The business of distance learning on the subcontinent is becoming so
big that foreign universities and venture capitalists are taking note
It's
a Sunday afternoon and class time for 39-year-old IT worker Seema
Shetty. Her feet curled under her in a swivel chair, she sits in front
of a computer monitor, adjusts a set of headphones, and scribbles in a
notebook. Shetty, who works for consulting firm Mastek in Mumbai, is in a
virtual classroom in the Vile Parle suburb, where a dozen computers
link students to some of India's elite management institutions. Today's
class is a three-hour general management lecture, part of the online
education course conducted by the Xavier Labor Relations Institute in
Jamshedpur, in the remote northern Indian state of Jharkhand.
A
consultant for various industries from insurance to banking, Shetty
signed up for an online certificate course to "learn more about my
clients' business requirements," she says. By enrolling in the 14-month,
six-hour-per-weekend online course, at a cost of $4,600, she can
further her education without having to take a two-year career break to
get an MBA. Learning online, says Shetty hopefully, "will definitely
boost my job prospects."
Shetty is part of a growing
tribe of working professionals and students in India who have enrolled
for online education certification. While it's difficult to determine
numbers of students, the online education market in India today
generates about $200 million in revenue, and industry experts expect it
to touch $1 billion by the end of the decade. The winning proposition:
Getting knowledge from top-notch professionals without disrupting
fast-track careers.
Slaking a Thirst for Knowledge
Mostly
it's courses in engineering, management, finance, human resources, and
mass communications available to individuals who feel they need some
polish and a deeper understanding of their chosen subjects.
Institutions, too, are big users—most are short of staff and overwhelmed
by the demand from students who want to be equipped with the best
possible education to further their job prospects in India's rapidly
expanding economy.
Online education addresses some
of India's shortcomings: a dismal education system, limited reach, and a
severe paucity of faculty. "Even students from smaller engineering
colleges feel they can now access the same courses our top students are
exposed to," says Kanan Moudgaliya, head of the distance learning
initiative at the Indian Institute of Technology (IIT) in Mumbai.
The
efforts to boost graduate education have begun right at the top. India
is booming, and as new industries such as retail, real estate, and
infrastructure grow, the talent crunch grows, too. In 2003, New Delhi
made education a priority, boosting spending from 3% of gross domestic
product to 5%. Upgrading the quality of higher education was key to its
agenda. That's when the IITs and the leading business schools went
online with their courses. There's both Web-based education, which puts
course material online for students to download, and there's virtual
learning—the kind that Shetty is undertaking.
Foreign Universities Heed the Call
The
biggest and most popular providers of online education are the IITs,
leading business schools like the Indian Institutes of Management
(IIMs), and private schools such as Sikkim Manipal University in
northern India. In addition there are private online education services
such as Educomp Solutions, Everonn Systems, and TutorVista. Last year,
Rubin Das, 29, a midlevel restaurant manager at Mumbai's Grand Hyatt
hotel, was one of the 120 students who enrolled for the online general
management course for young managers at IIM-Calcutta. The 52-week
course, which will end later this month, has taught Das "revenue and
marketing management, which I had no clue about." "It enhances my
chances to be a department head sooner," he says.
This
demand for online education in a hot market like India has also sparked
the interest of foreign universities. In 2007, Carnegie Mellon
University tied up with Shri Sivasubramaniya Nadar College of
Engineering in Chennai, in southern India, to offer IT courses. The
Massachusetts Institute of Technology is negotiating with the IITs. And
Cornell University has struck a deal with South Indian service provider
Easy Educate to offer courses in finance, management, and human resource
to Indian students.
Here's how it works. Each IIT
has 500 courses in all, but its distance-learning offering is 50
courses: a combination of Webcasts, live lectures, and prerecorded
lectures. Courses range from the study of nanoelectronics to an
introduction to biochemical engineering for both college and individual
students. All the IITs are negotiating with Google (GOOG) video, which
will help students download lectures for free.
Funding from Venture Capitalists
The
IIT courses are also distributed to India's 1,500 state-run engineering
colleges to spruce up their standards. This year, for instance, the
College of Engineering in Pune, 200km from Mumbai, will host nine
courses from IIT Mumbai, ranging from process instrumentation and
control to software engineering, for 120 students. They are hugely
popular. "These courses provide a quantum jump in the quality of our
education for both staff and faculty," says Anil Sahasrabudhe, director
of the college, who is on deputation from one of the IITs to boost
education standards in the Pune institute. For instance, instead of
developing many new courses, the institute can now pick and choose the
courses taught by IIT professors.
The opportunity is
so enormous that venture capitalists have begun to fund online
education companies. In 2007, they invested more than $74 million in
Indian education companies and say the sector will be among the hottest
in 2008. Think about it: Although India has a large, young population,
it is not the most productive. Boosting basic education with a current
online education certificate helps make Indians more employable.
Education Companies' Shares Soaring
A
2005 McKinsey study on the Indian workforce concluded that just
one-quarter of India's engineers and 15% of finance and accounting
professionals had the skill sets to be able to work productively for
multinational companies. K P Balaraj, a managing director at U.S.
venture capital firm Sequoia Capital, has invested $2 million in
TutorVista, an online tutorial company. "Employability is a big issue in
India, and the immediate need is to cater to a very large job market
that is not being met by school and college grads," he says.
Investors
like Balaraj will do well. Despite the recent fall of the market, the
share prices of some of the listed education companies have continued to
soar. Shares of Educomp, India's largest education company, are up 340%
over the past 12 months, while the Everonn scrip increased 61% since
its listing in August, 2007. Brokerage firms Credit Suisse (CS) and
First Global have also bestowed "outperform" ratings on three out of the
four listed education companies.