“You should remove ‘agricultural worker’ from the list of options of
parents’ occupations in Question 11,” said the senior government
bureaucrat. He explained, “It is impossible for the child of a farm
laborer to enter an engineering college.” That statement was made on
May 8 in Delhi this year, while he – the chief advisor on higher
education to the national government – reviewed a questionnaire for
final year engineering students. The questionnaire is to be filled by
the graduating cohort of engineering students at various Indian
universities this coming year. Its purpose is to discover job mobility
across generations and relate that to the cost of education, location,
public versus private provision, and various other factors. It is part
of a broader study supported by FSI that colleagues at Stanford
University and I, along with research groups in India, China and
Russia, have initiated to compare the quality of the engineering
workforce in three countries – China, India and Russia – with each
other and with the United States.
A few days later, on May 14, I was with the head of a medium-sized
private college in Bangalore, which had administered the pilot version
of the questionnaire to graduating students. As he handed me 450
completed forms, I glanced at the first few. There, right on top, I
read the first student’s response to Question 11. A female, she had
chosen “agricultural worker” as the father’s occupation. Combined with
information on her family’s income (which was in the lowest tier), this
was clearly someone who contradicted the bureaucrat’s assumption.
As heartwarming as it was to see that response on the questionnaire, it
reminded me, not for the first time, about how little government
officials can sometimes know about their constituents. In 2004, I had
studied, jointly with a division of the Ministry of Information
Technology, how rural users might best use information technology.
Our expectation (prior to the study) was that e-mail for personal and
business purposes and Internet searches and transactions for farm work
would be the main uses.
Instead, what people wanted was government services – health care
and other welfare services, postal services, accessing titles and other
official records, and government jobs. When I presented our findings to
the country’s Minister for Information Technology, he insisted that we
were wrong and that our initial hypotheses were correct. It was only
when his own division head, who had conducted the study jointly with
me, stated (firmly) that he stood by the results that the Minister
started to change his views.
Perhaps one should not be too harsh on a bureaucrat when a political
master, the minister, could be so ignorant! But, there is another
reason for leniency: the higher education revolution in India has still
not been understood, even within India, perhaps because of the speed of
its happening. A revolution it undoubtedly is. For example, in
engineering studies, the number of students enrolled in full-time
4-year undergraduate degree programs has risen from 250,000 in 1997 to
1.5 million in 2007, and is currently growing at 25% annually. Most
surprisingly, the higher education sector has moved from a primarily
state-provided service to private provision within a decade. 95 per
cent of the above increase comes from enrollment in privately-run
colleges, which now account for 80% of total enrolment. The storied
state-owned Indian Institutes of Technology, which made up 10% of
national engineering enrolment in 1990, now account for less than 2%,
and graduate 5,000 students a year.
How this happened is too long a story to go into here. Briefly, the
national government has increasingly yielded control over higher
education to the individual states over the past ten years. The states
have, in turn, allowed the private sector in, something that the
national government resisted when it was in charge.
One of the desirable outcomes is, as demonstrated by the response to
Question 11 above, increased access. Ten years ago, the child of an
agricultural worker was, if educated through secondary school, likely
to have studied only in the vernacular – and would thus have been
excluded from the higher education engineering degree, which is taught
only in English. Even if there was money in the family till to pay for
tuition, the nearest college was probably too far to allow the student
to stay at home; even if she had the money for staying away from home,
competition for the limited number of available seats would likely
exclude her from even the least meritorious college.
Today, even though the private colleges charge, on average, fifty
thousand rupees ($1250) a year for tuition, which is three times the
tuition fees at the comparable state college, affordability has
increased. This is for two reasons. First is the proliferation of
colleges. Thanks to the blanket coverage being provided by the private
sector, there is a college, most likely two or three, in most small
towns. Bangalore, with 290 engineering colleges – almost all private –
tells the story of the rest of the country.
So, even small-town students no longer need to live away from home,
thus saving on living costs. This can be a significant savings: in
Bangalore, rent for a single room more than makes up the difference in
private and state tuition fees. Second, the private colleges have built
linkages with banks, so bank loans will usually cover half the tuition
costs.
The democratization of higher education in India has removed the
impending shortage of talent for the IT exporting sector. It has also
brought into question the importance of the IITs to the eco-system,
which – according to the recruiters I have interviewed over the years –
was always overstated. Let’s examine both of these in the current
context.
For the top IT exporting firms in India, such as TCS, Infosys and
Wipro, the private providers are a boon. Together, the top three firms
will, even in today’s difficult global economic environment, add 70,000
persons to their payrolls (net of attrition) in 2008. 70 per cent of
these recruits will be fresh graduates. Private college graduates will
account for the overwhelming majority of their recruits, followed by
state colleges (not IITs).
Of course, these firms would like to recruit the top IIT graduates.
However, the best IIT graduates either go abroad to study or work (a
third do so, though that ratio is declining), another third join an MBA
program in India, and the rest are recruited by the Indian operations
of western firms like Google or Yahoo!, or join Indian startups like
Tejas Networks or Telsima. Such firms pay starting salaries that are
double the $7,500 starting wage offered by the Indian IT majors.
Is this a big loss for the Indian IT industry? No, say the recruiters,
pointing out that the IIT graduating cohort was always a small
proportion of their recruits because of overseas migration. What is
important, they point out, is that other providers are rapidly catching
up with the IITs in quality. Given their reliance on fresh graduates
and their scale of recruitment (for example, between June and August of
this year, TCS will make one thousand job offers a week and recruit 85%
of its offerees), the Indian IT firms make precise calibrations of
schools and rank them. The top quartile of the graduates of the top
local private colleges in Bangalore are now considered equal in quality
to those at the 50th percentile in the IITs. The top quartile at
national colleges, such as the National Institutes of Technology, are
deemed equal to the 75th percentile of the IITs.
The rank is based on various factors: alumni recruited by them in
earlier years, internal factors such as laboratory and library
infrastructure, and course content, their interaction with faculty in
research projects, and student performance in internships. A thousand
colleges (of the four thousand that offer engineering degrees in India)
are deemed to meet the standards of the top three IT firms and their
graduates are thus eligible for recruitment. According to one of the IT
firms I spoke to, a decade ago, there were only fifty colleges that met
their standards.
In consequence, in states where they are concentrated, eg., Infosys
and Wipro in the state of Karnataka (whose capital is Bangalore) and
TCS in Tamil Nadu (whose capital is Chennai), the ranking by the top 3
IT firms is critical for the colleges. A corporate recruiter from a
smaller firm seeking IT talent from a Chennai college will demand to
know its “TCS ranking."
This, in turn, is invaluable information to incoming students,
which, in its turn, influences how colleges invest in faculty and
infrastructure. As a result, in a way that was unforeseen by government
planners and even the World Bank (which, in 2000, argued that market
failure was likely in case private provision in India became
important), a thriving market for engineering education has been
created and quality has improved.
As recently as 2001, a report on IT education (which included a study
of the IITs) by the Ministry of Human Resource Development noted that
“The barest minimum laboratory facilities are available in many of the
institutions and very little research activity is
undertaken…Engineering institutions have not succeeded in developing
strong linkages with industry…The curriculum offered is outdated and
does not meet the needs of the labor market.” Around that time, when I
had interviewed the director of one of the IITs, he had supported this
finding, noting that almost all the engineering students at that IIT
did their final year thesis projects in laboratories within the IIT
(rather than, as intended, in companies).
Today, an engineering graduate from any of the thousand colleges
that the IT services industry deems eligible for recruitment will
always have completed several internships with industry prior to
graduation, including the final semester thesis project – in other
words, this is a sea change from just a few years ago.
Of course, there are caveats to the story of higher education. One
of the concerns stated by regulators is that, as control has shifted
from New Delhi to the states, the weak states have not been able to
keep up with the strong states, thus increasing the intellectual gap
between them. This appears to be true, on first impression. My
conversations with recruiters of IT firms in Bangalore in May indicated
increasing regional selectivity. Karnataka, Tamil Nadu, Kerala, Andhra
Pradesh, Delhi, Maharashtra and West Bengal were the regions of choice,
while weak states such as Bihar and Uttar Pradesh were falling behind.
A second genuine concern of policymakers is that the private
colleges have no research agenda. Of course, what policymakers do not
state is that the IITs have historically had no research agenda either.
The good part of the present situation is that, with the burden of
providing mass education off its backs, the national government is
using its limited resources to support centers of excellence for
research.
A final caution is on replicability in other countries. The higher
education system that has resulted in India was not foreseen and caught
the nation’s education planners by surprise. No one expected that the
private sector would respond as it did. Planners designed the system to
allow only non-profit private providers. Planners expected that those
private providers that would enter the system would be philanthropic.
They would exist at the margins of the then larger state-system.
Accordingly, planners encouraged them, through incentives, to set up
their institutions in smaller towns.
Instead, the private providers stormed into the big cities first,
preferring to ignore the incentives, and have only recently spread to
smaller towns. They have made profits through the back-door (by
charging an upfront fee, the capitation fee).
A key factor was rising federalism: strong states like Karnataka and
Tamil Nadu were able to provide the regulatory support that made
private sector entry possible. The second key factor was the IT
industry’s willingness to be the market maker, as described above. In
this, the role of the large Indian IT firms, as noted, was critical. It
is unlikely that an industry characterized by a large numbers of small
firms would have been able to play the role of market maker.
So, there are some unique factors in India. China offers an
alternative, perhaps more replicable, model: an entirely state-run
system in which tuition fees, which average $800 per annum, pay for 50
per cent of costs. It, too, has grown rapidly: for example, 5 million
students are currently enrolled in undergraduate engineering programs.
The share of the burden per student appears to be higher in India. In
India, the state and “aided” private colleges (these are privately
owned and managed, but accept state-aid to pay for costs such as
infrastructure and faculty salaries – in return, they must charge the
same tuition fees as state-run institutions) account for 40% of total
enrollment and charge fees that cover 30 per cent of costs. The unaided
schools, as noted earlier, recover full costs through tuitions
(endowments insignificant). Hence, the share of total national costs of
education borne by students in the system is over 70%. This may be
important for achieving long-term sustainability, although, in the
short-term, it may adversely affect enrollment.
For the moment, though, the Indian IT industry, earlier starved of
talent, has been saved by one of its own – the for-profit private
education sector.
