Outsourcing Indian Education

In many breathlessforeign reports about India’s outsourcing clout, the nation’s educationoften gets high marks for being the source of so much success. But the realityis that – while in absolute numbers, with a population of a billion plus, thecountry is ahead of others with total graduates – Indian higher education isnot responding to the challenges posed by globalization. 

The challenge facing India wasrecently on display when resident doctors and students at a premier medicalschool in New Delhi went on a lengthy strike. The protest targeted thegovernment’s plan to extend existing affirmative-action admission quotas fordisadvantaged castes an extra 27 percent, up from 22.5 percent. Neither thequotas nor protests are new. Indian institutions already have an extensiveseries of quotas for different castes. This proposal sought to extend quotas fornew groups in India’s most prized institutions: the All India Institute ofMedical Sciences, the famous Indian Institute of Technology (IIT) and the IndianInstitute of Management. Aside from the familiar questions about theeffectiveness of quotas and their impact on quality of education, the protestand the ensuing debate have put in sharper focus major challenges thatglobalization poses to India’s system of higher education.

Globalization poses manychallenges for higher education. Countries struggle with the fact that themarket for talent has become global. India’s premier institutions are hamperedby the fact that incentive structures to retain good faculty simply do notexist. Premier institutions like IIT and the Delhi School of Economics confrontfaculty shortages up to 40 percent, and their research profile is nowherecommensurate with their possibilities. India has become a net consumer offoreign education – spending to the tune of $3 billion a year to trainstudents abroad.

However, the Indian educationsystem is not able to mobilize funds from its students at home. By someaccounts, Indian students, whose fees are paid by their parents, have become anet subsidizer of British higher education; the largest number of foreignstudents in the US come from India, some 80,000; and there are even an estimated5,000 Indian medical students in China. Many of the best students go abroad. Onemeasure of the price India has paid for the flight of intellectual capital isthis: Devesh Kapur of the University of Texas has calculated that for everypatent held by an Indian, Indians abroad hold 28,000 patents!

Second, globalization has madebenchmarking in education global. While India’s premier institutions are goodfeeder schools for institutions abroad because of their recruitment process,their ability to compete globally is still an open question. Only three Indianinstitutions rank among the top 500 in the world, and significantly none of themare full-fledged universities. Beyond a small group of elite institutions, fewIndian institutions are globally accredited or recognized. Thus, the competitionfor a handful of elite institutions is severe.

Third, globalization has madeeducation an extraordinary business opportunity with a great impact onemployment. While there is some R&D outsourcing to India, there is also thesense that India is missing out on the opportunity to position itself as aglobal education hub. Its share in the global higher-education market isminiscule, and there are significantly more foreign students in China than inIndia. According to a study by the Association of Indian Universities of 300universities, the number of foreign students in India shrunk from 12,765 duringthe 1992-93 academic year to 7,745 in 2003-04.

Fourth, the ability of aneconomy to compete depends on the character of its education system. India hashistorically neglected primary and secondary education. But even in highereducation, the nation faces severe shortages of talent. Reports from almostevery sector of the economy, from health to aviation engineering, forecastshortages of skilled personnel. While in aggregate, the mismatch does not appearstark, there are severe bottlenecks in some sectors. The cost to business isincreased by the fact that firms must do much of their training in-house, sincethey cannot count on the supply of talent. The mismatch of education to theeconomy is also evidenced in this paradox: While there is a severe shortage ofskilled manpower, a third of unemployed youth are science graduates. Thegovernment has promised to increase outlays in higher education, mostly to allaysome of the fears of the striking students that the number of non-quota seatswill be drastically reduced. But government-determined allocations are notnecessarily sensitive to the needs of the economy.

The four challenges ofglobalization – the flight of talent, benchmarking to global standards, thepossibility of education as a business opportunity, and the mismatch betweensupply and demand – have a common thread running through them. Inflexible andovertly regulated education systems are unlikely to respond to these challenges.Rigid academic systems all over world, in Germany for example, struggle toreposition themselves to respond to the challenges posed by globalization. TheIndian regulatory system is very much modeled on central planning. It assumesthat regulatory agencies can second guess the sectors where demand is likely aswell as the appropriate content of education. Ironically, India met some demandsof the IT sector, because a large number of private institutions managed tododge the regulatory system by offering diplomas rather than degrees – whichcan only be conferred by government-regulated institutions.

The Indian education system isone of the most tightly controlled in the world. The government regulates whoyou can teach, what you can teach them and what you can charge them. It also hashuge regulatory bottlenecks. There are considerable entry barriers: Universitiescan be set up only through acts of legislation, approval procedures for startingnew courses are cumbersome, syllabi revision is slow, and accreditation systemsare extremely weak and arbitrary. The regulators permit relatively littleautonomy for institutions and variation amongst them.

Over-regulation has produced thecrisis of higher education that is the context of the current agitation. Theshortage of quality institutions is a product of India’s regulatorystructures. Increased public investment that the government has promised isabsolutely necessary to increase access. But this investment will not yield muchif India’s regulatory regime remains rigid. There was agitation over quotasnot because the students oppose increased access or even affirmative action.Quotas became a symbol of the state’s power over Indian education: itspropensity to hoist its own purposes upon academic institutions regardless oftheir impact on the quality of these institutions. Globalization requires twocontradictory transformations in the state: On the one hand, successfulglobalization requires that the state invest heavily in increasing access toeducation. But in higher education, globalization also requires the state torespect the autonomy of institutions so that a diversity of experiments can findexpression, so that institutions have the flexibility to do what it takes toretain talent in a globalized world and, above all, respond quickly to growingdemand. Globalization demands a paradigm shift in the regulation of highereducation. In India the debate has only just begun.

Pratap Bhanu Mehta ispresident of the Center for Policy Research in Delhi, India.Rights: © 2006 Yale Center for the Study of Globalization. YaleGlobalOnline