Global Trends in International Education Skills Innovation September 2008

Key Trends 1.Changing world 2.Australia’s changing demographic 3.Changing nature of demand 4.Changing marketplace The emergence of the private sector Growing competition 5.Changing modes of delivery Online TNE 6.Growing importance of branding and delivering on the promise 7.Skill shortages within the Australian workforce

Radical Transparency There’s a growing acceptance of living life in the open – in fact, many are actively embracing transparency. facts: –Top 10 countries in order of active users: U.S., Canada, U.K., Australia, Turkey, Sweden, Norway, South Africa, France and Hong Kong. –Over 61 million active users. –Over 6 million active user groups. –Over 18 million members in the U.S., over 7 million each in Canada and the U.K. –More than half of Facebook users are outside of college. –The fastest-growing demographic is users 25 and older. –More than half of active users return daily. Changing World

Mobility Marks the Generation Divide Changing World

Australia’s Changing Demographic Australia’s population is ageing – a result of two key factors: –Falling fertility rates –Increasing life expectancy Australia’s population is growing, albeit slowly. Some forecasts predict that population may contract over the next century. Australia’s Changing Demographic

Population Trends by Age Group Australia’s Changing Demographic 0-19 year olds increased by only 1.1% since In comparison, those aged 60+ increased by 14% over the same period.

Domestic HE Students by Level Most of the growth in domestic students can be attributed to the increases in PG students, although UG enrolments grew more than PG enrolments in The growth in domestic HE students is set to stagnate as a result of the declining cohort of year olds in Australia. Australia’s Changing Demographic

International HE Enrolments Changing Demand

Domestic VET Students Australia’s Changing Demographic

International TAFE Enrolments Changing Demand

International HE Enrolments The global demand for international HE is forecast to more than double to about 3.7 million by 2025 –International HE students coming from Asia to increase from 83% in 2005 to 86% by 2025 –Four countries to generate nearly 61% of the demand by 2025: China (30%), India (19%), Indonesia (6%) and Malaysia (5%) –Currently China and India account for 37% of international VET enrolments in Australia Changing Demand

Implications While widening participation and immigration will potentially negate the effect of the declining cohort in the age group… optimistically domestic demand will remain constant if employer and individual demand are present Growth in demand will come heavily from international market Changing Demand

Decisions need to be made around… –What is an appropriate level of international enrolments? –To what degree does this impact the culture, brand and positioning of the institution? –What are the implications to resources? –How do we manage an increasingly international student body – implications to both the domestic and international students? –Do we have the right products and support mechanisms in place? –How do we create and manage diversity in the classroom? Changing Demand

Competition is Growing Competition is growing – number of providers both traditional (bricks and mortar) and online is increasing The private sector has experienced significant growth over the last decade ―In 2005 the private HE market was estimated to be worth more than $300 billion worldwide and growing (e.g. in the US by nearly 15%). The emergence of major global brands e.g. Kaplan, Study Group, Navitas (IBT) –IBT only founded in 1994 now has a market cap of over $600 million –Kaplan only a few years ago was the worst performing division of the Washington Post – it now turns over in excess of $1.3 billion and is its most profitable unit Changing Market

Growth in the Private Sector The private sector is creating a much more aggressive and focused competitor. Private sector providers are fundamentally changing the landscape: –Nimble –Financially strong –Marketing focused –Controlling distribution channels and managing outcomes Large, international for profit education providers including Kaplan, Apollo, Laureate, and Cengage, are either active and present in New Zealand and Australia, or are currently looking at how they could enter the markets New figures from Australian DEEWR reveal EFSTL of 34,876 students studying higher education with private providers, which does not include state- registered private higher education providers Changing Market

Competition is Growing Internationally More competitors – both at the country and institutional level New competitors are emerging Traditional source countries are now becoming providers: –China; Malaysia While Australia was one of the first countries to recognise the importance of branding the destination, many competitors have now launched branding strategies. This is not constrained to just the MESDCs – but also emerging source countries.

Changing Market Emerging Trends in Student Mobility International student preferences and destinations are changing While the majority of students will still want to travel overseas for their entire education qualification, increasing numbers of students are satisfied with partial international study, obtaining only part of their degree overseas Traditional source countries are looking to bolster domestic provision of higher education, to enhance their status as educators and to strengthen their country’s economic and demographic positions Increased student mobility within East Asia also indicates a shift towards a stronger Asian influence in global international education student flows.

Changing Market Emerging Trends in Student Mobility Just under 80% of the participating institutions described themselves as “significantly” or “very active” in recruiting international students from East Asia The most common recruitment tools used by these institutions were exhibitions and inter- institutional arrangements. However, they are also using local in-country agents and online marketing The primary case study analysis also found positive current and projected growth in international East Asian student enrolments among participating institutions Approximately 40% projected either modest or significant growth in student enrolments from the East Asian region over the next five years

Changing Market Implications The strong and growing private sector represents a change in dynamic in the education sector nationally and globally Identify opportunities to further partner with the private sector to leverage their strengths to your benefit The marketplace is increasingly global requiring institutions to clearly define their brand, identify competitive differences and promote them Competition is no longer the MESDCs but countries which have been primary sources of international students – how do you partner with them?

Changing Delivery The Internet The availability and enrollment in web-based distance learning has increased dramatically –Led by for-profit organisations However, nonprofits are poised to become stronger competitors Growth of combined on-campus and online study programs The lines between online and on-campus education continue to blur as it becomes more and more important to provide students with options Potentially strong impact of rising oil/petrol prices on uptake of online education

Significant growth in TNE There has been significant growth in the demand for and delivery of TNE over the last few years TNE is education provision from an institution located in one country that is offered outside of that country Examples include –Distance learning and e-learning –Stand alone campuses RMIT Vietnam –Validation and franchising arrangements –Twinning and other collaborative provision Changing Delivery

Australian growth in TNE Source: DEST Changing Delivery

Growth in Demand for TNE Global demand for TNE education is predicted to continue increase significantly – by 2025 it’s expected it will be 440,000 – and by as early as 2010 outstrip demand for traditional onshore education Key reason is the large unsatisfied demand for higher education places in Asia (China, India, Hong Kong, Malaysia) Overseas governments encourage entry from foreign providers as a partial solution. However there are concerns with regard to quality. Many countries set up regulatory systems for foreign/private providers and some governments do not recognise qualifications that are delivered through “distance learning” or “e-learning” Changing Delivery

Implications It’s been suggested that TNE provision represents a threat to MESDC’s traditional international education market But it is also a potential threat to MESDC institutions’ domestic market e.g. Carnegie Mellon in Adelaide in Australia Huge global growth in demand represents a significant opportunity Challenge is identifying opportunities, managing the partnerships and the obvious risk

Branding Importance Standing Out Market is more cluttered and competitive than ever before - students need help to: –Make sense of its complexities –Make important decisions about which learning destination and establishment in which to invest (time, effort, money) As more people go to university, the difference between individual qualifications will lie less in having a degree and far more in where the qualifications came from – both country and institution. Communicating the quality and value of the qualifications and the establishment awarding them in a compelling and believable manner will be fundamental in providing a sound basis on which to compete Need to build a strong brand

Branding Importance Standing Out Research shows the increasing role that a brand plays in a student’s choice of institution…..but also: –Its ability to attract, recruit and retain quality staff both academic & professional; –The outcomes of its students; –Its ability to raise research and philanthropic funds; –Its overall ranking; and –Its profile/relationship within its local community Implications Identifying and effectively communicating a strong brand will become increasingly important

Skills Shortages Australia’s Labour Market The Australian labour market has changed significantly in recent times due, in part, to the sustained expansion of the economy over the past 14 years. The ageing of the population, rapid technological changes and increased competition have also played their part in dramatically changing the composition of the Australian labour force. The recent economic expansion has resulted in the considerable rise in the number of employed Australian people. Conversely unemployment levels, currently at five percent, are at their lowest for 30 years. The strength of the Australian labour market is expected to continue into the future and the demand for skills is generally high.

Skills Shortages Australia’s Workforce Employers are looking for a range of skilled workers in all states and territories, and across many trades and professions. Skills shortages for professionals are evident in a number of sectors, including : –The health sector; Accountancy; Child care; Engineering –Solicitors; Building and other trades; and Resources These skills shortages are predicted to worsen as the baby boomers leave the market Resources e.g. to achieve currently predicted increases in output, the resources sector will need to employ 70,000 more workers than it currently employs by 2015 almost 42,000 will be required in WA Direct employment in WA in the resources sector was approximately 61,700 jobs in 2006; and Total employment in the resources sector amounted to approximately 20% of WA state employment;

Skills Shortages Implications As the skills shortage worsen in the developed world employers will become increasingly aggressive in their strategies to attract, recruit and retain talent In this environment attracting domestic students will become increasingly challenging Identifying ways to partner with industry to address these challenges should deliver results War for talent in academic circles is going to worsen, identifying a strong employee value proposition will be critical Opportunities for international students to obtain PR as skilled migrants will increase