Outsourcing Higher Ed

By Richard Vedder

When CCAP, the higher education research center that I run with the help of the estimable Bryan O’Keefe, decided to upgrade from our initial web page designed by my former student Brian Fruchey for nothing, we looked first at Washington, D.C. web designers and were quoted prices in the $5000 range --with $600 extra for quick service. What did we do? We went to India, and got an attractively designed site -- for $200.

There is a lesson or two in that for American higher education. First, projects using a good deal of brainpower and technical expertise can be performed much cheaper using some of the literally millions of low wage bright professionals in Asia. America is losing its "comparative advantage" (low cost edge) in some high tech knowledge-based areas.

To the extent Americans are going to increasingly use distance learning as a tool in disseminating knowledge, what is there to stop on-line institutions based largely in, say, India or China, from offering low cost degrees? Will globalization become an increasing factor in the U.S. academic marketplace?

I believe many people go to college as much to "consume" as to "invest." They go to have a good time, pass an amiable transition from high school to the world of work, picking up some marketable skills in the process. Drinking and sex are as much as college life for millions of students as books and exams. What my friend Jim Duderstadt (former prez at the University of Michigan) calls the "socialization" dimension of higher education is a major driver of college costs. For this vast market of students, cheap on-line Indian degrees are probably not much of a lure. But for working adults who want to "invest" in education to boast earning power or simply increase their sense of well being through learning, the cheap Indian degree is a real lure.

Already, entrepreneurs are aware of this and eyeing a broad international market in higher education at an affordable price. One such person with a great previous track record is Randy Best of Dallas, who made a pile of money on his Voyager reading program and is now entering higher ed in a big way in a variety of venues --an Early College program targeting high school kids, a national college of education, and a broader international university effort. I suspect the University of Phoenix and other heavyweights in for profit higher ed are also taking steps to tap this huge market. Randy Best once told me he thought he could make money with a $1500 a year college degree program. There are millions of persons living in Third World countries who are price sensitive and for whom Low Cost U is a real lure, assuming the quality is good. This possibility of outsourcing distance education may not ultimately do much for the incomes of some American academic types who earn a decent living doing on-line instruction, but it will serve the world and Americans, by offering lower cost alternatives to our increasingly pricy and inefficient system of higher education.