Insights into Editorial: The technical higher education market dissected – INSIGHTSIAS

 

 

Introduction:

In India, the technical higher education sector — dominated by private players — can be best understood only in market terms: be it the exponential growth in institutions or in enrolment as well the dynamics of the decisions made by the regulatory bodies.

It is no accident that much of the growth in the technical higher education has been after 1991, when the All India Council for Technical Education (AICTE) became functional in its present avatar.

 

Supply exceeds demand:

1. During the three decades immediately preceding the present (1961 to 1991), the number of technical higher education institutions had increased five times to go up from 53 to 277.
2. During the same period, enrolment in technical higher education had increased six times — 0.37 lakh to 2.16 lakh. Importantly, most of the growth has been in the government sector.
3. During the past three decades (1991-2020) the institutions have gone up by 40 times (at 10,990), with the intake capacity rising 15 times to touch 32.85 lakh. Much of this expansion has been in the private sector.
4. Going by the number of students who appear for the joint entrance examination and other entrance tests conducted by various agencies and different higher educational institutions, the total demand for technical higher education appears to be no more than 20 lakhs.
5. Clearly, supply far exceeds the demand for technical higher education, probably in the hope that the supply would create its own demand.
6. Declining demand notwithstanding, these institutions have been adding more capacity, though some market corrections seem to have happened during the past few years.
7. The number of institutions and intake capacity in 2021-22 have come down to 8,997 and 30.87 lakh, respectively.

 

Student-teacher ratio:

1. The AICTE prescribes a minimum specific student-teacher ratio (STR), ranging from 7.5 to 20, depending on the type and level of programmes and disciplines under its domain.
2. As an overwhelming majority of the institutions are unable to admit students to capacity, their STR, at least on paper, has gone down from 5.5 in 2012-13 to 3.0 in 2020-21.
3. A lower STR could mean better quality but in their case, this only means higher cost adversely impinging on their economic sustainability.
4. Their revenue models adversely impacted, they are unable to create quality infrastructure and human resources and become trapped in a vicious cycle of mediocrity.
5. In market terms, they are the price takers and should be willing to offer their products and services at the lowest possible prices.
6. In a typical market framework, such businesses would either improve their quality or slash their prices to survive.
7. Apparently, it does not happen in the higher education market, except during the past two years when market corrections led to a drop of 18.3% and 6.01% in the number of institutions and intake capacity,

 

Appealing to the regulator:

1. They prefer regulators coming to their rescue. In the past they urged doing away with the requirements of a certain percentage of marks in the school board.
2. Recently, they could convince the regulator to abolish the condition of studying science and mathematics at the senior secondary/intermediate level in schools, though the AICTE retracted from the decision quickly.
3. Such suasions have obviously been intended to widen the catchment for admission.
4. Institutions have also been helped by raising the STR — from 15 to 20 in the undergraduate programme in engineering, for example.

 

The Veblen Effect:

1. These apart, technical higher educational institutions are differentiated and highly hierarchical.
2. Being highly selective, they are the price makers. Left to market forces, they may resort to an exploitative pricing policy. They generally resist capacity expansion ostensibly out of fear of dilution in quality.
3. Artificial scarcity suits them fine and at times enables them to use higher fees as a strategy for brand building.
4. After all, the Veblen Effect (what is expensive is perceived to be excellent), is as applicable to higher education as it is to luxuries.
5. Such institutions hate pricing regulations that limit their ability to charge as much as they wish.
6. They are naturally disappointed with the news that the AICTE is contemplating prescribing a ceiling limit on fees that these institutions can charge from their students.
7. A bulk of poor-quality institutions are happy about the prospect of a certain minimum level of fees being made mandatory.

 

Process in Higher Education:

1. Process in higher education currently is constrained and driven by traditional requirements for credentialing.
2. These requirements are organized around measurements of student seat time required to get academic credit, and number of credits required to get a certificate or degree.
3. These requirements are major drivers of infrastructure and staffing levels, and the associated time requirements for certification give a level of predictability to the profit formula.
4. However, the rising acceptance of competency-based education and prior learning assessment greatly changes this key organizational principle of Process.
5. Competency based education depends on a demonstration of competencies that have been defined by experts in a field.
6. Students advance when they can demonstrate those competencies, no matter how, when, and where they learned them.
7. Similarly, prior learning assessment evaluates college-equivalent knowledge gained through such activities as workplace training.
8. These approaches obviously greatly increase the ways in which the new Resource of off-the-shelf courses can be utilized.
9. Competency based education and prior learning assessment remove “time” from the definition of a credential, and changes the way we look at transfer credits, etc.
10. It also turns attention away from the “inputs” view of quality of education, to a direct focus on “outputs”.
11. Competency based education and prior learning assessment certainly will impact different classes of educational business models differently, but is likely to have some effect on almost all.
12. The rise of alternative credentialingg., badges and certificates of competency creates a new aspect of process.
13. Combined with the new resource of courses discussed above, this could present a major challenge to many traditional business models.

 

Steps for the AICTE:

Technically, the AICTE is empowered to take ‘all such steps as it may think fit for the coordinated and integrated development and maintenance of standards’.

Specifically, it can “fix norms and guidelines for charging tuition and other fees” as well.

Will this move not be construed as helping the institutes bettering their balance sheets, rather than safeguarding the interest of students.

After all, the AICTE Act mandates it “to take necessary steps to prevent commercialisation of (in) technical education”.

The rest could be left to the State-level fee fixation committees. This would be in the true spirit of federalism which expects States to be a responsible partner in the process.

 

Innovation is also critically linked to organizational strategies: What’s the solution?

1. Innovators should build heavyweight teams to support process changes and autonomous units to support models that risk being perceived as running against the grain of organizational priorities.
2. A heavyweight team is more than just another committee. It’s a group of employees pulled out of their departmental silos that have the authority to put new processes in place.
3. This team can’t just be charged with coming up with recommendations—it must be empowered to design new processes to support an innovative model.
4. Autonomous units need even more separation from the way the rest of the campus does business.
5. Institutions, like Northeastern University and Southern New Hampshire University, have been successful at building out totally new models with different priorities.
6. But they have let those innovations come together in separate office spaces with distinct cultures and practices.
7. The goal is to let the innovation change the university and to avoid having the feedback loop run the other way.

 

Conclusion:

The changing environment for higher education is exerting increasing pressure on many institutions of higher education.

Change of some type is increasingly inevitable for most institutions. Understanding how the elements of the new and still evolving environment can be utilized best to create greater institutional effectiveness and stability is essential for the successful leader in turbulent times.

The business model approach provides a powerful tool for understanding the nature of the environmental changes and the areas of organizational strength and weakness with respect to those changes. It also can suggest options for effective institutional response.