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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.

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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.

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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.

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