INDIA: Selling services or spreading light?

Over the last 20 years, the growth of the global middle class has driven up demand for higher education. A global market for education is operating with new forms of information-ranking systems to guide consumer choices.

Institutions and some governments have responded by promoting their brand of learning and marketing education services to those who can afford to pay. Part of that market has been the creation of branch campuses. A rash - or mini epidemic - broke out in the Arab Emirates with spots in Singapore, China, South Africa, Vietnam and Australia.

India, despite rapid growth in wealth and a large under-served population of young people, was quarantined, isolated by government regulatory barriers. But that may be about to change.

Last year's general election gave the Congress Party a majority that allowed it to create the first single party government in 20 years. The new cabinet includes a reform-minded Minister for Human Resource Development, Kapil Sibal. Unconstrained by leftish coalition partners of the last administration, Sibal is pursuing a reform programme that aims to simplify the national regulatory framework and allow foreign universities to set up campuses or enter partnerships with Indian institutions.

The new government wants to increase the numbers of young Indians going to higher education and the quality of the teaching they receive. Financially, it cannot afford to create the necessary number of high quality places in the public sector so must look to foreign direct investment in Indian higher education.

Tactically, it cannot lift quality without a significant knowledge transfer from outside India drawing world-class providers to act as beacons of excellence and create some competition. One path to both ends is inviting foreign universities to operate inside the national borders - either as sole proprietors or partners.

So what do presidents, provosts and vice-chancellors of the world's leading universities have to contemplate as Minister Sibal comes to call? (And he, proud Harvard alumnus, has already been visiting the east coast of America.) There are plenty of logistical and technical issues to contemplate: from the likely reactions of existing international partners to the challenges of financing and managing exchange rate risks.

But there are also the prior questions: "What business will you be in, in India? Are you selling education services or spreading the light of knowledge?"

Is the primary motivation to establish a 'commercial presence', to use the language of the General Agreement on Trade in Services? Or is it to continue a tradition of creating, protecting and transmitting knowledge that has persisted for 1,000 years or more?

As they think about this simplistic duality of purposes, academic leaders should look closely at the experience of those who went before them, regardless of industry and era. They can start with the traders and missionaries.

The officers of the East India Company knew why they were in India. From the arrival of their first ship in Surat in 1608 and their exemption from customs duties in 1717 up until the imposition of English government regulation in 1773, they were driven to increase trade and profit.

They displaced the competing Portuguese merchants, opened trading posts in Calcutta, Bombay and Madras and even collected revenue for the Mughal Emperor. Their adventures were driven by a desire for profit and market share and they were serving the demands of a growing middle class that wanted tea, cotton and spices as well as a return on investment.

The company's officers over-reached, seeking greater profits and personal rewards, while the company as a whole became burdened by military expenditure necessary to maintain security of supplies and certainty of production. Facing collapse, it was placed under a degree of parliamentary control - much like an American bank of recent months.

The missionaries and travelling scholars of the same and subsequent eras also knew why they were in India: to learn, to document, to codify and to proselytise. The Jesuits arrived in 1542 and have had a continuous presence since.

From their printing press and the first seminary in Goa they maintained a commitment to education and currently have 20 colleges in India. They were driven by faith and piety - the salvation and perfection of all and by the search for new knowledge and an understanding of the world.

What they discovered in India were the complexities of caste and the strength of doctrines and belief systems that had endured for centuries. There was only a small place for new institutions of worship so that after 450 years, Christianity is still only a small part of India's religious life.

Whatever their fate, the merchants and missionaries knew and largely kept to their primary purpose. The challenge for today's university leaders is to understand what drives them to diversify into other lands or regions.

What combination of push and pull factors leads academic leaders to open branches in places six, eight or 12 time zones away, where the languages and culture are markedly different?

The push factors include institutional mission, reputation, national strategic advantage and academic culture. First among these is institutional mission: many established universities in the developed world have adopted or renewed a commitment to "internationalisation" in the past 10 years.

It is sometimes expressed as the aspiration to be a 'global institution' or, in the case of the University of Pennsylvania, to "think globally and act locally". Its practical expression comes in many forms: in cross-border partnerships, diverse student bodies, compulsory study abroad for undergraduates, faculty from all parts of the world and research and service that transcend geographic borders.

And for some, such as Cornell, New York University and the University of Wollongong, it means branch campuses. This quest for internationalisation is linked in part to institutional reputation. A large international student enrolment and numbers of foreign professors are regarded as hallmarks of excellence and they are even factors in some ranking schemes.

Marketing materials also showcase diversity and international engagement. Having an outpost in fashionable or economically significant parts of the world also burnishes the brand or reputation.

Sometimes branch campuses are expressions of a broader strategic interest. This is most apparent for the nationally supported systems of higher education where the state can foster or promote cross border provision.

The Australian and UK governments promote the trade in educational services for economic and diplomatic reasons and encourage institutions to deliver services in other countries. This is not a trivial endeavour. For example, there are already more than 200,000 international students studying for an English higher education qualification in their own country.

Some of these centres are 'branches', such as the University of Nottingham clone with matching bell tower in Gansu province in China, and some will be in less elaborate branches and partnerships, such as the Nottingham branch at Jalan Broga in Malaysia.

Traditions and values can also shape decisions about branch campuses. An institution's intellectual culture - one that affirms the role of higher education in promoting greater equality in societies by providing access to learning for people regardless of class, caste or gender - may be influential.

Opening branch campuses in developing economies or highly stratified societies may increase the opportunities of women and disenfranchised minorities to gain a higher education, or to acquire particular sets of skills that have traditionally been the preserve of elites.

This may sit comfortably with the values and traditions of schools and colleges and enrich the lives of faculty, administrators and students. It will also raise questions of who the institution should serve, how it will select students, price its services and offer financial support.

India's complex caste system, large income disparities and huge unmet demand for higher education among the middle class will create philosophical and administrative challenges for academic leaders.

These push factors may be mediated through boards or councils, through academic senates or convocations and with or without fiscal incentives from the state or individual or corporate donors.

They are not always distinct, separable or clearly expressed. Sometimes they are bundled into strategic plans and marketing programmes. At other times they are tied to existing partnerships with institutions in other countries symbolised by faculty exchange agreements, memoranda of understanding and study abroad centres that seem to populate all modern campuses.

Regardless of how they are channelled, the strength of these individual factors that push institutions to internationalise is amplified by the pull factors that attract academic leaders to new ventures. These pull factors follow the same channels and are often intertwined. They include financial incentives and potential revenue, unmet demand and opportunities for meaningful and innovative research and service.

The largest financial inducements are offered in the Emirates. These can be in the form of access to land to build and capital or subsidised loans to finance new construction in the education cities and 'free zones'. Or they can be cash, such as the reported US$50 million gift to New York University to show good faith and induce President John Sexton to consider opening a campus in Abu Dhabi.

They can also be smaller, such as the A$3.5 million (US$3.1 million) refurbishment costs for a central business district location for Carnegie Mellon in Adelaide. Alumni and donors can also offer financial incentives.

Regardless of form and scale, these incentives reduce the fiscal risk of branch campuses and those risks are real as can be seen from past failures of US university branches in Japan. The other source of financial incentive is tuition revenue, especially if the fees are set with an eye to the global market value of the qualification rather than just the local cost environment.

But over-stated tuition revenue and enrolment assumptions led to the closure of branch campuses in a previous wave of expansion. In June 2007, the University of New South Wales abandoned its Singapore branch just months after it began operating. Even though it was structured as a charitable body and was welcomed by the Singapore government, enrolments were low and its continued operation unsustainable.

Even if enrolments are strong, revenue may be constrained by the prices of similar courses offered by local competitors and other regional and international providers. The capacity of local students to pay the fees may also be an inhibitor but the numerical size and relative wealth of the Indian middle class reduces the significance of that factor.

The more potent constraint is the notion of affordability and the university's mission of providing greater access. Priced too high for local consumers or without merit and needs-based scholarships, a branch campus may end up reinforcing social divisions and serving only the rich.

Unmet demand is another factor attracting universities to set up in India and other nations. Sometimes the demand is for specialist programmes, such as Mellon's public policy course in Adelaide, but more often it is for the courses aligned with the global job market - information technology, accounting, and economics and business studies.

The demand is also shaped by growing wealth, diversification of the domestic economy and increasing individual and family aspirations. Some of it is demand from people - notably women - who for reasons of culture, faith and custom are unable to study away from their family or society in another country.

Whatever its source, this demand and the opportunities it presents for enhanced reputation, for fulfilling a mission to serve and "gladly teche" pull academic institutions to other nations.

Serving that demand wherever it lives is part of the mission of the modern university, as are pursuing new knowledge and serving communities regardless geography. The problems facing to-day's and tomorrow's worlds know no geographic or cultural boundaries.

Disease, food security, clean water, religious intolerance and racial hatred ignore university catchment areas just as much as they ignore national borders. The opportunities for research and service in India and elsewhere draw scholars and students alike, and with them their home institutions.

The push and pull factors will coalesce in distinct ways for each university as it considers the emerging opportunities in India. The balance between them and the weight given to individual elements will vary with institutional history and aspiration.

Sometimes it will make good sense to stay at home. Other times they will follow the missionaries and merchants and look for fame in India. Some will fail or fall short of hopes and expectations. The likelihood of failure will be diminished by a period of quiet reflection about how to answer that question: "what are we doing in India?"

* Alan Ruby focuses on globalisation's effects on universities and education around the world at the University of Pennsylvania. He has had professional experience in more than 20 countries at all stages of economic and social development.

COMMENT:

Very interesting perspective by Dr. Ruby. I believe there are three broad segments of institutions which are having interests in India:

1) prestige-enhancing (top-50 research universities)
2) prestige-seeking (next-tier of research universities) and
3) revenue/profit maximizing (revenue for public institutions and profit for "for-profit" institutions). The first two segments are primarily interested in India for "spreading light" and in the process gain prestige through internationalisation, while the third segment is primarily looking to "sell services" and earn revenue/profit.

Interestingly, despite different ends and missions, all segments of institutions are facing challenges for entering India. The current government is interested in attracting the first and maybe the second segment, but is very reluctant to attract institutions with a profit/revenue motive. Yale has just announced its interest in engaging with Indian higher education (bit.ly).

Policymakers should not forget that the financial investment needed for expanding access (US$25 billion projected by the end of 2012) cannot be met by government itself or prestige seeking institutions; it will come from the profit/revenue maximising institutions. Like in the US, India should focus on creating effective regulatory mechanism for monitoring these institutions, instead of creating policy barriers to bar them from entering India. India needs both the high quality teaching and research provided by the research institutions, and also the massification which could be catalysed by the next tier of institutions.

Dr Rahul Choudaha
www.DrEducation.com
New York

Comment:
While foreign education providers bill gets underway in Indian parliament, I see things taking an "Indian course", as far as the entry of foreign education providers is concerned. And the pull and push mentioned is more likely to be sideways! I don't think a Harvard would want to rush into it. And among those who would want to, some are already in India in some ways. Of course more could want to. Serving the un-met demand by attracting Indians as foreign students into the United States is one thing, but coming to India to do it would be a different ball game. One would have to build a robust structure. Overstated tuition revenues just shows universities are capable of making mistakes themselves!

Indeed finding right partners would be one of the challenges, in case people handling the process are not up to it. I have seen some established international education providers trying to do it by making do with .....well.

Also, it is not just the Indian partners. It is also the foreign provider that would matter as much if not more.

Anil