Published On: Fri, Feb 3rd, 2012

Crisil: Higher Education space heading for a shakeout

EduShine Academic Search

CRISILA shakeout in the higher education space in India is imminent on account of declining occupancy levels, according to Crisil Research.

The average occupancy rate declined in 2011-12 to around 67% for engineering colleges and to about 65% for business schools despite low penetration of higher education and healthy demand for skilled manpower, according to Crisil Research. While the number of seats has increased, several colleges have not been able to equip students to meet corporate India’s requirements.

“Low occupancy rates are making it difficult for many lower-rung colleges to sustain operations. As a result, we expect a number of colleges to face closure or change ownership over the next few years,” says Ajay Srinivasan, head – industry research, Crisil Research.

The research cites a wide variation in occupancy rates across states and grades. For example, engineering colleges in Andhra Pradesh and Uttar Pradesh had an average occupancy of around 60% and 40% respectively, which is much lower than the pan-India average. Tier-4 B-schools, estimated to account for around 36% of the total seats, had an average occupancy of only around 50%.

Occupancy levels are under pressure due to the increase in the number of seats across colleges, shortage of skilled faculty, absence of industry link-ups, increasing awareness among students. Quality of education is another major concern, as an overwhelming percentage of students from lower-rung engineering colleges and B-schools lack skill sets needed to start working, without extensive training.