commission is not competitive with the commercial sector in India or US universities. India’s compensation structure is just not competitive to recruit global talent.

There is some sort of misconception that foreign universities setting up shop in India will provide quality education at 15 per cent of the cost. This is again not realistic. Ivy League universities have to access the same talent pool to deliver quality education: thus,if a Harvard professor teaches four classes a year,the revenue generated by these four classes need to be considerably more than his/her salary. Thus,the US-India education summit might create some opportunities whereby a couple of eminent professors show up in India,but the agreement will hardly convince US faculty to seek appointments in India. The US department of state can hardly afford to pay for US professors to either actively get involved in India or relocate to India.

Second,there needs to be a business case for a US university to get involved: and,at present,there is none. Let’s see how this will work out. The decision will likely be made by a vice-president of business development at a university. He or she has to justify the investment and think of the return of investment. Universities in India are non-profit,and even if they were for profit,according to the Foreign Educational Institutions (Regulation of Entry and Operations) Bill,they cannot repatriate profits outside India. This clause is the death knell of any possible collaboration. It will ensure that such universities do not get involved beyond token participation or participation that benefits the fee-paying student that a US university depends on for their survival. If a university like Harvard sets up a centre in India,this will be an investment to meet its own needs,like recruit talent or add to the global dimension of the university for the benefit of students. Notwithstanding the state department’s best intentions,without a solid economic justification,FDI will not materialise.

Some perspectives need to be corrected. That the US should spend to train personnel in India,who in future would service the US,is indefensible. Imagine the political naiveté of the state department asking Congress,in the present budgetary environment,for a billion dollars to could train Indian graduates who in turn would displace American workers. Should the US be interested in reducing the flow of Indian students to the US,and instead try delivering quality education in India? Indian students who pursue undergraduate degrees in the US generate revenues for the US. So why should the US be interested in getting rid of a revenue source?

A discussion on Indian education almost begs the question as to why India is not opening up its higher education sector by making three simple changes: first,making universities legally for-profit entities,second,by allowing foreign entities to repatriate profits and third,by providing compliance requirements that guard the interest of a student as well as provide a clear,realistic and achievable goal to an investor.

Even if these three conditions are met,it is unlikely the US universities can address the dire needs of India’s higher education sector. It is not the brief of Ivy League universities to be MNCs like Coca-Cola,aggressively seeking new markets,pursuing profits and managing growth. One reason is this: rapid expansion can dilute the quality of education delivered and hence dilute their brand. The question that we are finally led to: is why is the government not considering opening up the higher education sector to private participation. As with all spheres of economic activity where the private sector operates,there will be unscrupulous market players and unethical business practices at times. But that does not take away from the broader fact that the model of for-profit universities has thrived in the US,and the marketplace can make the necessary differentiation.

Sibal’s hard work will yield little fruit if the right operational model is not pursued.

The writer is a scientist for the NASA Mars Exploration Rover Mission,

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