Outsourcing Homework

By: Mike Shedlock | Fri, Sep 29, 2006
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Reuters is reporting U.S. homework outsourced as "e-tutoring" grows

Private tutors are a luxury many American families cannot afford, costing anywhere between $25 to $100 an hour. But California mother Denise Robison found one online for $2.50 an hour -- in India.

"It's made the biggest difference. My daughter is literally at the top of every single one of her classes and she has never done that before," said Robison, a single mother from Modesto.

Her 13-year-old daughter, Taylor, is one of 1,100 Americans enrolled in Bangalore-based TutorVista, which launched U.S. services last November with a staff of 150 "e-tutors" mostly in India with a fee of $100 a month for unlimited hours.

Taylor took two-hour sessions each day for five days a week in math and English -- a cost that tallies to $2.50 an hour, a fraction of the $40 an hour charged by U.S.-based online tutors such as market leader Tutor.com that draw on North American teachers, or the usual $100 an hour for face-to-face sessions.

"I like to tell people I did private tutoring every day for the cost of a fast-food meal or a Starbucks' coffee," Robison said. "We did our own form of summer school all summer."

"We've changed the paradigm of tutoring," said Krishnan Ganesh, founder and chairman of TutorVista, which offers subjects ranging from grammar to geometry for children as young as 6 years old to adults in college.

A New Delhi tutoring company, Educomp Solutions Ltd., estimates the U.S. tutoring market at $8 billion and growing. Online companies, both from the United States and India, are looking to tap millions of dollars available to firms under the U.S. No Child Left Behind Act for remedial tutoring.

Teachers unions hope to stop that from happening.

"Tutoring providers must keep in frequent touch with not only parents but classroom teachers and we believe there is greater difficulty in an offshore tutor doing that," said Nancy Van Meter, a director at the American Federation of Teachers.

"Tutoring providers must keep in frequent touch" says the American Federation of Teachers.

Is the internet not an acceptable means? If not, why not? Although I am generally skeptical of proposed "paradigm changes" I am inclined to believe Krishnan Ganesh, the founder and chairman of TutorVista who said "We've changed the paradigm of tutoring".


Cartoon by Jeff Koterba, Omaha World-Herald

Please consider the Time CNN article Outsourcing Your Homework.

One problem with the No Child Left Behind Act is that 80% of the kids entitled to after-school tutoring--at taxpayers' expense--aren't getting it, according to a new government report, and some rural districts offer no tutoring at all. But extra help is on the way. And like a lot of customer service these days, it comes with a distinctly Indian accent. The Bangalore-based TutorVista, which last fall began providing online tutoring to U.S. students in everything from grammar to geometry, last week announced it will provide a year of free tutoring to kids in the 10 poorest rural counties in the U.S.

TutorVista chairman Krishnan Ganesh dismisses critics who lament the further siphoning of jobs overseas. "There is plenty of work to go around," he says. "The American educational system is pathetic."

Hmmm "The American Education system is pathetic?" Given the illiteracy in some countries that could be a very debatable statement. What is not debatable, however, is a simple modification as follows "The cost of an American Education is pathetic".

The Guardian is reporting India's e-tutors give UK children homework help.

Call centres charge £50 a month for unlimited individual help to pupils thousands of miles away.

When Kelsey Baird began worrying about the complexity of AS-level biology she got a tutor from India. It is more than 4,000 miles from her boarding school in Fife to Agra, home of the Taj Mahal, but a new e-tutoring system makes the distance irrelevant.

Across India, hundreds of teachers have been recruited to feed a growing demand for online tutors. With maths and science teaching in Britain and the US in crisis, new Indian education companies are rushing to fill the gaps.

'Education is a major preoccupation [in Britain]. There isn't the money to pay for enough teachers in schools and it's almost impossible for children to get personalised attention,' he said. 'Tony Blair might be able to afford private tuition for his children, but most people can't.'

Quite often the parents will be sitting by the computer trying to learn elementary algebra alongside their children,' said Anirudh Phadke, general manager of e-tutoring at Career Launcher, a company offering tuition for the US curriculum.

India's educational standards vary hugely but there is some fine teaching of maths and science, with a traditional and rigorous approach. 'The real advantage is that Indian teachers are cheaper,' said Shantanu Prakash, managing director of Educomp, which teaches internet maths to American pupils.

India's new online teachers have not been impressed by the standards achieved by British children. 'They are not really academically fully skilled,' said Rita Sampson, a former college principal, now teaching English language online from her Bangalore home. 'There seems to have been a deterioration in standards. Retention in Indian students is much better.'

A glossary of UK slang has been compiled to help tutors navigate the peculiarities of teenage vernacular - explaining expressions such as 'bunking off', 'dodgy' and (perhaps less helpfully) 'blimey'.

Well, I think I understand "Blimey" but because of the "Truth in Reporting" act, Mish simply must plead ignorance about "bunking off" and "dodgy".

The New York Times is reporting Latest in outsourcing: Homework

COCHIN, India A few minutes before 7 on a recent morning, Greeshma Salin swiveled her chair to face the computer, slipped on her headset and said in faintly accented English, "Hello, Daniela." Seconds later she heard the response, "Hello, Greeshma."

The two chatted excitedly before Salin said, "We'll work on pronouns today." Then she typed in, "Daniela thinks that Daniela should give Daniela's horse Scarlett to Daniela's sister."

"Is this an awkward sentence?" she asked. "How can you make it better?"

Nothing unusual about this exchange except that Salin, 22, was in Cochin, a city in coastal southern India, and her student, Daniela Marinaro, 13, was at her home in Malibu, California.

Salin is part of a new wave of outsourcing to India: the tutoring of American students. Twice a week for a month, Salin, who grew up speaking an Indian language, Malayalam, at home, has been tutoring Daniela in English grammar, comprehension and writing.

Using a simulated whiteboard on a computer connected with Daniela's by the Internet and with a copy of Daniela's textbook in front of her, she guides the teenager through the intricacies of nouns, adjectives and verbs.

Daniela said, "I get C's in English and I want to score A's." She added that she had given no thought to her tutor's being 20,000 miles, or 32,000 kilometers, away, other than that the situation had felt "a bit strange in the beginning."

She and her sister, Serena, 10, are just two of the 350 Americans enrolled in Growing Stars, an online tutoring service that is based in Fremont, California, but whose 38 teachers are all in Cochin. They offer tutoring in mathematics and science, and recently in English, to students in Grades 3 to 12.

Critics have raised concern about the quality of the instruction.

"Online tutoring is not closely regulated or monitored," said Rob Weil, deputy director of the educational issues department at the American Federation of Teachers. "There are few industry standards."

Quality becomes a trickier issue with overseas tutoring because monitoring is harder, said Boria Sax, director of research, development and training for the online offerings of Mercy College, based in Dobbs Ferry, New York.

Growing Stars is rapidly expanding to accommodate students from the East Coast of the United States, as well as Canada, Great Britain and Australia.

Its recruits, mostly with recent postgraduate and teaching degrees, already have deep subject knowledge. They must go through two weeks of training on techniques, culture and accent.

"They learn to use 'eraser' instead of its Indian equivalent, 'rubber,' and understand that 'I need a pit stop' could mean 'I need to go to the loo,"' said Saji Philip, a software entrepreneur of Indian origin and the chairman and co-founder of Growing Stars, who works in New Jersey.

Biju Mathew, an Indian-born software engineer, set up Growing Stars after moving to Silicon Valley five years ago to work for a technology start-up company. In India, he had been paying $10 a month for twice-a-week tutoring sessions for his children.

In the United States, he found, a similar service could cost $50 or more per hour. The idea of homework outsourcing was born, and the company began offering its services in January 2004.

It's good to see that the India tutors are "culturally educated". Imagine the brewhaha that might erupt if a tutor told a 13 year old student to "Please use the rubber" instead of "Please use the eraser". If you think I am joking, please consider Teacher: Reprisals began after field trip

FRISCO - A veteran Frisco art teacher says school administrators have retaliated against her because a student reportedly saw a nude sculpture during a field trip to the Dallas Museum of Art. District officials say they are supporting a principal who reprimanded Sydney McGee over the field trip and other performance issues.

At Ms. McGee's request, the situation was aired in public during a school board meeting Monday. The school board rejected a request that would have allowed Ms. McGee to transfer to another school.

Ms. McGee, who has taught in various Texas districts for 28 years, said she visited the museum and spoke with museum staffers before the trip to ensure that it was appropriate for the fifth-grade class. Ms. McGee said she does not know which piece of art offended the parent, and the district did not identify it.

That's pretty amazing isn't it? A teacher was fired because she took her 5th grade students to an art museum where the kids saw a nude statue. Note that this happened after the principal gave permission to the teacher. Also note that no one would even say what the offending statue was.

Hmm, I think I was wrong earlier. This type of nonsense as well as bickering over evolution and the desire to teach creationism is exactly why many consider the US education system to be pathetic. In light of the above, can you really blame them?

So here is what it comes down to: The US system is enormously costly for mediocre results. In fact that is an unsustainable trend. The market is always willing to fill such vacuums and if permitted usually does so at bargain basement prices. That is exactly what we are seeing in these articles. There is free tutoring in some cases. But for the masses the cost of tutoring ranges from less than the price of a cup of Starbucks coffee all the way to $10.00 an hour. This is in contrast to $40 an hour for US tutors.

The market has spoken. Education costs are going to come down. That is a good thing. Outsourcing homework is just the start. Eventually the cost structure will be outsourcing entire classes or perhaps offshoring entire classes.

Previously we discussed Medical Tourism, the Healthcare Fiasco, and the Healthcare Fiasco Continued. If you have not read those articles, please do so. The market is bound and determined to find ways to avoid the high cost of US healthcare and education.

Left unhampered by governmental regulation, it will do just that. US educational costs have peaked. There is only way to go from here and that is down.

There was an interesting debate about inflation on Silicon Investor week. Heck, there is a debate about that practically every day. The general viewpoint is that the US$ is toast, commodity prices are going higher, and costs will follow. Even if the first two are true (and given one's timeframe that is very debatable), one of the biggest reasons for high prices in the US is labor costs. With the internet and global wage arbitrage, there is continued price pressure on that cost.

The cost of education is hugely one of labor and bureaucratic costs. In that regard we are headed straight for huge cost reductions when it comes to internet education. $2.50-$10 an hour for an Indian tutor, vs. $40-50 for a US tutor. The former will win over the latter any time (except for those rich enough that prestige is more important than money). Let's do the math. Assume on average $5/hr vs. $40/hr. That is an 87.5% cost reduction.

Deflationary pressures are sneaking up on everyone on account of globalization. Oddly enough someone was recently telling me that globalization would increase inflationary pressures. As long as wages comprise a higher percentage of costs than raw materials, that person is just plain wrong.

Medical tourism, outsourcing homework, falling prices of goods produced overseas, falling restaurant prices as discussed in The Psychology of Deflation, unrelenting outsourcing of all kinds of goods and services, the inability to pass on costs as evidenced by Intermediate vs. Finished PPI, and a strongly inverted yield curve all tell me that deflationary pressures are strong and growing. The only question anyone should have at this point is to wonder if these are cyclical or secular changes. I strongly suggest the latter.

 


 

Mike Shedlock

Author: Mike Shedlock

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Mike Shedlock

Michael "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Visit http://www.sitkapacific.com/ to learn more about wealth management for investors seeking strong performance with low volatility.

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