WHY INDIAN STUDENTS GOING ABROAD ARE RETURNING HOME?
Costs,
poor job prospects and wrangles over work permits are persuading a host of
Indian students with foreign degrees to return home
Akshay Kumar, 25, knew his journey would be tough.
But he thought he was prepared.
In 2012, after an engineering degree and a oneyear stint with a
multinational, Kumar felt he needed a makeover. “I didn’t want to be stuck
with civil engineering all my life. I also wanted to see the world and
explore new options,” he recalls. Doing an MBA from a premier institute was
on his mind. He did think of the Indian Institutes of Management (IIMs) and
the Xavier School of Management, but the desire for global exposure pushed
him to explore options overseas. Kumar settled for a oneyear post-graduate
course at the Imperial University in the UK, which he financed via an
education loan. “Visa rules and the bleak job market there did weigh on my
mind. But I had a feeling I could manage it,” he says. He had confidence in
Imperial’s good global ranking, its alumni network and his own hard work.
Kumar began his hunt for a job virtually from the
day he landed in the UK. He studied hard to get good grades but worked even
harder to find a good job. By tapping into networks of his alumni, friends
and family, Kumar reckons he would have reached out to over 200 firms
during that year. “It didn’t work. My good grades made me eligible for
plenty of jobs, but my non-European Indian passport was the problem,” he
shrugs.
Kumar moved back to India late last year and has
just landed a job with a private equity firm. “All my plans have been
delayed by five years,” he says. Close to half his salary today goes in
paying monthly instalments on his education loan.
The World isn’t Flat
The West has a problem. Its economy is in a funk, not enough jobs are
being created, cautious companies aren’t hiring too many, and worried
governments — from the US to the UK — are raising visa barriers for foreigners
to work in their countries.
Young Indians, who went overseas for education, are
facing a tough time finding a job. Many like Kumar have returned home. And
some are now casting the net wider — looking for jobs from the US to Hong
Kong and Singapore — or settling for sub-optimal options. Rupa Chanda,
professor, IIM-Bangalore, who has worked on reports on international
student mobility, says visa and immigration is the biggest factor affecting
Indian students’ decisions.
The US, the UK and Australia — the three most
popular destinations for Indians seeking global education — have seen the
number of Indian students come down over the past few years (see Out of
Favour?). Remember, many Indian students take hefty education loans to
finance their studies abroad. While many would find decent jobs back in
India that would not help much as these students need dollar salaries to
comfortably service their loan. This is taking its toll. “Overseas
education is costly. Many Indian students are doing a cost-benefit analysis
to figure how to recoup their investments overseas and putting off their
plans [to study there],” explains New York-based Rahul Choudaha, chief
knowledge officer, World Education Services (WES), a non-profit
organization that provides credential evaluations for international
students planning to study or work in the US and Canada.
But to be fully able to understand how this trend
will play out, one must understand the backdrop. A big generational shift
is taking place among the students looking for overseas education. Many of
them now are India’s liberalization children, who have grown up post-1991
and lived in an increasingly global world with fewer barriers. So in many
ways this is their first brush with a world with barriers. Many are also
children of globetrotting well-paid senior corporate executives who think
differently about education, exposure and investing in a world-class
education. “These parents understand the long-term rewards of a world-class
education. I see many of my friends taking their children to these top
campuses after they pass out from school to give them a first-hand feel,”
says Hema Ravichandar, strategic HR expert and a former HR head of Infosys.
Woes on Foreign Shores
Both of Ravichandar’s children have studied overseas. Her daughter,
Aditi, is doing her MBA from Wharton in the US and her son Nikhil, 22,
completed his Bachelor’s in economics from Warwick in the UK. Nikhil chose
the UK over India because of the flexibility available in picking courses —
he wanted to do economics with law which was impossible in India with its
rigid course structures. “Education in India is not very research-driven
and multicultural,” he adds.
But during his stay there, the UK revoked the
two-year work permit for foreign graduates. Thus he needed a firm job offer
to stay on after graduation. This was difficult since he was particular
about the kind of work. “I wanted a job in economic consulting,” he says.
Unable to get that he preferred to do a postgraduate programme instead.
While he did not take any loan, for many of his classmates, who had taken a
hefty education loan, things were difficult.
Now, Nikhil is back in India getting some
interesting exposure at a few start-ups in Bangalore, India’s Silicon
Valley. He is contemplating a startup of his own. “This is the best time to
take the risk and explore it,” he says.
Across the Atlantic, Sujoyini Mandal, in her 20s,
offers another peek into the odds that Indian students face overseas. After
her graduation from Jadavpur University, Mandal went to Singapore for her
postgrad and worked with a think-tank there. Life was good but since she
had
always yearned for a degree from a world-class university, she applied for
a Master’s at Harvard’s Kennedy School. For two years, she deferred her
admission as she did not get any financial aid. She saved some money and,
with a bit of aid, finally took the plunge in 2011. Foreign students in her
college face an education loan cap of $30,000 ($15,000 a year), she says,
making things even more difficult
Mandal started looking for a job when she graduated
in May 2013. But mandates that fitted her needs and aspirations were not
easy to come by. She did land a contract with the World Bank but that was
short term, uncertain and had no medical cover. Last month Mandal finally
landed a job with an investment bank.
Despite such struggles, there are many reasons why
the pursuit of overseas education among young Indians is unlikely to die
down any time soon.
The Demographic Bulge
Every year, around 800,000 Indian students reportedly go overseas for
their education. This costs the country close to $15 billion of forex
annually, estimates industry lobby Assocham. If students are going overseas
for education, it’s because India has a problem of both capacity and
quality. The country has one of the world’s largest education
infrastructures: 600 universities and 34,000 colleges with 17 million
students enrolled and 5 million students graduating every year. But India
is also witnessing a demographic bulge — it has perhaps the world’s largest
young population. Experts estimate that some 100-million-odd students will
seek higher education over the next decade.
The capacity problem is compounded by the quality
issue. About 70% of the capacity in India is of poor standards. At the
other end of the spectrum, competitive intensity at the premier colleges is
so stiff that it is often easier for bright students to get admission in
Ivy League colleges in the US and the UK than in the IITs, IIMs and even
top colleges in Delhi University.
All this coincides with the rise of India’s
aspirational upper middle class. Over the past two decades, many
first-generation Indians have risen up the corporate hierarchy and are
financially well-off. These well-travelled, financially stable corporate
executives desire the best for their children. “They are looking for the
best educational experience. They know it is a life-long asset. Indian
premier colleges do not have the capacity and are very rigid,” says TV
Mohandas Pai, chairman, Manipal Global Education. Pai’s son studied at
Stanford University in the US and now works for a start-up in Silicon
Valley.
This aligns well with the global trend of rising
international mobility of students. According to Institute of International
Education (IIE), since 2000, the number of students leaving home in pursuit
of higher education has increased by 65%, totalling about 4.3 million
students globally. What is more interesting is that the share of students
from the developing countries in this pie is rising — it moved up from
54.8% to 69% between 1999 and 2009.
India vs China
Not surprisingly, the world’s two most populous and powerful emerging
countries — China and India — send the largest number of students overseas.
But China has rapidly shifted gears to overtake India.
Consider what’s taking place in the US. In 2000-01,
India topped the list of international students by country, with 66,836
against China’s 63,211. But by 2009-10 China had overtaken India. In
2012-13, China sent 236,000 students; India was nudging the 97,000 mark.
While the number of Chinese students has been growing in double digits of
late, that of Indian students has been sliding.
To understand why that is happening, it is
important to analyze the profile of students going overseas from both the
countries. Chinese students going to the US are evenly split between
undergraduate (40%) and postgraduate programmes (44%). But Indian students
are heavily skewed towards postgraduate programmes (55%) with just 13% at
the undergraduate level. Indian students are also unique as over 60% are in
the STEM (science, technology, engineering, maths) category. Bear in mind
that historically, postgraduate and STEM programmes offer more financial
support than undergraduate and non - STEM programmes.
“The decline in Indian students is directly related
to the ‘Strivers’ [value-for-money seekers as per WES research, see
Different Breeds], who have been putting their plans on hold due to increasing
cost of studying abroad which in turn was triggered by economic uncertainty
and currency devaluation,” says Choudaha.
A majority of Indian students arrives at the
Master’s level and funds education by taking loans as financial aid from
colleges has dried up. So, while the majority of Indian students go for
education loans, Chinese students are supported by their families.
According to a research by WES, 47% of Indian respondents report loans as
one of the primary sources of funding as compared with only 3% of Chinese.
Chinese students, in contrast, are “explorers”
(experience seekers), says Choudaha. Often the only-child of financially
well-off parents, they have the financial wherewithal to study abroad and
are under less pressure to find a job there.
But change may be afoot. Some Indian students could
make the transition from ‘strivers’ to ‘explorers’ and Choudaha expects
more and more Indian students — most of them children of well-off senior
executives — to go overseas at the undergraduate level. Not so dependent on
financial aid, he also sees many more Indians exploring new
interdisciplinary fields, beyond STEM. Even in the STEM category, experts
feel that Indian students will be the biggest beneficiary as the Obama
government eases rules for this critical segment in future.
Lessons from China
Two decades back, China faced problems similar to those India faces
today — its higher education had both capacity and quality issues. Since
then China has worked hard to upgrade its educational institutions. It has
two programmes — Project 211 and Project 985. The former aims to make 100
Chinese universities world class in the 21st century; this will help China
churn out world-class trained professionals to push economic growth. These
universities are expected to set national standards for education quality
that can be replicated by others.
Project 985 started more than a decade back and is an attempt to build
China’s own Ivy League colleges in the 21st century. In the first phase the
project included nine universities. The second phase, launched in 2004,
includes 40-odd universities. The projects have been backed by significant
investments. According to a New York Times report, China is investing $250
billion a year in human capital.
The dragon country’s efforts are now bearing fruit. Many Chinese
universities are climbing up the global ranks. Two Chinese universities
have made it to the top global 50 in the Times Higher Education report.
India has none. In the top 500, 16 Chinese universities make the cut
against seven from India.
Mobile international students are taking note. A
decade back, China was hardly on anybody’s radar. Today, it is the third
largest education hub in the world after the US and the UK with 3.28 lakh
international students, according to IIE. By 2020, it hopes to host 500,000
international students. Even Singapore is targeting 1.5 lakh foreign
students by 2015. In contrast, India was home to just 27,000 international
students in 2012. China is aware that to push innovation and realize its
economic ambitions, it must be able to attract top talent — in its colleges
and workforce.
Also, in virtually every key statistic, the world
today is seeing a shift from the West to the East. From economic GDP to
consumption power, MNCs across the board are looking at Asia and the
world’s two most populous nations. This shift is happening demographically
too. But in the education space, the West still dominates. Of the world’s
top 100 universities, 46 are in the US. Seven of top 10 universities are in
the US. Asia has just 11 in the top 100. “It is difficult to replicate what
US has done with its universities to emerge as an innovation hub,” says
Pai.
So, ambitious and aspirational Indians will
continue to look overseas for education. But if India has to realize its
potential, it must invest heavily in building world-class institutions in
the country — the China way.
•
Malini
Goyal ETM140323
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