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Document: Education

The untappedopportunity

An Evalueserve report explores thedemand for research professionals in

India over the next 10 years

Industry-led research and developmentis witnessing rapid growth in India.Over 200 multinational companieshave initiated research and develop-

ment operations domains like IT/telecom,biotechnology, pharmaceuticals, chemi-cals, and consumer goods.

Public-private partnerships have seengrowth with both industry andacademic/research institutions benefitingfrom the process. Several MNCs are cur-rently meeting their requirement of R&Dprofessionals by hiring expatriates for sen-ior positions and training qualified engi-neers/science graduates in India for entry-level positions.

However, in the next five to 10 years,lack of suitably qualified and trained tech-nical professionals could be an impedimentto the growth of the R&D industry. Thereis bound to be a demand for research pro-

fessionals in the Indian R&D industry overthe next 10 years. There is an opportunityfor international technical universities andresearch institutes to assist India in meet-ing this demand for trained R&D profes-sionals. This article provides an overviewof various possible business models thatinternational universities could consider forestablishing their presence in India.

The Indian R&D industry was valued at$8.5 billion in 2005, representing around1.16 per cent of India's GDP. Evalueserveestimates the Indian R&D industry to growat a CAGR of 26 per cent to reach $27.5billion in 2010. The R&D spend is expect-ed to grow further at a CAGR of 19 percent over the period 2011-15 to reach$64.5 billion in 2015. Thereby the contri-bution of R&D as a percentage of GDP isexpected to grow to around 2.0 per centby 2010 and 2.6 per cent by 2015.

This translates into an additionalrequirement of approximately 294,000researchers during 2006-10 and another300,000 researchers over 2011-2015.While the Government of India is rampingup its higher educational infrastructure byopening new institutions/universities andexpanding the teaching faculty and infra-structure in the existing institutions; thereis an opportunity for foreign institutions /universities to set up their training andresearch institutes in India. These are somebusiness models that international universi-ties could consider.

Offer higher educationHigh growth in the services industry

coupled with increased participation of theprivate sector in education has resulted indemand for specialised courses and train-ing in India. Given growth projections of

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the Indian services industry, the country islikely to witness tremendous activity in thehigher education sector in the next five to10 years.

In a developing country with a popula-tion of more than one billion people, thepressure to get employed is very high.Therefore graduates aspire for a master'sdegree at an early age. The trend is furtheraccentuated by an inclination towardscourses in science or technology, whichoffer better employment opportunities.

However, in the current scenario, theoptions available to an aspiring Indian stu-dent are limited by the lack of the requisiteinfrastructure in higher education.Therefore, a large section of the studentsspend exorbitant sums to enroll themselvesinto private Indian institutes and foreignuniversities. As a society where emphasisis laid on education and distinction, parentsare willing to make the additional invest-ment for their child's future.

A student could pay up to $10,000 peryear for a post-graduate course in an Indianprivate institute and around $30,000 peryear for education in a foreign university.Earlier, these courses were restricted to therich and scholarship-holders only.However, increased access to soft educa-tional loans has made expensive highereducation accessible to a larger section ofsociety. Student loans have been a majorfactor in catalysing the growth of the pri-vate sector and foreign education.

Furthermore, the market generallyrewards professionals with an advanceddegree with high-paying jobs. The degreesopen attractive opportunities, not only inIndia, but also overseas. Therefore with theoption of paying out the loan later, it suitsIndian students to pay high tuition fees.

For example, The Indian School ofBusiness (ISB) Hyderabad, which has atie-up with the Kellogg School ofManagement, the Wharton School,Pennsylvania and the London School ofBusiness, and charges more than$30,000 for a one-year MBA course. Theschool attracts 500 students annually andthe placement salaries go as high as$66,000 per annum for a domestic offerand $233,800 per annum for an overseasplacement.

International universities could play asignificant role in expanding access to highquality, higher education in the country.Given a choice, students would prefer to

enroll into a foreign university at an Indiancampus, which offers an internationalexposure through faculty and studentexchange programmes. Therefore, a for-eign university in India would offer the bestof both worlds - high quality education atlow cost.

From the university perspective, it cancreate a sustainable business modelthrough larger enrollments at a lower feestructure. International universities canenter the Indian market, either through col-laboration with an Indian institute or on astand-alone basis. Some examples of for-eign partnerships in education in India are: v Staffordshire University has partnered

with Jadavpur University and Universityof Madras to offer masters courses, pri-marily in engineering.

v The Indian Institute of Science (IISc),Bangalore and Cardiff University,Wales, UK, have partnered to co-oper-ate in training and research in the fieldsof science and technology. The collabo-ration includes exchange programmesfor scientists and students, and sharingof information related to research activ-ities.

v The Maastricht Economic ResearchInstitute on Innovation and Technology(MERIT) at the University of Maastricht,Netherlands tied up with the Centre forDevelopment of Advanced Computing(C-DAC), Mumbai in July 2006 to starta two-year project called FLOSSWORLDsupported by the European Union (EU),in the area of open source software.The project has been implemented inseveral countries.

0

10

20

30

40

50

60

70

2005

8.5

27.5

64.5

2010 2015

The Rapid Rise:Growth of Indian

R&D Industry

Source: Evaluserve

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DOCUMENT: EDUCATION

Conduct international researchprojects

The Indian arm of the university canalso conduct research on international proj-ects in close association with the parentuniversity. The cost of conducting researchin India is much lower than that in devel-oped countries. The differential could be ashigh as 30-40 per cent. For example, thesalary of a chip designer with a master'sdegree and five years' experience is about$7,000 a month in the US. Whereas inIndia, the salary for a similar profile wouldbe about $1,500 a month.

Similarly, the annual cost incurred for asenior engineer in the US is about$150,000-200,000, while in India anequivalent would cost about $30,000-40,000. On other related costs, such asinfrastructure, constructions, etc, Indiaagain scores far better. Moreover, Indianswork for longer hours as compared to theirWestern counterparts. Therefore, India cre-

ates a much higher value per dollar that isspent on R&D.

However, the value cannot be estimat-ed by cost alone. Given the quality and sizeof the talent pool and the time zone advan-tage, conducting research in India wouldresult in shorter time-to-market for productdevelopment and innovations.

In addition, the university can staff stu-dents and interns in live research projects.This would not only add tremendous valueto their experience and enrich their training,but also increase their job opportunities.

Conduct research for local industry

The university can also offer consult-ing/advisory services and training pro-grammes to local private and public enti-ties. Some examples of partnerships of uni-versities and the private sector are: v IBM has partnered with IIT Mumbai for

collaborative research on technology;Intel has partnered with IIT Madras forresearch on speech technology; Wiprohas partnered with WollongongUniversity, Australia in the area of edu-cation and research in IT services.

v Bharti, the largest mobile serviceprovider in India, has partnered with IITDelhi to establish the Bharti School ofTelecommunication Technology andManagement for technical researchand education.

GOING forward, the public-private part-nership in education and research needsto be strengthened as both have animportant role to play in building the sys-tem. A cross-border partnership at amacro level creates a lasting impact onthe society. It creates a platform for cre-ation of jobs, cross-border employment,cross-pollination of cultures, technologytransfer, sharing of best practices and bi-lateral relations, to name a few.Countries, such as the US, the UK,Switzerland and India have made suc-cessful attempts in this direction. For example, The Department of Science& Technology (DST), India and theSwiss National Science Foundation(SNSF) have partnered together with theaim of linking together research groupsfrom Swiss and Indian institutions. EPFL,VPRI of Lausanne, Switzerland plays akey role as the academic and researchpartner in this programme. The approxi-mate project budget is about $46,500.EPFL is also responsible for a number ofother private and public alliances, suchas the Indo-Swiss Academic Alliance,Indo-Swiss Scientific & TechnologicalCooperation, Indo Swiss Bilateral

Research Initiative and the Indo-SwissJoint Research Programme.Furthermore, EPFL has collaborated withpremier Indian technical universities,such as the IITs, IISc and IIIT for cross-border student internships and projects,creating a mix of international minds.The number of students enrolled for thePhD programme at EPFL has been 43and 51 for 2005 and 2006, respective-ly. The institute conducts joint researchprojects at the IIT campuses. Facultiesare brought in from both Switzerland andIndia. The Swiss project partners includeETHZ, IDIAP, University of Lausanne andUniversity of Zurich.Similarly, the UK-India EducationResearch Initiative (UKIERI) is aimedtowards improving higher educationaland research, and create sustainableinstitution to institution links betweenthe UK and India. The programme isbacked by the governments, the BritishCouncil, the education sector and busi-nesses. The main activities of the pro-gramme include promoting research part-nerships between centres of excellenceand developing joint training courses.

JOINING HANDS

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v On the other hand, Pramati Technologies, a developer in Java 2Enterprise Edition (J2EE) applicationserver technology based in India, haspartnered with leading global institu-tions, such as MIT Massachusetts,University of Muenster Germany, IIITBangalore, XLRI Jamshedpur, NationalChiao Tung University Taiwan, andTsinghua University China to introducecourses in Java technology.

Incubate technology start-upsIncubation parks within university cam-

puses are common in developed countries.These parks help research professionals incommercialising their ideas and innova-tions. The university can provide the nec-essary IP, infrastructure, advisory andtechnology support to these technology-based business start-ups. The financialresources can be provided by the venturecapital community, which supports suchinnovation parks backed by universities. AsIndians show a strong inclination towardsentrepreneurship, the technology-basedbusiness incubation model is likely to besuccessful in India.

Indian Institute of InformationTechnology (IIIT) Bangalore is amongst theleading institutions that encourages a tech-nology-based business incubation ecosys-tem. The incubation park is based on theStanford University-Silicon Valley model toencourage entrepreneurship amongst stu-dents. In the recent past, two companies,namely 'Backend Bangalore' and 'BedrocQ'have been incubated by the park.

Conduct social researchThe government encourages R&D in

domains, agriculture, space, defence,healthcare, alternate energy, pollution-control and calamity-control. A few Indianuniversities specialise in carrying outresearch in some of these fields. Theinternational universities can collaboratewith them to conduct joint research andshare best practices.

And finally...The government of India encourages

the diffusion of higher education andresearch in a number of ways. It offersspecial subsidies and maintenance grantsto state-funded institutes including thereputed establishments, such as IITs and AIIMS.

States such as Karnataka have addition-al norms to support public subsidies to theprivate sector. For foreign institutions, a100 per cent FDI is allowed via the auto-matic route in the education sector.

Over the years, the government hasbeen the largest spender in R&D and educa-tion. In 2004, it contributed 85 per cent ofthe R&D spend in the country. Governmentbodies, such as the Department of Scienceand Technology support R&D through anumber of initiatives. In terms of interna-tional regulations, it has adopted the WTO'sIP regime formulated in 2005.

Students in particular, are offered multi-ple advantages in the form of soft loansfrom nationalised banks, grants-in-aid, feesubsidies, and so on. In addition, studentsare offered attractive education loans.

In December 2005, the outstandingloans of the public sector banks under theeducation portfolio stood at $2,091 mil-lion. Out of this, new loans disbursed in thefirst three quarters of 2005-06 was$2,705 in 1,76,870 accounts. Moreover,loans up to $16,650 were given to merito-rious students without collaterals.

India is fast becoming a country ofgrowing importance to the world econo-my. The real strength of the country doesnot lie in its population, or cost advan-tage, but in its skill-set. An internationaluniversity in India can not only providehigh quality training to the Indian techni-cal graduates, but also leverage the talentpool for international R&D endeavours.Therefore the entry of foreign universitiesin the Indian higher education sector cre-ates a win-win situation for both the uni-versity as well as the Indian educationand R&D industry.

Research partnerships: betweenuniversities and the private sectorin India

IIT Kharagpur undertakes research incollaboration with MNCs, such as,Motorola, Compaq, Oracle and GECaps.

IIT Chennai and Hewlett Packard (HP)run a joint laboratory at IIT's campus.This lab develops technologies foremerging economies.

HP Labs also partners with IIScBangalore, BITS Pilani and the NationalInstitute of Design, Ahmedabad.

Intel has formed alliances with the IITs,IISc and IIIT-B to conduct CurriculumDevelopment Workshops for the facultyof engineering colleges, which helps tobridge the gap between academia andindustry.

Intel strives to promote R&D activitiesbased on its design, through its IntelTechnology Laboratories (ITL) at IITMumbai, Chennai and Delhi; IIScBangalore, and the National Center forSoftware Technology (NCST), Mumbai.

GM has tied up with 21 institutes,including the IITs and IISc. It conductsresearch with IISc on fuel alternativesand light-weight engine materials.

IBM collaborates with the IITs, C-DACPune, the Indian Institute ofInformation Technology (IIITs), and IIScBangalore.

Texas Instruments has set up its DigitalSignal Processing (DSP) laboratory atIISc Bangalore and five IITs.

Samsung undertakes designing ofcolour televisions, washing machinesand air conditioners in collaborationwith IIT Delhi's Industrial DesignDepartment. It also has a consumerlaboratory at IIT Delhi that undertakesusability studies

Hindustan Lever collaborates with theIITs, IISc and the University ofMumbai's Department of ChemicalTechnology (UDCT).

Employment Opportunity in Indian R&D Industry2005 2010* 2015*

PhDs Required 27,000 56,000 86,000

Post-Graduates Required 80,000 168,000 258,000

Graduates Required 159,000 336,000 516,000

Total Researchers Required 266,000 560,000 860,000

* Projected Source: Evaluserve

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