Advice for Foreign Universities Entering India

Challenges for Foreign Universities in India

Professional Services Training & Consulting

Sanjoe Tom Jose Rajesh Behera

Ernest JonesKrishna Yedla

Hari VijayKumar

A live training project in ZENeSYS Consulting Certification Program Participants learn consulting skills such as structured problem solving,

research and analysis to develop reports such as these.

For more information visit http://www.zenesys.org

July 2009

2 Professional Services Training & ConsultingCopyright © Zenesys & Kuber

CONTENTS

1. Executive Summary

2. Approach

3. Assumptions

4. Goals & Challenges

5. Recommendations

6. Summary


1. Executive Summary

» Education Institutes from outside India are considering entering the Indian Education market as Government of India is considering lifting restrictions on operating in India.

» India might be the world's largest single market for these universities.

» Indian education sector could pose certain challenges to them:» Government Interventions & Regulations» Maintaining Quality Standards» Cross cultural partnerships & joint ventures

Many of these challenges are peculiar to India.

» This study is investigating the partnership and entry considerations for global universities in the Indian market.


2. Approach

» We listed key factors that will impact this move

» We conducted Internet based secondary research to test and establish the validity of those key factors

» Models and operational success/failures were observed in other countries

» We rated them them in terms of their relative importance as a challenge or an opportunity

» We analyzed the the challenges and opportunities derive suitable recommendations.

» Prepared this report to provide help incoming universities to understand the implications


2. Assumptions

» The study was India centric and is applicable only to foreign universities planning to enter India

» Reliability of information on the Internet is assumed

» Foreign institution will primarily address issues in current inadequacies of higher education

» Study was more focused on higher education though some of the findings could be used for others also

» A partnership based approach for foreign university is assumed to be the way to enter India


4. Goals & Challenges


1. Government Interventions/Regulations

1.1 Lock In of Investment

• In face of low local Government & private investment in education sector foreign investors would be eager to avail the opportunity

• Although recent Government behavior can be termed favorable past developments indicates when the foreign institution bill is passed there could be strong clauses to prevent commercialization of education (Draft of Foreign Education Institutions Bill, 2007 & Yashpal Committee Report) which could hamper the prospects of such entities

• Rapid expansion of investment in Higher Education played an important role in success of foreign institutions in China

• Foreign schools are starting to set up field offices and research centers to explore the possibilities of bigger investment down the road (University of Michigan in Bangalore & ISB in Hyderabad)



1.2 Clarity in Regulation

• Initial years could be a period of lack of clarity in regulation as it happened in China where initial bill passed in 1995 got a proper form only by 2000 and is still undergoing changes frequently

• In cross-border education, there exists the possibility of disturbance of the existing policy environment and can throw out of balance, the regulatory mechanisms in the host country. In Dubai, cross-border policies regulate foreign state sponsored entities as if they were fully private, nongovernmental organizations, both governments assuming the other is providing oversight, but neither actively engaging in such a way

• Regulatory, cultural, and logistical challenges could abound in understanding regulatory framework which consists of a web of interrelated national, state, and local regulations and policies, which may get interpreted and applied with varying degrees of consistency



1.3 Salary Regulation/Reservation System

• In India reservation policy is usually deployed to win over the support of the marginalized or under-represented sectors of society

• Salary regulations & reservation system held foreign higher education investment back, despite the government's lifting of FDI restrictions back in 2001

• Supporters of reservation argue that in a caste-ridden and hierarchical society like India, it is desirable to find some ways of providing social justice and economic opportunities to all those who were deprived due to social and educational backwardness

• The IITs which remain a small number of centers of academic excellence amidst the plethora of mediocre higher education institutions in India were asked to implement almost 50% caste based reservation in 2008


2. Maintaining Quality Standards

2.1 Matching expert faculty at mother campus-Relocation/Local Recruitment• Finding well-qualified foreign faculty who are willing and able to live in India

for extended periods of time will be a challenge

• Local recruitment could pose a challenge as the western pedagogical approach is different from what is followed in India currently. Additional training might be required to help them to adapt

• Salary regulation could be another challenge since if the government imposes stringent regulations on salary it will keep quality talent on account of low remuneration

• Availability of trained teaching diasporas who may want to relocate to India is an advantage. Also for some it represents a more humanitarian commitment: bringing the best of the West to a developing country; spreading of rural &women education



2.2 Curriculum Content & Structure

• Command over English among students should not be a problem in higher education

• Pedagogical approach generally employed in Indian classrooms centers around lecturing by the instructor and memorization and repetition on the part of students

• Asking students to suddenly go from “sitting passively listening” to engaging in active class discussion and debating with their colleagues and instructors can take students and instructors far out of their comfort zone

• Be aware of differences within the educational systems. For example, the quality assurance process and the way universities are run can be different. Gaining an understanding of the educational system operates is crucial.



2.3 Attracting Foreign Students

• Exposure in an emerging market could be an attraction for business and management students. Lower cost is another attraction

• Students may not be willing to do the entire program in India as they will be apprehensive about the quality, limited job opportunities and difficulties in relocation

• Quality of life, food habits, course content and course structure can hold them back from taking such a decision

• Fresh enrolment of international students in domestic varsities was at 13,267 in 2004-05 and at 14,456 in 2005-06. This shows that inflow is too low considering the outflow

• Access to world class research facilities existing in India can drive them to come to India



2.4 Attracting Indian Students

• Immigration rates high on the agenda of a typical Indian student who goes to a foreign country for education –job opportunities, improved life standard, status in the Indian society

• Because of the same reasons many of them who are financially well off would still prefer to attend these universities in foreign land rather than home land. For others the cost has to be significantly lower

• In China, where the foreign institutions with high fees compromised on quality, due to fear of causing Chinese students to lose face (and thus losing the tuition-based revenues), are allowing the students to graduate basically without English-language skills—let alone without substantive competency in their major fields

• Still the target market is so huge that this tendencies can have substantial impact on student quality. MNCs operating in India are ready to recruit quality (foreign educated) talent



2.5 Establishing an efficient low cost model

• In India the output dividend in education is greater than the input costs. In a leading private B-School in USA, annual tuition fees can range from $15, 000 to $30,000 while in some of the top B-School in India, the tuition fees ranges from $4400 to $8000 per annum.

• Foreign universities will have to adapt to the low cost model which is followed in India to attract students.

• Such a low cost model implies lower remuneration for faculty, low cost infrastructure, research facilities-could affect quality

• But that also means low cost model developed for India could be replicated to other locations including mother campus- back end operation for the internationalization plan could be carried out from India which will result in a competitive model

• Private institutions (potential partners) in India demonstrates that this is possible


3. Partnership/Joint Ventures

3.1 Capability for cross-cultural management

•The management style of the partner should be an important consideration. Partners must be flexible, “open-minded,” and willing to make necessary accommodations for the foreign program.

•Some common mistakes committed by foreign universities in China :Not properly defined agreements so that they allow an enormous amount of flexibilityFailing to carry out due diligence - to really, really drill down into what the Indian party is saying to you, what its asset base is, even in educationAllowing government relations to be handled by the local party

•Handling the aspirations of local support staff, proper communication with them are some of the other challenges.

•Differences in interpretation of what common terms mean can create confusion.


3. Partnership/Joint Ventures

3.2 Ensuring partner contribution in their strength areas

•In 2006, just 39 percent of institutions made a specific reference to international or global education in their mission statements. More commitment is required.

•Key factors in selecting a partner should include the potential partner's reputation and geographic location (i.e., with sufficient demand for higher education and enough students able to pay foreign tuition rates).

•The primary role of a Indian partner is to provide facilities including classrooms, dormitories, cafeterias, and office space, as well as operational support by, for example, obtaining relevant licenses and handling inspections. Another key area of local partner contribution is know-how of operating a low cost model

•Maintaining ultimate control of the academic components of the programs, to protect the reputation and accreditation of the home campuses is required.


Growth Opportunity

• India will fall short of real talent by about - 5.3 million

• Growth of Higher education needed per five year plan – 37 %

• Shortfall in number of seats in colleges required and available - 45 %

• Creation of 1500 colleges and Universities to reach 15 % GER ( Gross Enrollment Ratio ) by 2015

• Increasing capacity of existing IIT’s and IIM’s by 200 %

• Sharp difference in the no. of PHD’s in India and US – 67000 PHD’s and first class professional in USA compared to 8000 PHD’s in India

Age Wise Demographic Distribution

32%

28%

40%

Infants & Kids(0-15) Youth(16-29)Middle Age(>30)


Opportunity for Rural and Women education

• The 2005 GPI (Gender Parity Index – which is a ratio of female GER to male GER), compiled from Census and University Grants Commission (UGC) data, was estimated at 0.75. When compared to a relevant-age population ratio of 0.91 (i.e. female population aged 18-24 as a ratio of male population aged 18-24), which shows that women are significantly under-represented in higher education.

• Compared to the overall GER of the country (7%-11%), the GER for Schedule Castes is 6.7% and for Schedule Tribes 4.9%, that stay in rural parts of India.

• While the overall GPI for India stands at 0.75, the GPI among SC students is 0.64, and among ST students 0.55. Thus women in these disadvantaged categories are considerably less likely to participate in the higher education system than women in general.

•These indicates that there is tremendous scope for promoting rural and women education and thus fulfilling social responsibility.


5. Recommendations

• Actively engage with accrediting bodies—that is, by inviting them to visit the India operations and maintaining transparency, to ensure that the accreditation and academic reputation of the home institution are protected

• Staffing arrangements that involve foreign faculty without requiring them to be on-site for extended periods

• Attractive offers for trained Indian diasporas to relocate to India• Students can and do adapt to Western pedagogical techniques/curriculum but may

need time and help to do so; it is critical to create environments in which “it is safe to challenge the teacher” and colleagues

• Efficient exchange programs with the mother campus to ensure a mix of students at both the campuses

• A cost model which will not keep away any potential candidate• Taking time to build solid relationships with partners, establishing open lines of

communication, and meeting regularly face-to-face can help mitigate any issue.• Innovating resource sharing plans should be devised to make maximum utilization

of existing resources: infrastructure, research partnerships etc


6. Summary

For education institutes from outside India who are considering to enter the Indian education market the major partnership and entry considerations are:• How to handle government interventions and regulations which could come in their way

while providing world class education• How can they ensure that the quality of education is maintained and brand value is

protected when expanding globally• How they can attract and maintain a good mix of students in their campuses• How to design course structure and content which will be of maximum benefit to all the

stakeholders• How to remain profitable while adopting a low cost model which suits local needs• How to establish a mutually benefiting long term relationship with the local partner with

both parties contributing according to their strengths

Key focus should be on the following areas:• Actively engaging all the stakeholders including local partners, accrediting bodies• Devising the course structure to maximize utilization of foreign & local faculty and

resources• Cost model & structure to attract quality mix of student talent• The ones who adopt an innovative solution to address the challenges is likely to do well