Wednesday 17 December 2008

Is Global education market ripe for IT consolidation

Having spent number of years in global IT outsourcing industry and having helped clients consolidate their IT operations, I had always wondered why the Education sector - which commands one of the largest percentage of global GDP spend - accounts for such little share of customers for IT vendors. Now that I have been spending time with the decision makers in the sector for the last year or so, I have an inkling of why.

Unlike private sector, the education sector has no incentive to streamline IT operations - the sector is mostly run by academics who do not see IT as core part of 'running a business' - in fact, many academics do not even consider their operations a 'business'. On top of it, since most of the establihments are either owned by the government or chartibale trusts, there is no shareholder pressure (unlike in private sector) to bring in efficiencies and economies of scale.

The result? An unwieldy set of operations where each establishment repeats exactly the same set of processes - across customer segments and countries, with no focus, incentive or 'management' inclination to make things better and efficient, despite the tax holders indierctly paying for such inefficiencies all over the world. Thus, the concepts of outsourcing, shared services and common business processes are unheard of.

Will things change - probably, though I supect they may change more as establishments get privatized or as they compete more with private sector education provider. However, in the short term, I do not see governments or academicians doing much to drive efficiencies in the sector.

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