Note: Jan Van Mieghem and Gad Allon are participating in a Kellogg faculty study trip to India. Below is Jan’s first report from the road. For more on the trip, check out the accompanying blog
Our first leg of our faculty study trip to India was Delhi where we visited three companies: PepsiCo India, HCL and HT Media.
HT Media is a legacy company inaugurated by Gandhi in 1924 and well-known for its two major newspapers: Hindustan Times, in English, and Hindustan, in Hindi, which is the second largest paper in the country. Since the arrival of CEO Rajiv Verma in 2004, the company has turned around into a very dynamic organization that has started multiple new businesses: Mint, a financial newspaper started in 2007 in cooperation with The Wall Street Journal and already has a 250,000 readership; Fever, launched in 2006, is a radio station playing mostly the hugely popular Bollywood music with 15 million listeners; FireFly is focused on digital media and is expected to become dominant, together with mobile; HT Burda, which is an interesting joint venture with Burda, Germany’s second largest printer after Bertelsmann (more on that in another post); and HT Media, perhaps the most intriguing new venture into higher education.
Education is highly valued by Indian families and clearly the gateway to moving up. Yet it also is fiercely competitive (e.g., the entrance exams to the ITTs are taken by one million Indians for a few thousand slots) but capacity of the right type seems to be the major hurdle for India, leading to a major mismatch between demand and supply. We learned that the supply comprises:
1. Institutes of National Importance, the crème de la crème, including the IITs and IIMs, which has 26,400 students enrolled.
2. Another 26,500 institutes enroll 14 million students. Some of these institutes are top universities like Delhi University (where only a perfect SAT score got you admitted this year!), but some are true shells only. The result is that only 25 percent is employable (P.S.: the government has a peculiar approach here and there are two reasons to start a higher ed institute in India:
- The right to grant degrees is a money-making machine in this country with high excess demand for education and;
- An educational institute ‘protects’ your real estate as it cannot be ‘taken/bought’ by the government.)
3. Currently three million students are enrolled in open and distance learning education, which is expected to double annually. One of our guides was among the first graduates of this new initiative, which is a great hope for a scalable quality education.
The interesting observation I find is that, while there are a great number of higher ed organizations, there is the top level with very little below it, which leads to fierce competition. Seems to me that what this country needs more is great vocational education (e.g., the German model)…
Anyway, assuming an average three to four year study program, the supply of educated Indians is about 3M/3 + 14*25%/3 + 26,400/4 or at best, 2 M annually. To put in perspective: 50 percent of the Indian population is young and 124M are between 18 to 25 years old.
The incremental demand for educated employees over the next six years is estimated at about 70 to 90 million! (Obviously, one can wonder where this estimate is coming from, as it is not feasible to produce 90M/6 = 15M graduates per year. To put in perspective: China produces 4M.)
Regardless, education seems like the major bottleneck to GDP growth in India and I hope that new online and remote education initiatives will be able to draw in rural India.