Nearly all American universities have experienced tremendous growth in administrative staff in the last 30 years. At most schools the ratio of admins to faculty has doubled. As this trend continues necessarily tuition prices continue to outpace inflation. Within our lifetimes it is likely that the cost of a college degree will exceed the cost of a twin-engine business jet airplane (in the 1950s four years of tuition cost about the same as a new Chevrolet).
If colleges cannot get by without adding more labor per student why not do as for-profit corporations do and add that labor in China or India? As noted in a December 1, 2003 entry, MIT has had great success outsourcing OpenCourseware programming and editing to India. Think about all the jobs at a typical university that are done primarily via phone and email. Obviously the entire IT department could be in India. Why not the registrar? How about most of the coordinating and tracking functions of the alumni office?
American labor is wonderful but it is a luxury that most American families can’t afford.
Business idea for the young readers: Start a university “back-office” service bureau in India or China. The folks who’ve done this for Wall Street have been very successful (New Yorker magazine did a great article this summer on Office Tiger, started by two Princeton alums). Most university administrations lack the initiative to manage staff overseas (or do anything innovative, actually) but they would all appreciate the potential cost savings. So they’ll need a contractor to do it all for them.
Philip – You are on the mark. The time for US universities to outsource administrative work has definitely come – the cost of US education is definitely perceived to be high by students outside of US – Firstly, part of the cost benefits, if transferred to students on account of this outsourcing would help. Secondly, universities themselves should begin to reward their faculties differently – stars should be paid definitely much higher. Thirdly, the cost benefit acheieved on account of outsourcing should go to funding research and incubate more enterprises – The need of the hour for the US and the world by extension is for America to innovate faster, better on a large scale and foster entrepreneurism. While, i do not know the potential of cost savings here, i beleive if the numbers are big, we shall see different appraoches that universities shall be taking to redeploy this savings. Universities now have to compete with online/virtual universities as well – whose cost structures are different. No escape for universities other than to try outsourcing in a big way.
Do you not see any kind of paradox in the statement “American labor is wonderful but a luxury that most American families can’t afford”?
To “sadagopan” – my experience with online/alternative universities – the primary cost advantage they have is not through less administration – lets face it – the administrators are often the people who raise the funds and make people pay their tuition – in fact they often have a larger percentage of administrative costs. They do not fund that wonderful welfare institution known as “tenure.”
> “American labor is wonderful but it is a luxury that most American families can’t afford.”
If this is true, why bother educating Americans anyway? It just means they will accrue student loan and other debt, paying what little they do have to foreign economies, and leave with a useless diploma, since they have moved from the ranks of those who “can’t afford the luxury” to the ranks of those who *are* the luxury no one else can afford.
It will work just fine if the universities concentrate on MBA and law degrees.
Philip… Fundamentally good idea but a bit off-the-mark. I say the place to start is the local-city grammar/high schools. Stupifying ratios of facilitators/coordinaters/assistants to actual teachers. Speaking of which, I say outsource the entire grammar-school industry to India. Much cheaper, certainly more effective, and you get your kids back with a terrific sing-songy British accent.
Phillip,
That is an interesting idea, but it is like asking an institution to jump from the 19th century to the 21st without any steps in between.
What’s my point? The way that I see it is that most educational systems in the us suffer from too much administration because they insist on operating as stand-alone institutions. At a grade school level, my metro area has over thirty seperate school districts. Each district has an entire heirarchy of staff that could easily be eliminated if the districts were all combined and, benefitting from economies of scale, a single administrative heirarchy served for all of the schools in the unified district.
At the university level, imagine if all of the big universities operated under a single administrative heirarchy? There would be a fantastic elimination of redundant chancellors and presidents… The cost savings would be immediately evident.
Of course the private sector of american business has been going through consolidation for the last century. Just look at conagra or viad to see how effecient companies can be by eliminating the most redundant portion of their staff, executives.
FWIW, I believe that jumping straight into overseas outsourcing would be too extreme of a change for the university system. Let’s start small, like broaching a Princeton/Harvard/Yale consolidation first…
What I like about this idea is that all the administrators will be available to the kids at the very hours when the kids most need help – instead of students having to rouse themselves for 2pm office hours, they can just IM at 2 am!
I had a business prof tell me that the fundamental problem with cost control at a university was the organizational chart – which he presented like this:
Professors
|
Administration
|
Professors
I would suggest that a lot of the exploding “administration” costs are either hidden perks to faculty, or essentially defensive measures (studies, committees, budget analysts) designed to make sure that nobody actually tries to improve the productivity of the professors.
Hope my little diagram comes out alright.
and of course it didn’t. The 3 terms are supposed to be one above the other – Professors then Administrators then Professors again.
To Owen…
Airlines suffer the same problem. Their org chart looks like…
Pilots
******
Administration
******
Maintenance
******
Pilots
Great insight on your part…
Rats I thought I could improve on the Owen-glitch. Yes my terms are supposed to be one-above-the-other.
Double-Rats “Pilots-Administration-Pilots” <sigh>
lack the initiative to manage staff overseas (or do anything innovative, actually) I’m sorry, shouldn’t that statement be about COMPUTER SCIENTISTS? There’s been soooooooo much innovation in that field, relative to the amount of money invested, right? <thinly veiled sarcasm>
Lack of innovation in computer science? I suppose so since 90% of what we use daily (gui, mouse, IM, collaboration) was already demoed in the late 60’s…
Of course we’ve been really, really busy getting the masses accustomed to ‘thinking different’ and not just wetting themselves with anxiety when sat in front of a computer screen.
And there really are lots of benefits through efficiency, reduced trip miles, enablement(where _did_ all of those file clerks go?)… More innovation can wait it’s turn to get implemented.
And speaking of innovation, how about innovation in the field of business administration. Most of the trends of the last 30+ years seem to consist of hiding true costs from the balance sheet, or just delaying them until after the current ceo gets their golden parachute.
Yeah, now that’s innovation.
p.s. If you really wanna see some innovation, then go to hell.com (seriously)
Clever article. Of course, this actually assumes that outsourcing would save money. It does, but only if the development process is dysfunctional in the first place.
End user to marketer to business analyst back to end user to spec to marketer to business analyst to developer who meets the spec but produces the wrong application back to business analyst update the spec over to end user back to business analyst to developer… iteration #1.
Yeah, if you’re going to do it this way, I guess you may as well get a cheap price on a developer hour. Problem is, you just paid three salaries for two weeks to save a few hundred bucks on a couple hours of coding.
I still think that they’ll eventually figure this one out.
> Obviously the entire IT department could be in India.
And when the network port is not working, they’ll fly someone over.
Or when the blade in the switch fails, they’ll just call a janitor over.
Or when 40% of all the PC’s are infected by viruses, they can all just call the help desk, which is a VoiP connection to an Indian call center where a bleary eyed support person with a thick accent will end up talking to an international student with a similarly thick accent from the other side of the world, where they’ll just say “Oh, please drop off your computer at ComSci Hall 102 tomorrow. We’ll ship it over here and fix it. You’ll have it back in two weeks.”
Sure, perhaps there could be some things shipped out, but face it, you’ll need to have front line support on the ground, helping out the people who don’t understand left from right click.
Now, if you just had all the students do the labor… oh wait, then you’d end up with financial software that looks like MUD code. Gah!
Why not just send everyone to study abroad in India? Whohaa, that way, we pay a lower tuition and still get american people educated… and yes, one might argue that our money goes then to India, but we would still get education in exchange anyways.
ZDNet today mentioned OpenCourseWare being written in India but for some reason did not identify the “east coast university” that purchased it, even though this information is well known. I wonder why.
http://blogs.zdnet.com/index.php?p=561
“From his personal experience, Shenoy drew upon two examples where his company turned to India to produce high quality solutions at a dramatically reduced cost. One was courseware product for a “large east coast university.” When iMC responded to an RFP with a bid that was one-fourth of the price of the competing bids. “Eight weeks later, we had the program installed and running with no quality problems.”
I have to agree with jak’s comment. There are intrinsic problems with the outsourcing model, which allow only a limited set of problems to be successfully transferred to a contractor on the other side of the world. The chaotic, communication-intensive work involved in administration is definitely not a good choice for outsourcing. Besides which, outsourcing by itself creates a new set of problems on both sides of the transaction. (some of which I’m covering on my site, http://outsourcee.blogspot.com ) Your average university management would just crash under the overhead.
A similar issue came up, I think in NJ, when a person on welfare called a welfare call center and it was in India. The issues were, couldn’t the person on welfare do this job; tax dollars not putting a US citizen to work but going out of the country. I heard Clinton propose once that there is cheap labor in the Ozarks and someone should figure out how to use it.
I have a relative who works at a University and they fired the secretaries, now you have PhD’s doing the photocopying instead of preparing classes, working with students, and doing research. And why do chancellors have such large salaries and perks, and football coaches 🙂 Do sports really help Universities? Has anyone ever looked at the PeopleSoft software that is sold to Universities… I think there is more bloat at the K-12 level – schools are so close together (8 blocks maybe in some areas)and each one has its own Principle, VP, staff and office space and equipment to go along.
Isn’t outsourcing a two-way street? If people come to the US to work, couldn’t a US-citizen live and work abroad. Actually I think I’d go to Ireland.