Finding the way out

Education providers are the latest sector to feel the brunt of credit crunch. Imthishan Giado takes a look.

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By  Imthishan Giado Published  January 11, 2009

Education providers are now the latest sector to feel the brunt of the rapidly expanding credit crunch. Imthishan Giado takes a look at the impact on regional schools and what measures they intend to take.

As the shadow of the credit crisis continues to stretch out over the Middle East, it's clear that no IT sector will be able to escape its grasp.

From finance to construction, IT managers are now fully aware that their number one priority in the New Year is finding ways to cut costs while continuing to implement the latest technology. It's all about keeping an eye on the days beyond the credit crisis and making sure that your enterprise emerges out the other side fully prepared.

And if there's one sector that cares about the future more than the most, it's the world of universities and colleges - because their end-users today are the leaders of tomorrow.

Unfortunately, says Sean Dollman, consultant for admission and registration at private institution Qatar University (QU), the education sector is unlikely to escape unscathed: "I think that regionally we will start to see a slowdown in the next two to three years - mainly because most of the budget projects and allocations for the next fiscal year have already been made.

"Universities now have to make tough decisions - do they continue to increase the cost of institutions so that they can afford newer technologies? Or do they need to reinvestigate existing technologies to try and improve their efficiency?

As a consequence, I do see spending slowing down because we cannot continue to increase the cost of our tuition - basically passing the cost of those new technologies on to our students. We have to find different ways of doing business," he explains.

Not everybody agrees, however. Jack Kramer, senior vice president for solutions development at Sunguard Higher Education - which develops many of the software platforms used by regional institutions - remains remarkably upbeat about the potential for growth in the market.

"We have over 40 customers here in the Middle East - it's our fastest growing region. It is frankly one of the few areas within the globe where new institutions are being created.

If you look at the rest of the world, outside of China and India there's pretty much stagnation in the number of institutions. I also believe that this area prioritises and understands the value of education. They've been willing to invest to get the appropriate support of solutions to back up the teaching and learning process," he states.

When it comes to effects, there's little data to draw on present. Based on his experience back in the United States which is already deep in recession, Kramer believes any potential cutbacks will be limited.

"We just did a non-scientific survey of a group of customers from our advisory board and they're averaging probably about a 5% cut back in IT spending this year with expected greater cutbacks next year. What they are looking right now is what they would term their non-essential areas - we are seeing institutions are trying to avoid reducing staff, although we have seen this happen," he says.

A key element which may determine how schools weather the credit crisis may be their source of funding. While private-funded organisations have to lean even further upon their alumni and students, publicly funded schools bankrolled by the government have no such restrictions.

One such school is Saudi Arabia's King Fahd University of Petroleum and Minerals, which boasted an impressive $8 million budget in 2008. Sultan Mohammad Al Otaibi, manager of the academic information systems department at the Information Technology Centre believes that next year's budget will be largely unchanged, based on the fact that the school receives funding from the government.

"The budget has not been set yet and we hope it will not be affected. We get priority as an education institution from the government and we usually get what we ask for. I don't think there will be much long term effect. It may affect in other places like administration and things like overtime and business trip - these may experience budget cuts. But with basically anything that will affect the academic quality, they will not do any cuts," he states.

Part of the challenge of balancing budget cuts with implementing the latest technology is ensuring that your institution stays ahead of the regional game.

Qatar University's Dollman says that this pressure is now starting to come from the students as well as the board of directors: "Just for example; the cost of higher education has risen more than 385% in the US between 1996 and 2006. That's a tremendous increase and parents and students are now demanding more from that education. They want to know why the cost is increasing and what they are getting for that increase.

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