Parthenon group : Indian Higher Education needs 8 million more seats

A research conducted by The Parthenon Group’s Education Centre of Excellence projected that India’s higher education sector needs an additional 8 million seats over the next 3 years in order to sustain economic growth.

The Parthenon Group is a leading strategic advisory firm with deep experience in global education industries. It released its key findings from presentations made at the firm’s Global Education Seminar held in Mumbai. The event was the fourth in a series of global education conferences held in New York City, London, and Dubai. Speakers from Parthenon shared analysis on various hot topics in the Indian education sector such as growth and investment opportunities in higher education and school sectors, and the scalability and success of private schools in India, among others.

Robert Lytle, Partner and Co-Head of Parthenon’s Education Centre of Excellence, presented findings on how foreign universities can help solve India’s higher education crisis. Karan Khemka, Partner and Head of Parthenon’s Asia Office, shared perspectives in the supply-demand gap and scalability of private primary and secondary schools in India.

Lytle said: “We have hosted four education conferences in the past two weeks – in New York City, London, and Dubai; but, we saved the biggest and best for where the education market, issues, and challenges are the most dynamic – right here in India. Even here, in India, where demand for quality education seems insatiable, choosing the wrong value proposition or wrong business model will condemn you to failure. Conversely, informed choices allow you to build enduring, self sustaining, and expanding educational institutions.”

Increasing higher education enrolment is central to India’s ability to compete in a global economy, as economic strength and Gross National Income (GNI) per capita are closely linked to a country’s higher education enrolment ratio. In order to increase India’s competitiveness, it is necessary to grow the availability of high quality higher education.

Other insights shared at the Global Education Seminar included reflections on the role foreign universities could play in helping India meet significant demand for higher education seats. Specifically, in order to increase its tertiary enrolment ratio, India needs a portfolio approach that incorporates both prestigious world-class and capital-efficient universities. While established world-class universities face limitations in their ability to expand, brand-recognized foreign universities have greater flexibility to help fill the current gap in higher education seats. Whereas world-class universities (with average annual enrolments of approximately 14,000 students) grow at an annual rate of only 1%, capital-efficient foreign universities boast faster growth rates that allow them to achieve much greater scale.

The Parthenon Group’s research shows that in labour markets such as China and Vietnam, graduates from the local branches of foreign universities are able to command a slight 10-20% wage premium over graduates of local universities. As a result, universities like Ningbo Nottingham in China and RMIT in Vietnam are able to charge a tuition premium. Foreign universities such as Monash (Malaysia), Nottingham (China), and RMIT (Vietnam) that have a recognizable – albeit non-world class brand – are able to achieve a self-sufficient scale of 4,000 to 6,000 students with revenues in excess of $30 million. The key success factors for such universities include robust government relations, a strong local partner, and premium placements for students with leading employers. While these examples are encouraging signs, the question remains as to whether India’s regulatory environment will allow for such foreign universities to play a role in bridging India’s current – and growing – tertiary enrolment gap.