Monday, May 09, 2011

Pearson India aims to step into the education void

Pearson Plc, one of the largest education services company globally and owners of Financial Times and the Penguin brand, views India as a laboratory in the education field. Post its acquisition of majority stake in Bangalore-based TutorVista, Pearson is planning an even bigger portfolio for itself. The President of Pearson India, Mr. Khozem Merchant, speaks to Business Line on the opportunities it sees ahead.

The Government has pumped around Rs 50,000 crore (Rs. 500 billion) into education in this year's Budget. You have said that this is a clear indication of a 'need gap' in the sector that can be filled by education institutions. What will Pearson's role be in bridging this gap?
I think first you have to step back a little bit and ask yourself why the Government is making such a colossal and welcome allocation. The reason for that is presumably that they believe, as everyone else believes, whether they are educationists, parents, administrators, that there is a big disparity between quality of learning and the demand for learning. That is a self-evident truth, but it is not one that has been necessarily publicly embraced for many years. But, it has been embraced now with great boldness and candidness by the Education Minister and his government, I guess for a couple of reasons. Over the past 15 years, accelerated economic growth has highlighted sharp disparities.

Unless these disparities are bridged, that level of growth will obviously not be sustainable… If India is to develop as a knowledge economy, services economy, then, it needs to have educated people as well as people with employable skills. Much of this is anecdotal evidence, but in the early period of economic growth, those gaps became evident as companies grew, recruited more people and discovered to their horror that people didn't have the skills despite the degree. … This is a general observation but one that crept upon India and the consequences of ignoring that is that the country would lose competitiveness vis-à-vis its principal trading partners and say China.

If it is ignored, it could lead to a big social problem considering the demographics of the country……if young people don't get jobs, it's a problem… So, that is coming to very sharp focus in the last 4 to 5 years… India needs to train its people in a way that it sets them apart from other sources of skilled labour…this is the broad macro perspective.

So, how does Pearson plan to leverage this gap?
Pearson has a big role…What we can do is manifold and India's needs are manifold and we think that as the world's largest education services company – by services, I mean the things that support the delivery of learning, its not just the content, its training the schools, managing the technology to provide learning tools, to provide remedial education – …we do feel that we can step in confidently into that gap in India. And the gap is a fantastic opportunity for India and I'm confident India will do it and it has done in the recent past, there is a precedent of similar gaps that have existed and India has done absolutely the right thing. For example, telecom and banking services where they made a great leap in telescoped time. It did in 3 or 4 years what mature economies take a lot longer to do… Indian reform can make these great exponential leaps for the whole generation in what is obsolete technology, obsolete learning, redundant techniques and redundant methodologies. So, the same can happen in education and it can happen through multiple suppliers. There are many very fine Indian companies and global companies developing the technologies but the point is steeping into that void…. we are excited because India presents to us a landscape of skills and capabilities, fantastic opportunities for providing services from K-12 to school management services to vocational training, and to professional education…. And there isn't in my knowledge a comparable organisation that has done breath or depth…we would step into that void with some responsibility and humility…

So, while we are talking about the government, there are some public-private participation (PPP) models that you've been looking at. There are reports that TutorVista is talking to states like Rajasthan and Maharashtra to get involved in PPP education ventures.
With the acquisition of TutorVista, we've acquired obviously a company with four sets of activities – one of them is K-12 into which this PPP activity could potentially fit. If they see PPP opportunities as a way to expand their footprint in K- 12, I'm sure they'll follow their nose on that. At another level of our strategic expansion here, we're looking at the private sector and I think in large measure that will remain our focus…

You have raised your stake in TutorVista to 76 per cent, through which you now manage 19 schools which are currently under the Manipal brand. There has been talk that you are looking at taking over more schools. Would those form a separate chain under the Pearson brand?
No. TutorVista is now a company that we control. We're very lucky to have a fantastic management and the founders with us, that's an important part of our thinking. As we move forward and as we think about opening up or purchasing managing control of schools, then certainly there will be a branding exercise few years down the line… the point is that in time it would be a brand and marketing of our choice rather than the one that we have inherited…in time the rebranding will take place.

You have a joint venture with Educom – India Can – for vocational training…. Where do you see this going?
We have a dynamic partner in Educom for vocational training, mostly for blue collar workers. Here, there is a fantastic opportunity. We are looking to spread to 120 centres, from the 80 right now. Here, we will spread education in a physical face-to-face format as well as online.

You and the Chairman have repeatedly spoken about India serving as a laboratory for the company. What has been your learning till now?
First, we have learnt a lot about price. This is a price-sensitive market and we realise that to build presence in the mass market, one of the things that we will need is our ability to maintain the quality of Pearson products, but those will at the same time have to be affordable. We now have a practitioner sense of the price sensitivity of the market here.

We have also learnt a lot about the art of distribution for this is not a homogenous market and it changes pretty rapidly any which way you turn. We have also grasped how this country offers tremendous opportunity for the application of technology for learning. And that is really exciting when the audience is large and dispersed.

We can also offer a lot of our products only online and need not have them in the physical form… they could be in digital form… it is more the distribution of learning and not the distribution of books as we consume learning now it in many different ways. Our children today consume it in many different ways and the skill there is to master the different distribution channels. A markets like this and others with the same socio-economic profile forces you to grasp that.

Source: Business Line, May 9, 2011

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