Today, higher education institutes are expanding by opening new campuses and diversifying the repertoire of courses on offer. Have they found a success recipe?
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In 1996, when the Birla Institute of Technology and Science (BITS), Pilani, received 20,000 applications for its 400 seats, it realised there was no other way but to expand if it had to take in more students. The institute founded in 1929 by G. D. Birla, achieved a Deemed University status in 1964. But it still took more than three decades to set up campuses in Dubai, Goa and Hyderabad.
The Amity Group, on the other hand, which set up its first business school in 1995 at Noida, realised soon enough that it could no longer delay expanding into other geographies when it started receiving almost 120,000 applications for its 6,000 seats. The last five years has seen the Chauhan family owned group aggressively push to set up 15 campuses within India and two overseas — one each in London and Singapore. There are plans to roll out a campus in every state of India by 2011, and several overseas within the next two to three years. “Ten new campuses will come up in New York, Dubai, South America and Europe, with an expected investment of about Rs. 2.5 billion,” claims Atul Chauhan, president of Amity Education.
BITS and Amity are not alone. The expansion spree is gaining steam both within India and overseas. Take the case of Manipal Education Group, which is investing Rs 1 billion in expanding its campus in Dubai and is also exploring a new campus at Sri Lanka. In the next two to three years, it hopes to have a presence in the Middle-East, South-East Asia, the Caribbean and the US. It recently bought a major stake in the American University of Antigua in the Caribbean. Manipal is moving to open its fourth campus at Jaipur next year.
International Management Institute (IMI), Delhi plans to open a new campus at Bhubaneshwar and another one in Kolkata. Institute of Management Technology (IMT) which already has three operational campuses in Ghaziabad, Nagpur and Dubai, has planned another one in Hyderabad by 2011. Even the research-oriented Indian School of Business (ISB), Hyderabad is seeding a new 70-acre campus at Mohali in Punjab with an investment of about Rs 2 billion.
So, what are the imperatives that drive such need for expansion? After all, opening multiple campuses is no child’s play. It requires huge investments, there is a fear of diluting the quality of education, plus many logistical problems. The only thing that appears readily available is the enormous demand for these institutes. And this huge potential is the reason for the push.
Seeking Multiple Advantages
The National Knowledge Commission estimated that around 1,500 universities will be needed around the nation to achieve a Gross Enrolment Ratio (GER) of at least 15 percent by 2015. It is this need gap that creates opportunities for expansion.
Thanks to its multiple campuses, BITS has managed to increase its annual intake six times. “Today we can accommodate over 10,500 students and our annual intake has increased from 400 seats in 1996 to almost 2,500 now,” says a confident B. R. Natarajan, dean, Work Integrated Learning Programmes BITS Pilani.
Higher volumes also make sound economic sense as they translate into more revenue. If one is aiming for even higher margins then the overseas market is a good option. For instance, while the fee per semester at a BITS campus is only Rs 0.04 million in India, it is about 17,500 dirham or Rs 0.23 million per semester at BITS Dubai. Similarly, while an Amity student pays Rs 0.13 million per semester at Bangalore, he is charged Rs 0.3 million at the London campus.
Going overseas also has other advantages, like easier government regulations and tax benefits. Even Indian students prefer to go overseas in search of better quality education. According to the Knowledge Commission there are an estimated 1.6 million students from India who are studying abroad. If the average expenditure on fees and maintenance is US$ 25,000 per student per year, overseas Indian students would be spending nearly US$ 4 billion or Rs 188 billion each year (at current exchange rates). If only higher education institutes create more opportunities for quality education of Indian students here, they could grab a small, but significant fraction of this pie.
Many players also find that establishing a presence overseas helps in brandbuilding and attracting students to their Indian campus as well. Chauhan of Amity points out that corporates today want to hire employees who are aware of the business culture and systems in different markets. So, Amity uses global exposure as a Unique Selling Proposition to sell its programmes. An Amity student can enrol himself in Indore, and go on to do subsequent semesters in London, Singapore and the US by paying the relevant fee for those markets. Institutes, that do not have global campuses, are offering similar exposure to their students by tying up with reputed international universities. For example, the Indian Institute of Management (IIM) Lucknow has tied up with McGill University of Canada, the Management Development Institute (MDI) has tied-up with 50 foreign institutes across the globe. The ISB has links with Wharton School of Business, Kellogg School of Management and London Business School.
Expansion Mantra
Indian institutes are entering new geographies through acquisitions, investments and newer markets, or setting up new campuses on their own. While some like BITS, Amity, ISB, ICFAI and Symbiosis, believe in following the organic route for expansion, others like Manipal have sought to grow inorganically with joint ventures (JVs), affiliations, takeover of existing properties and facilities, or the franchisee model. Manipal University, has expanded geographically through its self-owned campuses within the country, while Sikkim Manipal University has achieved expansion through the franchisee model, with about 550 tie-ups (including more than 20 in Middle East and Africa).
The Group has also acquired TutorVista, MeritTrac and U21 Global to enter potentially high growth segments including online education and skilltesting segment. Manipal Education and Medical Group Managing Director and Chief Executive Officer Dr Ranjan R. Pai says, “Our strategy is both organic and inorganic depending on markets. The advantage of inorganic growth is that all licenses and permissions are already in place, so we can hit the ground running.” Manipal considers JVs only for its international ventures because of local regulations (like in Dubai and Malaysia) or to get a better feel of local conditions. “The local partner normally brings in local know-how and helps in expediting the projects,” he adds.
“With the acquisitions made in the recent past, the group’s international operations contribute to more than 50 percent of its total revenue,” notes a recent Ernst & Young report, “Emerging Direction in Global Education (EDGE).”
Chauhan says that Amity does not prefer JVs because education is a long-term business and partnerships are hardly long-term since the priorities and vision of the partners may change with time. IMI Director C.S. Venkata Ratnam explains that the institute prefers to go alone because the regulatory authorities do not allow a corporate model for raising finance from the market.
Location Specifies Needs
The reasons for choosing locations for new campuses are different for different institutions. Many decide on locations through feasibility studies.
For instance Amity discovered during a feasibility survey in the North-East, which has a lower GER than the rest of the country, that more than 65 percent of prospective students would enrol for higher education if a reputed university set up a campus there. It also discovered that there was an overwhelming demand for agro-based courses. To cater to this unique requirement, Amity is planning to open a campus offering exclusive agro-based courses there. Before opening a campus in Bhubaneshwar, IMI Delhi had also done a feasibility study which revealed that Orissa, in general, and Bhubaneswar in particular, is emerging as an educational hub. Although there are 19 management schools in the city with Xavier’s Institute of Management (XIM) as the leading institution, the opportunities and need for postgraduate and executive education in a high-quality institution are vast, given the scale of development projects in the pipeline, particularly in infrastructure and mining.
Some institutes like IIM Lucknow and IMT are also opening additional campuses to exclusively cater to specific courses like the management development programs (MDPs). While IIM Lucknow has established a campus at Noida to leverage the commercial hub of the national capital region, IMT plans to open a third campus at Ghaziabad to exclusively cater to these courses.
The presence of industry in a particular area also encourages institutions to set up a campus. While the industry absorbs students after they graduate, it also solves the chronic faculty shortage problem for the institutes. “Being in the commercial hub, we are able to invite industry experts to our campus to deliver lectures which give us additional mileage,” says Punam Sahgal, dean, IIM Lucknow’s Noida campus. Little wonder, industry hubs including Bangalore and Hyderabad are now hot spots for quality educational institutions as well.
Lastly, the initiatives of some state governments to improve educational infrastructure in their respective states has made it easier for the institutes to set shop there. For example, in IMI’s case, the Orissa government allotted 16-acres of land to the institute at a concessionary price and gave speedy clearances. When Andhra Pradesh government’s efforts to get an Indian Institute of Technology (IIT) in the state did not materialise, it offered land and extended all facilities to BITS to establish its campus there.
Similarly, in late 1990s when the Dubai government realised that it did not have enough facilities for higher education and parents were sending their children to other countries for higher education, it invited educational institutes from around the world to set up campuses there. It provided single-window clearances, and today IMT, BITS and Manipal have full-fledged campuses there, with Amity to follow suit.
Overcoming Challenges
Even though the demand-supply gap is huge there is no assurance that all expansion plans will be successful. Venkata Ratnam explains the dilemma, “The plus point is greater visibility and furthering of our consultancy and executive education efforts across the country. The negative point is that two campuses mean two cultures, and the difficulty of building and maintaining brand equity.”
It is a big challenge for institutes with multiple campuses to ensure that a uniform quality of education and exposure is maintained across all campuses. To address this, ISB plans to manage most key departments from a single place. Savita Mahajan, associate dean (Strategic Initiatives and Admissions) and chief executive of ISB’s Mohali campus, says, “The vision behind any department in both the campuses would be the same since one person would be in-charge for that department at both the campuses.”
Fear of quality dilution across distance was also the reason why Amity delayed expansion. To solve this Amity has set up a complete back-end system where attendance, progress grades, and all details about each student, faculty, administrators and management can be updated online. As the campuses grow in number, the group can now simply expand the control system to maintain quality of exposure, curriculum and learning across various locations.
Given the faculty crunch sweeping across India, finding quality teachers is also a challenge, and the institutes are finding innovative ways, including technology-linked tools to address that. “We have projection facilities for about 500 students at all our centres, and with the help of internet we ensure a standard curriculum and teaching pattern across our centres,” explains Natarajan of BITS.
During the expansion phase, land acquisition is another major challenge. Land is not always available at concessionary rates, and many times institutes have to spend huge amounts to get hold of the right plot. BITS was lucky to receive 180 acres of land from Birla’s Zuari Industries, for its second campus in Goa. In Dubai, since a foreign entity could not own land, BITS decided to partner with Emirates Trading Agency (ETA), a leading industrial group, to set up its campus there.
When expanding into new geographies, institutes also have to design courses and programmes keeping in mind the demand of the regional population. The courses that are relevant in London might not be relevant in Goa. For instance at its Jaipur campus, Amity has more programmes dedicated to family enterprises since family-run businesses abound in that region.
The Road Ahead
In spite of the challenges involved in the multiple campus format, the extent of potential in this form of expansion cannot be ignored. The E&Y-EDGE report says that strong macro-economic and demographic drivers coupled with a gap in public spending will accentuate the relevance of private sector in higher education in India. While reiterating that many players are not present in this space due to structural and regulatory challenges, E&Y India partner Amitabh Jhingan says that private equity investors could play an important role in the expansion of India’s higher education infrastructure. Private equity investments could also help institutions approach expansion through multiple campuses in an organised way.
Most established private players have realised that this form of expansion is a reasonable way to grow, specially since India needs more institutions to increase its GER in higher education. It is time that others also see the advantages and contribute to improving the education environment in India.
Write in your views and opinions about the stories in this magazine or on any other issues relating to higher education. Send them to the Editor, EDU at editor@edu-leaders.com
“With the acquisitions made in the recent past, the group’s international operations contribute to more than 50 percent of its total revenue,” notes a recent Ernst & Young report, “Emerging Direction in Global Education (EDGE).”
Chauhan says that Amity does not prefer JVs because education is a long-term business and partnerships are hardly long-term since the priorities and vision of the partners may change with time. IMI Director C.S. Venkata Ratnam explains that the institute prefers to go alone because the regulatory authorities do not allow a corporate model for raising finance from the market.
Location Specifies Needs
The reasons for choosing locations for new campuses are different for different institutions. Many decide on locations through feasibility studies.
For instance Amity discovered during a feasibility survey in the North-East, which has a lower GER than the rest of the country, that more than 65 percent of prospective students would enrol for higher education if a reputed university set up a campus there. It also discovered that there was an overwhelming demand for agro-based courses. To cater to this unique requirement, Amity is planning to open a campus offering exclusive agro-based courses there. Before opening a campus in Bhubaneshwar, IMI Delhi had also done a feasibility study which revealed that Orissa, in general, and Bhubaneswar in particular, is emerging as an educational hub. Although there are 19 management schools in the city with Xavier’s Institute of Management (XIM) as the leading institution, the opportunities and need for postgraduate and executive education in a high-quality institution are vast, given the scale of development projects in the pipeline, particularly in infrastructure and mining.
Some institutes like IIM Lucknow and IMT are also opening additional campuses to exclusively cater to specific courses like the management development programs (MDPs). While IIM Lucknow has established a campus at Noida to leverage the commercial hub of the national capital region, IMT plans to open a third campus at Ghaziabad to exclusively cater to these courses.
The presence of industry in a particular area also encourages institutions to set up a campus. While the industry absorbs students after they graduate, it also solves the chronic faculty shortage problem for the institutes. “Being in the commercial hub, we are able to invite industry experts to our campus to deliver lectures which give us additional mileage,” says Punam Sahgal, dean, IIM Lucknow’s Noida campus. Little wonder, industry hubs including Bangalore and Hyderabad are now hot spots for quality educational institutions as well.
Lastly, the initiatives of some state governments to improve educational infrastructure in their respective states has made it easier for the institutes to set shop there. For example, in IMI’s case, the Orissa government allotted 16-acres of land to the institute at a concessionary price and gave speedy clearances. When Andhra Pradesh government’s efforts to get an Indian Institute of Technology (IIT) in the state did not materialise, it offered land and extended all facilities to BITS to establish its campus there.
Similarly, in late 1990s when the Dubai government realised that it did not have enough facilities for higher education and parents were sending their children to other countries for higher education, it invited educational institutes from around the world to set up campuses there. It provided single-window clearances, and today IMT, BITS and Manipal have full-fledged campuses there, with Amity to follow suit.
Overcoming Challenges
Even though the demand-supply gap is huge there is no assurance that all expansion plans will be successful. Venkata Ratnam explains the dilemma, “The plus point is greater visibility and furthering of our consultancy and executive education efforts across the country. The negative point is that two campuses mean two cultures, and the difficulty of building and maintaining brand equity.”
It is a big challenge for institutes with multiple campuses to ensure that a uniform quality of education and exposure is maintained across all campuses. To address this, ISB plans to manage most key departments from a single place. Savita Mahajan, associate dean (Strategic Initiatives and Admissions) and chief executive of ISB’s Mohali campus, says, “The vision behind any department in both the campuses would be the same since one person would be in-charge for that department at both the campuses.”
Fear of quality dilution across distance was also the reason why Amity delayed expansion. To solve this Amity has set up a complete back-end system where attendance, progress grades, and all details about each student, faculty, administrators and management can be updated online. As the campuses grow in number, the group can now simply expand the control system to maintain quality of exposure, curriculum and learning across various locations.
Given the faculty crunch sweeping across India, finding quality teachers is also a challenge, and the institutes are finding innovative ways, including technology-linked tools to address that. “We have projection facilities for about 500 students at all our centres, and with the help of internet we ensure a standard curriculum and teaching pattern across our centres,” explains Natarajan of BITS.
During the expansion phase, land acquisition is another major challenge. Land is not always available at concessionary rates, and many times institutes have to spend huge amounts to get hold of the right plot. BITS was lucky to receive 180 acres of land from Birla’s Zuari Industries, for its second campus in Goa. In Dubai, since a foreign entity could not own land, BITS decided to partner with Emirates Trading Agency (ETA), a leading industrial group, to set up its campus there.
When expanding into new geographies, institutes also have to design courses and programmes keeping in mind the demand of the regional population. The courses that are relevant in London might not be relevant in Goa. For instance at its Jaipur campus, Amity has more programmes dedicated to family enterprises since family-run businesses abound in that region.
The Road Ahead
In spite of the challenges involved in the multiple campus format, the extent of potential in this form of expansion cannot be ignored. The E&Y-EDGE report says that strong macro-economic and demographic drivers coupled with a gap in public spending will accentuate the relevance of private sector in higher education in India. While reiterating that many players are not present in this space due to structural and regulatory challenges, E&Y India partner Amitabh Jhingan says that private equity investors could play an important role in the expansion of India’s higher education infrastructure. Private equity investments could also help institutions approach expansion through multiple campuses in an organised way.
Most established private players have realised that this form of expansion is a reasonable way to grow, specially since India needs more institutions to increase its GER in higher education. It is time that others also see the advantages and contribute to improving the education environment in India.
Write in your views and opinions about the stories in this magazine or on any other issues relating to higher education. Send them to the Editor, EDU at editor@edu-leaders.com
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