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Indian students with foreign degrees returning home:

Lessons India can learn from China
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By Malini Goyal, ET Bureau | 23 Mar, 2014, 10.48AM IST

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

High costs, poor job prospects and wrangles over work

permits are persuading a host of Indian students with foreign
degrees to return home.

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to get good grades but worked even harder to find a good job. By tapping into networks of

investments

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

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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.

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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 welltravelled, 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.

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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.

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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 2emerge 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.

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