vocational education Apr, 05 2014

Risks & returns of going global

The Indian education system is one of the largest in the world and has been evolving from being purely knowledge based in the past to become more skill based. This has led to emergence of niche segments like vocational training, e-learning, skill developm

By Yamini S Verma, TFW Bureau
Sr. Sub-editor
Risks & returns of going global

Here is a glimpse to this segment of vocational training brand that are going abroad and are facing challenges while foraying into the international market via franchising.

According to the reports of Indian Vocational Education Sector: Trends & Opportunities (2012-2017) by MarketResearch.com, a comprehensive collection of market intelligence products and services on the web, Vocational Education and Training (VET) in India being a concurrent subject, the responsibility is shared by both central and state governments. The government has set a target to skill 500 million people by the end of the year 2020. It has already started working in this direction and has taken a number of important initiatives. Traditionally vocational education training in India was provided by institutes in the public sector but now many private institutes have forayed in either alone or in association in government body in the form of public private partnership (PPP).

Some of the challenges that confront VET in India are low relevance of vocational education courses to job market needs which leads to low success of VET graduates. There is shortage of quality faculty in vocational training institutes as there is no provision for training of vocational teachers. Lack of fund in these institutes and less private participation are also some of the major setbacks for the segment.

Similar problems are faced by the vocational training brands that have entered the foreign land and are putting their 100% to come at par with their counterparts.

Desi turning videshi

Every business brings along with it the challenges to establish itself in the respective industry it belongs to. India has become a good platform for retail, F&B, Health and Beauty businesses. Education sector being the prime of the all is going global after winning accolades for their services and products here in the desi land. To gain same recognition for their brand via franchising, many vocational training education brands are foraying videshi market.

When starting a new business, entrepreneurs usually start out small. The major reason behind this small investment venture is the apprehension regarding the challenge they might have to confront in the initial stages. The scenario remains the same for all small or big players in the educational sector in vocational training segment that are willing to expand or have already expanded abroad.

For edupreneurs, starting a vocational training institute can be extremely exciting as well as challenging. It is hard to delegate work to anyone as there is a lack of skilled manpower in the service sector. Apart from hurdles like lack of funds, lack of experience, small or no social and marketing network and time management bothers an Indian brand to establish itself overseas.

Big shots and their hindrances

Aptech Ltd, a computer training institute follows an asset light model and specializes in franchising. The brand is operational via business partnership, joint ventures, master franchising for international expansion.

According to Shrutidhar Paliwal,Vice President & Head, Corporate Communications & Media Relations, Aptech Ltd: “Franchising is a great route to follow since it offers tremendous viability to the franchise. Success in India across IT, animation & Multimedia, Aviation & Hospitality, Hardware & networking, English Language training paved way for an international recognition and branding. With this realization of international appeal, a surge came in with the proliferation of IT training as more number of students wanted IT training & more contemporary education which makes them employable.”

With brand’s strong presence abroad, her challenges mainly comprises of local knowledge of laws, customs & social values, understanding & research of the market dynamics and student population and a high cost of continuous updation of courses, regular training to trainers, channelizing most contemporary subjects to study and with franchising the business partner shares a very nominal one are some of the few and notable challenges faced by the entrepreneurs worldwide.

However, Rajendra S Pawar, Chairman, NIIT Group believes: “No two countries have identical opportunities, and hence the consequent challenges also differ. The challenges may vary according to each country's economic situation, the present Government's policies and priorities.”

NIIT with plans for aggressive expansion abroad, boasts to be called as the McDonalds of computer education in India for rightful reasons. The brand opines that it was the very first time that it developed systems and processes to ensure uniform delivery of education across and student experience across multiple locations. Whatever may be the model, the underlying business philosophy of NIIT has always been that its success is a derivative of the success of its business partners. In the international arena, there are mainly three different kinds of models that are mostly prevalent which is franchise model, Build, Operate & Develop Model and NIIT Inside Model.

Challenges to overcome

Some believe that the major challenges faced by the Indian vocational training brands abroad if of understanding the local laws, especially the ones that govern business. Additionally, sourcing of the desired level & quality of manpower has also presented itself as a challenge.

Naveen Gupta, Executive Director & Ceo, Frameboxx Animation & Visual Effects says: “For the international markets, we are trying to source established educational providers such as colleges and technical institutions who are looking at expanding their product portfolio. This allows us to leverage their experience, penetration in the market and a deep rooted understanding of the local laws.”

Moreover, identifying the right partner who is interested in technology related education business is the vital challenge for the brand like CADD Centre Training Services Pvt. Ltd. N subramanian, vice president, CADD Centre Training Services Pvt. Ltd says: “Ours is the niche market. A lot of awareness needs to be created about the technology and products. Education licensing and program accreditation with the local Education Ministry and handling business in non-English speaking countries are some of the other problem.” For CADD Centre, franchising has been the expansion method adopted to expand in the global market.

Major Challenges faced by Indian brand while foraying international market

·        Lack of clarity on government policies with regard to the vocational education sector- Many countries does not recognise vocational qualifications from foreign brands unless they conform to local qualification frameworks.

·        Restrictions on foreign exchange remittances – Since most developing economies are facing economic challenges, it becomes extremely challenging for partners from such countries to remit monies to the franchisor for regular activities like franchise fees, royalty payments etc. This also results in a lot of protracted paperwork to aid such remittances.

·         Lack of clarity on Customs Duty / e-transactions – A large impediment at most times lack of clarity on what customs duty should be levied on educational books that are being imported into the host country. Sometimes, arbitrarily applying higher duty can make it unviable to import a consignment. Also, most developing economies still have not got used to e-transactions. Hence treatment of digital content transfer for taxation and remittance purposes is still largely an unanswered question in most countries.

Related: Animation education on the horizon

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