Pre-2008, India’s GDP grew at 9-10% but during past decade the intake in its engineering colleges has been growing at 100k per year. So we now have 1.5 million engineering seats per year; compare this with 550 thousand seats in 2006-07. While the supply of graduate engineers is too much more than the capacity of india to absorb them in jobs, engineering industries feel that the quality of engineering graduates is abysmally poor. The debate on quantity versus quality of engineering graduates from India, therefore, is at all time high. Check the ET blow up: A million engineers in India struggling to get placed in an extremely challenging market .
Very strange situation. Normally when supply is more than demand, the competition in the market place becomes tough and normalcy is restored quickly. We are already seeing the effect. With an occupancy levels of less than 50% of allocated seats, now several of these institutions are closing down or selling out their assets. Looks like the coming 4-5 years are going to be the real test of time for educational institutions as well as the over supplied graduates. Surprisingly, more than 80% of these seats are owned by private sector, and one wonders why so many organizations did not have the oversight or business sense of demand – supply mismatch. Unfortunately there seem to be some other motives behind starting so many institutions than business, philanthropy or allegiance to improving education in India. Also it seems that a large number of these institutions does not have the long-term commitment to have quality built into their educational processes, adequately qualified and updated teaching staff and industry interactions. Several of these though have sprawling campuses and infrastructure.
This situation is not just in engineering education, it is there in management schools as well, where seats in colleges have grown 4 fold to 360,000 in just 5 years from around 95,000 in 2006-07.
We do have a very serious problem of youngsters remaining unemployed and underemployed, with deep frustration of education not getting them their dream jobs. This is a big problem and needs issues to be handled at national level policies about higher educational and job generation. One thing I know specifically about engineering jobs (demand) is that India has a highly ambitious plan to improve share of its manufacturing GDP from 16% to 25% by 2022.And for this, it targets creation of 100 million new jobs. With the Integrated Manufacturing Zones being planned, there is a future rosy scenario; but knowing where manufacturing growth of the country is today and that last year we had one of the lowest industrial growth in more than a decade, we need to take fast forward initiatives.
Look at what over 100 practitioners from different industries have done to redefine the way manufacturing organizations must work to be competitive. Check their work : ‘The Path – Leveraging Operations in a complex and chaotic world’. Following this work there is a follow up book on making Indian industry more competitive so that the objectives of its New Manufacturing Plan could be fulfilled. The second book is ‘Building Manufacturing Competitiveness‘.
We knew that the deluge of a large number of engineering graduates is coming. Now we need every bit of our attention to create and secure engineering jobs in India, so that we could avoid a social backlash of unemployment.
Notwithstanding the plans for improving opportunities (demand) for engineering graduates, something equally dramatic must be done on the supply side. It therefore, behooves on serious educational institutions to relook into their operational model and dramatically improve performance of their graduates not only to make them industry ready but also to sustain their own growth.
Last month owners of a large group of institutions came and asked, ‘Is there a way we can come out of the current turmoil in education sector? We do not want to be running at 50% our capacity and fall by ranks soon. Is there a way we can better manage our institutions and sustain our growth for long term? We are committed to education sector.’
Like any other business, if we run private educational institutions as a business then we must run it with the rules of business that offer us opportunity to sustain and achieve its objective. Educational institutions must ask themselves following questions and then find the right answers in their own context.
1. What is the objective of the education institution?
2. How should the institution measure its success?
3. What is the decisive competitive edge its institution must have so that (more and more) students will join them year on year.
4. How does it build, capitalize and sustain the decisive competitive edge?
Only if above questions are answered and the strategy and tactics are drawn, an educational institution will have a blue print for getting closer to its objective NOW as well as in FUTURE.
To know more about how an education institution is following the path of improving its performance quickly and dramatically, read the next post on this subject, due shortly.
31 March 2014