By Richard Garrett, Chief Research Officer
The U.S. online higher education market is the largest and most developed in the world. This doesn’t mean U.S. schools should assume innovation only takes place at home. Precisely because the U.S. took the lead in online education, it is the first to experience a mature and more regulated online market. Slow growth in a crowded sector can drive invention, but it can also lower expectations and breed complacency. It is thus interesting to look at non-U.S. players to find innovation and approaches to creating new markets.
We recently came across two Australian universities that are worth watching: Swinburne University of Technology and Deakin University. This Wake-Up Call will look at Swinburne, and a second will examine Deakin.
Having quickly become a major online player in Australia, which it attributes to a particular operational model and an unusual partnership, Swinburne has international ambitions.
Swinburne is a public, mid-tier university based in Melbourne with over 50,000 vocational, undergraduate and graduate students. Since 2011, Swinburne Online has grown to over 7,000 students (the equivalent of 70,000 online students in the U.S. market, which is 10 times larger) and brings in over $40 million. The majority of students are undergraduates, and the average age is 33. Swinburne is now the fifth largest in Australia in distance enrollments and is rapidly gaining on its competition. In 2013, Swinburne enrolled more new undergraduate distance learners than any other Australian university.
How Did Swinburne Pull Off Such Impressive Growth?
Swinburne Online is run as a private company in partnership with SEEK Limited, a $500-million firm that operates the largest job portal in Australia. The alliance, a 50/50 joint venture called Online Education Services, goes further than U.S. online program management (OPM) firms, such as Pearson Embanet and Wiley. The joint venture runs the entire operation, including course development, hiring faculty, and conducting student assessment. Tenured Swinburne faculty provide academic oversight, and Swinburne awards degrees. In the U.S., such an arrangement would fall foul of accreditor outsourcing thresholds.
Unlike America, where for-profit universities took the lead online, Australia’s for-profit and private non-profit university sector remains modest. Open Universities Australia (OUA), a collective of public universities employing a shared services and promotion model, had long dominated the distance learning market. Swinburne, also a veteran OUA member, credits its recent solo success with niche focus, freedom to hire the most engaging and experienced faculty, and a commitment to high-quality pedagogy and student support. Compared to the U.S. OPM model, this approach offers management autonomy and consistency of experience. One drawback of the OUA model is the tension between a single brand and the multiplicity of institutions, courses, platforms, and faculty behind the scenes that impact the student experience.
A Unique Partnership
Looking ahead, what is most intriguing about Swinburne Online is the potential of the SEEK partnership. SEEK is similar to LinkedIn, which it predates by five years, and is distinguished by a live counseling model that helps job seekers find the right opportunity. Long before LinkedIn paid $1.5 billion for the skills development firm, Lynda.com, SEEK entered the education market to complement its job search business. The company has experimented with college ownership by buying Think Education, a group of vocational colleges offering bachelor’s degrees and later selling it to Laureate. It is also the majority owner of IDP, one of the world’s largest international student recruitment firms that serves over 600 universities and colleges globally.
SEEK’s mix of career and education advising benefits Swinburne Online. Alongside jobs ads, the SEEK site enables visitors to search for degree and non-course offerings from a variety of institutions. Education offerings are linked to industries and job openings, and SEEK counselors are available to discuss options, discuss financial aid, and even enroll the student. This is not a market-wide portal; it is confined to some 20 partner institutions, primarily vocational institutions as well as the likes of Skillsoft and Rosetta Stone. Unlike the U.S., there is no ban on incentive compensation in Australia. Firms cannot cold-call prospects, but they can provide enrollment services on request and get paid per enrollment.
Going International And Sidestepping LinkedIn
Conscious of LinkedIn’s rise and the limits of the Australian market, SEEK has aggressively expanded overseas, buying up major job recruitment businesses in Africa, Asia, and Latin America. These might seem like less attractive markets, but SEEK is thinking long-term. These are the giants of the future, and a series of discounted acquisitions in today’s “backwaters” is more strategic than trying to go head-to-head with LinkedIn.
Today, SEEK claims over 330 million visits per month to its international collection of job sites. Right now, the Australian job portal is the only one to feature partner schools, but that will change. The opportunity for Swinburne Online, one of only two universities promoted by SEEK’s job portal, is to ride SEEK’s international network and establish a lead in the cross-border online degree market. U.S. universities have long tried to establish international markets for their online offerings, but success has been elusive. International students account for no more than a few percentage points of total online enrollment in U.S. schools, and many of those enrollments are U.S. military or ex-pats.
Extensive market research, underwritten by SEEK, has convinced Swinburne Online that a genuine online market opportunity is finally taking shape in a number of countries. Globalization and automation, pressures that drive large numbers of U.S. adults back to school, are playing out worldwide. Online learning is not the oddity it once was, and conventional universities are more visible in the marketplace. Lots of U.S. universities look longingly at the international opportunity, but SEEK offers Swinburne a market research budget and a global audience of job seekers, a sizeable proportion of whom may be considering a degree as a bridge to their desired career.
Seek Versus Linkedin
Even if Swinburne is first to the international market through a job search platform, is the online degree the right solution? LinkedIn made a different bet by purchasing Lynda.com, which offers a monthly subscription at $30/month for unlimited access to thousands of video-based courses and tutorials across information technology, business, and media specialties. If consumers need to develop skills in a rapidly changing economy and to dip in and out of school as circumstances dictate, a degree may be too cumbersome. Cross-country and cross-cultural delivery present additional challenges.
If the degree is the strongest currency amid the noise of other credentials, and if employers value the breadth and grit degree completion signals, then the international opportunity may be far from mature, and Swinburne can ride the first wave. Aware of the need to keep prices down and emphasize job relevance, Swinburne is experimenting with competency-based, non-degree offerings. It recently visited major CBE schools in the U.S.
The case for linking education and job search is still in its early stages. Neither LinkedIn nor SEEK have yet attempted to make explicit connections between the education and job success of their clientele. The plethora of courses, programs, and users will make neat causation problematic. Additionally, some clients may dislike speaking to a counselor or dealing with a career development company that is pushing particular education options. It is in SEEK’s interest to promote Swinburne Online, but the consumer may want a broader choice.
To succeed in the international market, Swinburne Online will need to compete on course quality, student experience, and academic and career outcomes. Exactly what those metrics are and Swinburne’s performance against them is unclear. These topics are similarly fuzzy for U.S. schools in the business of international expansion—that is today’s frontier in online higher education. Swinburne Online’s unique mix of autonomy, strong consumer response, and a global workforce partner make it a player for U.S. schools to watch.
Look out for a future Wake-Up Call about Deakin Digital, a wholly owned subsidiary of Australia’s Deakin University that sees an opportunity to disrupt the master’s degree market.