India 101 for Global Education Start-Ups

In discussing a global education business, someone asked me why one should do India if India is complex and one of the most difficult in the world. 

This echoed my own position as it used to be. When I was trying to raise money to do UAspire, if anyone asked which countries we were planning to aim for, my answer used to be - "not India"! It was an awkward answer given my Indian heritage and connections, but one I thought was most pertinent, given that we were raising a small amount of money. And, sure enough, my assumption was right - despite getting most of our time and effort in India, all of our signups came from China, where we spent a lot less time! 

However, that was 2012. My views have changed since, not least because of the economic instability in China, and a change in the political environment which has made doing business there a lot more complicated. India, in the meantime, established a demographic pole position - a quarter of the world's new workforce will be in India, a fact that is now reflected in the hiring plans of most global companies - and despite its complexity, if a global education business does not operate in India, it is not a global business at all.

And, dare I say this, it is becoming a lot less complex over time. In 2012, it was difficult to enter India and compete with local providers in the middle of an unbriddled expansion of Higher Education: From 2006 to 2012, 10 new colleges were being set up in India every single day and seats, particularly in technical and management education, were expanding rapidly. The regulatory structure was at a breaking point - it did break eventually - under the pressure of rapid expansion and new business formats (like, Distance Learning). The government was not sure about private education businesses, and have shied away from inviting in foreign institutions, a stalement which was unlikely to be broken.

However, things have changed since. The first significant change is the inevitable rationalisation that comes after unchecked expansion - colleges have started failing! The reason they are failing is also significant: It is not for the want of demand, because the student numbers continue to rise. The primary reason colleges failed in India are for the unsustainable financial model underlying it - high cost of land, hight borrowing costs and the regulated fees that are designed to keep the colleges without surplus. But, poor education delivery and lack of employment outcomes, particularly for Business Schools, have played a big role too. This has created an environment, both with students and within schools themselves, which is more open to experimentation than it was.

Indian employers are also becoming more open to innovation. Indian employers in the IT Services sector, the main employers for the new graduate output, usually have indulged with recruitment models unique in many senses, based on volume recruitment of overqualified personnel. Many companies took advantage of abundant supply of Engineering and Business graduates to fill non-graduate positions, propping up the expansion of Engineering Education but also, at the same time, lowering the competence expectations in general. This model is now coming under threat from automation and technological change. As the jobs become more complex, the skills gap is now somewhat obvious - and will become more problematic with time. This creates 'extinction-level' risk for many IT/ IT Services organisations. While it will take time for a strategic approach to emerge in general, there are piecemeal projects and initiatives already under way.

Third, the financing for non-traditional education in India has become more available, not least because of the skills agenda that successive governments in Delhi has promoted. While the effort has been mostly corruption-ridden and poor on delivery, it has helped create an awareness in banks and other institutions about financing of non-traditional education.

India, therefore, has become a no-brainer, though it has remained one of the most complex of the education markets. It has become an exciting place for education innovation, despite the innate conservatism of the Indian middle classes. It is a must-do for any education start-up that intends to change the world, though only the ones which make an attempt to understand the market and respond to its peculiar demands can really win the game.


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