Education in India – Next Transformation?

One of the most impressive aspects of our trip to India was the amount of talent that was present in the people that we met during our numerous company/government/village visits. We all know India as a nation that produces leading edge IT systems and engineers. When it comes to IT, the world knows the ingenuity of Indian engineers.

India has 350 universities, 18,000 colleges, and 6,000 industrial training institutes (ITIs). Out of the 2.3 million graduates, approximately 500,000 are technical graduates in the IT field. The National Association of Software and Services Companies (NASSCOM) estimates that 75% of the 500,000 IT graduates are not easily employable and 90% of the 2.3 million graduates are considered unfit for employment.

The first problem is the mismatch between students’ salary expectations and companies’ offers. It’s interesting to see the same issues that I saw during my undergraduate days among my peers in engineering. I also remember rejecting several job offers with low compensation being the main reason. When the media publishes 80 lakh offers made by companies like Samsung (approximately $146K US) and six figure offers in Silicon Valley straight out of undergrad, it’s hard not to set the bar as high as your peers.

The second issue is the lack of essential disciplines offered at these institutions, many of which employers highly value. Some of these essential disciplines include agriculture, biotechnology, and human resources, but a larger issue lies in the practicality of the courses taught at the institutions. There is a certain need for modernization of the curriculums of the majors offered at these schools. For example, a general feedback given to my undergraduate institution was that many students lacked effective communication skills. Therefore, the school integrated a mandatory communications course into the engineering curriculum. Apparently, many companies in India are facing the same problems when employing engineers in India so the educational institutions will need to address this issue.

The third problem is the students’ preferences to work in IT and the lure of IT salaries and the resulting skew of human capital in IT compared to other industries. Currently, 500,000 graduates have degrees related to IT out of the 2.3 million graduates per year. This means that approximately 22% of the people who have successfully completed post-secondary education want to go into IT. Despite the supply in IT, there is a huge demand for professionals in other industries such as civil engineering. During our trip to India, we saw the need for developed infrastructure to both better the lives of Indian citizens and help businesses overall. Civil engineering firms can tackle this issue with enough relevant human capital in this field. Other demands for professionals include cyber lawyers, nutritionists, paramedics, human resources professionals among many others. If India can motivate people to work in a more diverse range of industries, a well-developed India, not just IT India, may not be too far off from the present.

Hot Wheels: The Magic School Bus

Since our learning expedition touched down in Chennai a couple of weeks ago, our primary source of transportation had been the minibus. It isn’t your average minibus. It is a rather spacious 23 seater. The minibus has a milky white paint job and even comes with beige curtains to shield its passengers from the blistering Indian sun. It has both a driver and his sidekick. This sidekick is responsible for opening/closing the door, dealing with security guards at our destinations, and making sure that all passengers are comfortable (this can also include distributing bottled water).

We relied extensively on the minibus to get us from point A to point B in Chennai, Agra, and Delhi and rarely made use of taxis, public buses, or rickshaws. Not only was it a comfortable and reliable form of transportation, but we were also able to take in some of the unique sights and sounds of India. Fortunately, we had Prasad and Mahesh (I-India educational trip organizers) in addition to Professor Sundaram to answer any questions that might have arisen as we peeked out the window.

Sights: As we ventured from one point to another, we endured large amounts of traffic on the road. Motorcycles with an entire family on it, large crowded buses, and midsize cars were all vying for a place on the narrow road. It would not be unusual for some 2-3 cars and multiple motorcycles to share a two lane road. Every now and then, you would also see a large cow roaming the side of the road or even simply ‘chilling’ in the divider between opposing sides of traffic. You would then pause and ask yourself, “How on Earth did these cows not get hit by any moving vehicle?” We quickly learned that cows are sacred in India and have a special role in the Hindu mythologies. Consequently, no one would dare kill a cow even if accidental. Could this be where the expression “holy cow” comes from?

Sounds: There was one pervasive sound that was continuously heard on the roads: the honking! And when I mean continuous, I really do mean non-stop. It seemed as though drivers would literally drive with one hand on the car horn. Given how densely populated the roads were and the amount of congestion, I guess it is only natural that you would continuously honk. Moreover, it was not unusual for many of us to go back to the hotel and continue to hear the honking!

Hot Wheels, our primary form of transportation

The comfortable interior of our minibus

A little traffic never really hurt anyone

Visit to TERI

On our last day in India, we visited TERI(Tata Energy Research Institute) university, located in the south of New Delhi. TERI, is a research institute established in 1974, and its focus fields are energy, environment and sustainable development. The Institute’s Director General is Dr. R.K. Pachauri, who is also the chairman of the Intergovernmental Panel on Climate Change that won the Nobel Peace Prize in 2007.

Before we head to TERI University, we had chance to visit TERI RETREAT and take a walk around beautiful trail and garden. I really enjoyed relaxing time of being out of honking while being around green that I had not had during the trip. After 30 minutes of introduction of TERI and its green buildings, we explored different parts of the site in order to study how TERI facilities are designed to be self-sufficient in terms of power supply and also to study the technologies that the institution develops. The facilities in TERI RETREAT use process that is environmentally friendly and resource-efficient throughout the life-cycle of the facilities. TERI RETREAT consists of a residential training facility for executives and research laboratories of various fields regarding environment and sustainability.

Our tour started with the residential complex. The building uses bio mass gasifier as the power source. The building faces south to maximize sun light gain and has solar panels on the roof, the energy from which is used to heat up water. The building maintains its room temperature at 20 °C in winter, 28 °C in summer through circulating underground air from 4 meters below as the temperature of underground air is around 26 °C all year around. The facility can save around 40% of energy with this air conditioning system compared to conventional way. The waste water management system cleans waste water from toilets and kitchens by using reed plants. The way that the complex utilizes plants and air conditioning system to minimize energy consumption was very impressive, and I was surprised by that fact that India ranked second globally for green building in terms of square feet after U.S because my first impression of India was far from ‘green’ after seeing loads of trash and untreated sewage every corner and breathing in polluted air in Chennai and New Delhi.

(Check out the news from The Hindu Business Line if you are interested in. http://www.thehindubusinessline.com/industry-and-economy/economy/article3296791.ece?homepage=true&ref=wl_home)

Although it will be challenging to adopt the technologies used in the TERI complex in urban areas with limited space and dense population, I became more optimistic about environment in India after this tour.

After exploring residential complex, we moved to bio mass gasifier site as well as laboratories of oil zapper. Oil Zapper is basically bacterial strains that suck up oils and convert them into water and CO2. The product can be widely applied for oil refinery sites and oil splits caused by accidents. The product interested me because Korea had a massive oil spilt in Taean County in 2007. At that time, more than 1.8 million volunteer workers cleaned every stone in the beach by hands. Although effective microorganism products were used after much of work had been done by hands, it might have taken shorter time to revitalize the area if products like Oil Zapper had been applied in the earlier point.

TERI showed me whole different story of India, green technology. We traveled to TERI university campus and wrapped up our visit by attending lectures given by Dr. R.K. Pachauri, Dr. Srivastava of TERI and Professor Sundaram regarding climate change and business.

Life back home – is it different?

I have been back in Korea for almost a week.  When I landed in Incheon Airport, I admittedly have to say that I have never felt so glad, grateful, and relieved to be back home.  Now that I have settled down and had some time to reflect on my time in India and comparatively live in my motherland, I think I can give a more thoughtful and unbiased view of what I have experienced for the past few weeks.

I apologize in advance if the reader was looking for more insight or cultural experience in India, for this is going to dwell on my inner thoughts and learning (relatively void of references to India).

I often heard people say “have appreciation for cultural differences.”  I, 100%, agree and that’s the attitude I have armored myself going to India (and few other countries I visited prior to India).  What people may forget is “appreciation for the familiar.”  After India, I have become even more keen to the details of comfort that I have been surrounded by.  From a well-lit, heated public transit (or even the existence of it!) to eating without fear of any food (there’s a facebook picture of Korean and American T’13s eating street food in Seoul after I got back), there’s a plethora of luxury and safety that I had taken for granted and normal.  I am enjoying and grateful for this heightened sense of observation and appreciation for my surroundings; though I know it will fade away, I hope I can retain a good dose of this perspective for as long as I can.

The second perspective I have gained is to look at the environment from an outside-in view.  In India, I looked at India as a foreigner.  There are some local customs that I had hard time adjusting to (i.e. little regard for personal space or staying/getting in line) and I admittedly erred on the side of “that is rude” than “wow, that is fascinating.”  Coming back to Korea, I started evaluating what Koreans (and myself, including) deemed as a normal course of life; as little detail as getting jam-packed in the subway during the rush hour to yelling out for service at any waiter walking by, I asked myself “how would a group of foreigners respond to this?”  I had always thought that Korea is a westernized and developed place – besides the language issue, any foreigner could live here easily.  When I looked at these little details, there are issues at which a foreign would have had hard time adjusting to, just like I did in India; I was blind-sided or rather numb since I grew up in this culture and thought only natural.  With that, I felt a little dose of embarrassment and guilt that crept up on me for having thought the way I had in India.  It’s amazing how things can go from negative to neutral or positive or visa versa with the flick of a perspective.

Overall, I really appreciated my experiences in India.  It was a learning experience as well as a bonding experience.  Phil, Sewon and I still exchanged few jokes when we met yesterday; and I am sure my whole group have a lot to catch up when we head back to Hanover.

Safe travels and see you all back in Hanover.

A Drink With Suds

We spent our first night in Delhi with Sudershan Tirumala (“Suds”), a 2010 Tuck graduate currently working as a growth equity investor providing capital to promising Indian companies. We met at the magnificent Punjabi by Nature restaurant just a couple of minutes from our hotel; which, in addition to its succulent food, offers a 2 for 1 happy hour special that became a staple of our Delhi trip. Our conversation focused both on his personal Tuck experiences as well as the nature of the private equity and venture capital industry here in India.

His passion for both Tuck and India was very apparent and inspiring. We all loved hearing about how his Tuck nickname followed him across the world and greatly appreciated the fact that Suds flew in from Mumbai just for our dinner. He described his intense desire for both private equity investing and for the emerging markets, especially India, and his deliberate and thorough methodology for achieving his goal. Recognizing his lack of emerging markets, Suds studied abroad at HEC in Paris and then orchestrated independent study focusing on fundraising of private equity funds which was the first ever private equity at Tuck with a non-Tuck professor as an advisor. He used a targeted but aggressive approach to recruiting, including a broad networking effort, recurring trips to India and successful private equity summer internship.

While listening to Suds rehash his Tuck days, I could not ignore the similarities between his recruiting philosophy and mine. Over the past year and a half I have sorted through a database of over 500 private equity funds and reached out to over 150 as well as performed an independent study for a small private equity fund. This led to a summer internship in London with a private equity fund focused on emerging markets which was a very educational experience for me which I hope to leverage into a full time offer. Overall, his success using this approach was very refreshing.
In addition to Tuck memories, Suds offered fantastic insight into the nature of the private equity market in India.

Overall, I was surprised how similar the industry looks when compared to the US. Similar multiples were used for target investment values, and investors sought similar return characteristics (20-25% IRR) despite what would be perceived as a higher risk environment given the emerging economy. But there were two more similarities that really surprised me. First, Suds mentioned that the majority of growth equity investments are exited by selling to a larger buyout private equity arm as opposed to IPO or to a strategic corporation. Given the relatively young nature of private equity investing in India and the conglomerate nature of family owned businesses, this seemed counterintuitive. What enables this, which is surprise number two, is the amount of leverage used in private equity transactions is similar to that in the US. This is despite significantly higher interest rates (Indian treasury bond is 7% compared to US rate of 2%) and the added interest burden imposed on acquisition targets. In general, myself and my classmates came away very impressed with Suds and the level of sophistication of the private equity industry in India.