RBC daily (St. Petersburg), February 28, 2008

A QUIET HARBOR, Denis Lebedev

 

THE BUSINESS EDUCATION MARKET OF ST. PETERSBURG IS AT A STAGE OF EVOLUTIONARY DEVELOPMENT

The established circle of the main players does not feel any serious competitive pressure on the part of Moscow-based and foreign institutes yet. They prefer either working in niche segments or not noticing the market of St. Petersburg at all.

Not a single representative of the educational business polled by RBC daily noticed their serious influence on the situation and growth of prices by 10-15% in 2007 passed unnoticed for the enrollees not spoilt by high competition.

Despite the sufficiently high profitability of the business programs (see the round table on pages 30-31), large foreign МВА brands do not hurry to open their campuses in St. Petersburg. On the one hand, the top schools are very conservative in general, on the other hand, increase of qualification and growth of an employee inside of a St. Petersburg-based company requires a special approach of professors impossible without taking of local specific into account. Anastasia Korshunova, Deputy Director for International Development of Vlerick Leuven Gent Management School - Campus St.Petersburg, comments, "As a rule, West European and American schools that come to the Russian market offer education in long-term (starting from one year) programs in European countries and in the US. Target groups of such business schools and the schools offering education in Russia differ from each other very much. That is why it is hardly possible to speak about tightening of competition due to coming of foreign players of the market."

Valentin Galenko, Director of the Higher School of Economics of the SPbGUEF, says "If foreign business schools wish to be on our educational market they will need time to understand the educational needs of companies and to create the relevant programs. Along with this, they will hardly do without attraction of experience of our lecturers. In my opinion, joint programs will always be competitive under condition of good preparatory joint work. With regard to the business schools from other cities, only Moscow is a competitor for St. Petersburg so far. However, the level of the best business schools of Moscow and St. Petersburg is approximately similar. The markets of business education of Moscow and St. Petersburg are also large enough for bitter competition." Along with this, such situation has been registered in the last few years and seems to be quite stable. Dmitry Pavlov, Pro-Rector for Development and Foreign Relations of the IMISP, presumes, "80-95% of the audience of the city is oriented at offers of traditional local players." Alexei Popov, Director of ЕМВА General Management programs of the Stockholm School of Economics, says, "Nothing is heard yet about coming of some new loud names to St. Petersburg. Meanwhile, all leading players do not stand still, are developing their products actively and competition exerts its positive influence."

WITHOUT DISTRACTION FROM THE JOB

The St. Petersburg model of education practically accomplished its formation and did not undergo serious changes for a few years in succession.

Anastasia Korshunova remarks, "The local market of business education is filled mostly with offers of modular/full-time-correspondence and afternoon formats of education. This trend is directly connected with the labor market and practically zero level of unemployment. Very few acting managers are ready to interrupt the work record for 12-18 months for education in a day program. The employer is also hardly prepared to finance (fully or partially) education of employees in a day program with full distraction from the job." Nadezhda Golitsyna from Open Business School agrees that day education is almost not demanded in St. Petersburg still. Golitsyna is convinced, "Although all accredited remote programs have a full-time component to this or that extent, the quantity of those who can study full-time is insignificant in our city and in the country yet."

The polled business schools of St. Petersburg speak about the trends having opposite directions in formation of the profile of an average student of MBA programs in the city. For instance, representatives of Vlerik point at growth of the average age by one or two years to 33 years. On the contrary, representatives of the Higher School of Economics speak about rejuvenation. Although representatives of the IMISP admit that the average age of students changes very little lately (33.5 years), they also point at coming of a new generation of managers born in the 1980s and whose first experience of work has been gained already after the crisis of 1998. The ratio of students who pay for education on their own and students for whom the employer pays differs in different way in various schools. The reason is that all schools have different approaches to attraction of clients. Whereas some schools stake at direct work with managers, some others strengthen their positions in the corporate segment. The latter start offering more comprehensive services to companies. Valentin Galenko reported, "Cases when companies order consulting services with support in the form of programs for improvement of qualification, training etc grow more frequent."

Along with this, all business schools also point at growth in the competence of the enrollees both in the managerial aspect and in the initial training. For instance, the quantity of students who cannot study in the English language decreases permanently. Growth of the quantity of students who study at expense of their companies corresponds also to growth in well-being of the top managers who are ready to pay for their education on their own, say representatives of the Stockholm School. The crediting programs of banks that develop on the wave of the consumer boom in St. Petersburg allow the students to pay for their education more often. In any case, so far it is difficult for Russian banks to compete against offers of foreign financial entities oriented at crediting of Western programs. In Europe and America, it is possible to draw a credit for education at 2-3% a year and majority of Russian banks do not single out educational crediting into a separate business line yet to the extent enabling them to offer serious interest discounts. Interestingly, the business schools of the city call the Russian branch of foreign bank BSVG the leader of the market of crediting of education. Anastasia Korshunova complains, "Percentage of the students who pay for education on credits of banks is very small and, unfortunately, does not grow annually. On average, it is not bigger than 5% of all students."

INSENSITIVE

Growth in prices of programs of business schools by 10-15% on average is expected in 2008 like in 2008. Along with this, management programs traditionally cost more than marketing programs along with the same volume of classes and timeframe. Anastasia Korshunova reports, "The target audience is not sensitive to growth of the price, which is primarily explained by growth in the quantity of the students who receive financial support of the employers and, of course, by growth in incomes of the population." In general, the market of business schools of the city oriented mostly at the internal demand is far from saturation and appearance of really serious competition yet. For obtaining of the standard of education demanded in the West it is necessary to go abroad. The local schools already formed the mains standards of the St. Petersburg level of the quality of knowledge suitable exactly for the local specific of business processes. Changes may start only from a new generation of professors and managers of the schools. Pavlov says, "The overall situation on the Russian market of business education is characterized by change of generations both among lecturers and among managers of the schools. This process will determine development of the industry in the next five to ten years and competitiveness of a separate business school in the long term will depend on successful (directed, regulated etc) course of the process in such business school in the short term. This is not a secret that majority of both lecturers and managers of the main market players has been formed in the Soviet educational environment and the age of majority of starts is more than 50 or even 60 years old. In my opinion, creation of technologies and tools for transfer of professional skills and delegation of power represent the vector of changes of today."

***

Valentin Galenko, Director of the Higher School of Economics of the SPbGUEF:

"Cases when companies order consulting services with support in the form of programs for improvement of qualification, training etc grow more frequent."