TVU Immigration Scam

From The Hindu

This could become one of the largest immigration frauds to ever hit the U.S. university system

With 95% of the students involved said to be of Indian origin, hundreds may face deportation

Tri Valley University, here in the Bay Area is involved in what might be the biggest immigration frauds with student visas. From The Hindu

When they launched a sting operation against Susan Xiao-Ping Su, the head of TVU, with undercover officers posing as foreign students, she was willing to offer them I-20, or student visas, even though they admitted they had no intention to attend courses and had improper status from previous schools.

Over 95% of the students are of Indian origin.

The TVU story is over. But the website is still up. It projects a strong association with “Christian education”. It won’t be the first operation to use religion as a cover-up.

God has been with us for every step the university takes. Initially starting with engineering program, Tri-Valley University quickly develop all of its academic programs in Christian ministry, business, law and medicine with helps and contributions from many faculty members, volunteers, as well as renown professionals.

TVU appears to be very new. They applied for accreditation in 2008. No news on whether it was received or not.

The first important milestone date of Tri-Valley University’s development is June 29th, 2008, the initial contact of Tri-Valley University with our accreditation agency. Ever since then, Tri-Valley University has been structured according to the prestigious accreditation requirement for all its institution infrastructure, administration, and academic programs in spirit and practice.

Because it is so new, it probably hasn’t graduated too many students, though there may be some who have transferred credits elsewhere. Those credits will be worth very little now.

TVU exploited the scarcity of US visas and Su’s ability to award them. There are many, many people around the world who want to get into the United States, somehow, anyhow. H1-B visas are already scarce. USCIS ran out of the 2011 quota on Jan 26. That F-1 visa is worth something, even if the education around it is a sham.

A similar thing happened in the early days of the IT boom in India. There weren’t enough engineering graduates coming out of colleges for the IT Services companies. Which led to the rise of the donation college – colleges that essentially granted you a degree in exchange for money. The quality of education itself was almost immaterial. The smarter colleges focused on getting employers to come for campus hiring. Then stick some kind of entry criteria at the admission level so that you aren’t admitting totally unemployable students and the virtuous cycle of good students – good jobs – more good students starts working in your favour.

Some day, there will be a shakeout in the engineering college industry in India. Supply will catch up. Salaries offered on campus will diverge. And the game will be over for the fly-by-nighters. But then the owners never really invested too much in education anyway. The students will be left up the creek without a paddle.

It didn’t have to be this way. If accreditation agencies in India took their job to be anything other than making money for themselves, you could still ensure quality education while growing supply. But then, that wouldn’t be India, would it.

[Update: ToI has the best piece on the TVU scam]

Week’s Tweets 2011-01-30

  • This is what would happen to me if someone called and offered me the award of a lifetime. http://t.co/ee0X60A #
  • DNA Blogs – Abhay Vaidya – Why politicians build education trusts, not rural hospitals http://bit.ly/eh6BAP #
  • “@jonahlehrer: Where have all the geniuses gone? http://t.co/jcWr3oB” Collaboration is no longer an option. #
  • If I Rise is quite good | Bollywood's A.R. Rahman nominated for two Oscars – The Bollywood Ticket http://bit.ly/guvXH9 #
  • IIM Ahmedabad ranked 85, only B School in India on the list | Economist | 2010 Full time MBA ranking http://econ.st/hbTlZP #
  • Now to go and post this on Facebook | Facebook is for the herd | Gene Expression http://bit.ly/hG30Ik #
  • Apart from some institutionalized affirmative action admission to IITs is similar | Why Caltech Is in a Class by Itself http://bit.ly/hLhMG5 #
  • Hawaii attempts to balance budget by fee on crazy people | AP: HI bill would give anyone Obama birth info for fee http://bit.ly/hIOxMs #
  • Really! China is blocking searches on Egypt on microblogging sites | Al Jazeera English: http://bit.ly/gqIwPY #

A Leg Up for Indian English

http://video.ted.com/assets/player/swf/EmbedPlayer.swf
In the mornings when I drop off my daughter at school, I generally have BBC on the car radio. (It’s Disney if I pick her up. That’s the deal with her. I can subject her to BBC in the mornings if I let her listen to Disney in the PM.)

For the longest time, BBC has had reporters in India or Pakistan or Africa who speak English like the locals do. So I’m used to hearing English spoken in a nice Indian accent on BBC. Which is perhaps why, I did not notice this till today – nowadays, even newscasters on BBC World News have Indian accents.

Today’s news, for instance, was anchored by someone with a British accent, presumably in London, and someone in India with a pucca Indian accent.

A few years ago, I had written a piece on The Future of Business English, predicting that Indian English would become more and more acceptable. That piece was more about words and phrases. But its the same with accents.

The acceptability of Indian accented English will be propelled by two things – India’s economic importance and the greater interconnectedness of the world.

The rise of Indian as an economic power is most important. Nobody cares about the culture and heritage of country that is poor. But as soon as that very country’s economy starts growing it presents opportunities. Suddenly, every one wants to learn what they can about the country, its language and culture. That’s the way of the world.

Now if this was all there was to it, China would be far ahead. But that will change. Western democracies have a natural preference for democratic India. And English is an Indian language. It’s a big window into India. English is not a Chinese language.

Greater interconnectedness comes from many things. Immigration is one. Indians form the largest (or one of the largest) groups of immigrants in the US, Canada, UK and Australia. Some come as college students. Others with the Indian IT Services industry. With the years, the number of Indian-born immigrants embedded in all walks of life in these countries keeps going up. And guess what, every one of them speaks in this accent that gets less and less strange to the natives, as the years go by.

The explosion of video on the internet also helps. You don’t have to depend upon the fare network TV is dishing out. You can go to TED Talks where you’ll find many Indian speakers. Or some Indian born exec at Google talking about the next big thing from Google.

But Indian accents on American TV still hasn’t caught on. We’re seeing a whole bunch of Indian faces – Aarti Sequeira on Food Network, Archie Panjabi on The Good Wife and Reshma Shetty on Royal Pains. But by some odd coincidence, they all speak in British accents. Outsourced, on NBC, has lots of Indian accents, but then its setting is India (though it is shot in the US). CNBC in New York has an anchor with an unalloyed Australian accent, which is a step forward. But BBC is way ahead. They are truly global. (sidenote: they announced that they are shutting down their BBC Hindi service on shortwave. Apparently, shortwave costs too much.)

In the meanwhile, us Indian-Americans, we’ll just keep rolling our R’s. And our kids will grow up having fun at our expense.

Week’s Tweets 2011-01-16

  • a historic day for the burgeoning Indian aerospace industry and military aviation http://bit.ly/g7mACv #
  • iGate acquires Patni http://on.wsj.com/gPYxLC #
  • Notion Ink, Bangalore has a Tablet in the works with both bright LCD and e-ink modes. See video on GigaOm from 9:30 « http://bit.ly/i4SxLS #
  • The Android Market can’t be searched from a computer at all. I never understood why. I guess nobody does http://nyti.ms/eHMWd9 #
  • women express & reveal more race consciousness than men when it comes dating & mating http://bit.ly/g8dnVn #
  • The rhetoric in this country is getting too ugly. One or two spaces after a period: By Farhad Manjoo – Slate Magazine http://slate.me/eRBcts #
  • In age of much inconsequential tweeting, remember yogis of yore: Sit still, so still that a bird can land on your head.http://nyti.ms/fXeUYy #

iGate acquires Patni

iGate announced its acquisition of a majority stake in Patni.

iGate with Apax Partners, will acquire 63% of the company for the final price of Rs. 503.50 effectively valuing Patni, the company at $1.5 Billion. By Indian law, iGate will have to make an open offer to acquire an additional 21% of the company.

With that, a company with revenues of about $200 million in 2009 acquires control of a company with revenues of about $650 million. Even by market cap, iGate is a third smaller than Patni. You won’t see this python-swallows-an-elephant acquisition happen too often in any industry.

What made it possible was the difference in the growth in earnings. Which in turn is because of the difference in how well the two companies are managed (see last year’s stock performance below). Based upon yesterday’s price, Patni’s P/E is around 10 and iGate’s is around 22. The difference is big enough for any private equity firm to drive a truck through.

About a year back I had wondered why the offshore services industry wasn’t consolidating. I had argued the case for scalar acquisitions

But a scalar acquisition strategy – basically bulking up – can make a lot of financial sense. If you are a well managed company with a P/E that is higher than the industry, an active acquisition strategy can make sense.

First, if you can negotiate a price for the target that is somewhere at or below your P/E, you are already looking good.

Second, acquiring a company with a similar business, has fewer integration risks.

Third, this industry, even though it has low entry barriers, is a business of scale. Visibility, brand, lower sales costs and overheads – all come from scale.

When I wrote that piece, I didn’t quite have this python-swallowing-elephant kind of an acquisition in mind. But this is, in fact, a scalar acquisition. Although the integration on this one won’t be easy.

Indian law makes it difficult to outright acquire a company. Mahindra Satyam and Tech Mahindra are still separate companies. Until Patni is fully acquired, integrating management is difficult. Eliminating costs is difficult. Benefitting from having a common brand and go-to-market is not going to be possible. But I’m sure iGate and Apax would have carefully thought through these issues. It’ll be interesting to see how the integration takes shape in the coming months.

Nonetheless, this is a big deal with lots of potential to create value. If there is someone who can pull this off it is Phaneesh Murthy. He’s done superb job with iGate. Congratulations, Phaneesh! And good luck.

Congratulations also to Shashank Singh at Apax Partners for a very significant deal.

The Marginal Cost of Software

Fellow Enterprise Irregular, Bob Warfield calls me out on my claim that software has no marginal cost in my blog post App Stores Galore.

I write about the economics of Information Products often and have used the term marginal costs several times over the years in connection with digital music, e-books and of course the technology industry. So perhaps it is important for readers to understand what I mean when I say marginal costs are zero. In the process, I’ll also examine Bob’s claims to the contrary about the software on an App Store.

Wikipedia’s definition of marginal costs is

…marginal cost is the change in total cost that arises when the quantity produced changes by one unit.

Effectively, when I say that apps on the Mac App Store have a marginal cost of zero, what I am saying is that the next user of Angry Birds or Evernote or Omnigraffle, incrementally costs these companies nothing.

Compare this with Gap jeans. The next pair of Gap jeans sold will cost Gap a pretty sizable portion (maybe 50%?) of the sale price of the jeans.These costs are the material, manufacturing and shipping costs. And maybe a few others as well.

Bob’s rebuttal rests on three types of costs that he says prove that the marginal costs are not zero.

Engineering costs related to updates

Engineering costs are fixed costs. They have no relationship to the units of software sold. Sure, if you sell more units you have more money to spend on engineering, but that is conflating cause with effect. Think of the Gap jeans analogy. Is the next unit of Angry Birds sold going to need any extra cost in engineering? Nope.

Support

Support is a little trickier. If the app you are buying includes support over email or the phone, yes, there is a marginal cost here. But apps, and indeed, most consumer SaaS applications now direct users to their forums. On the forums, they either find the solution to their problem themselves or they post a question and a super user answers it for them. Often, someone from the company’s support team will have to answer the question. And so you might say that as the number of users goes up, the queries on the forum go up and the size of the support team must also go up. 

But, there is another dynamic at play here. As users grow in number, the knowledge base on the forum also gets richer. The number of super users also increases. Problems with the software that lead to support queries are ironed out. Does all this compensate for the upward pressure on support costs? I don’t know. Probably not. But for these kinds of apps, after a certain user base has been achieved, incremental costs are not material, in my opinion.

Server side costs of processing, storage and bandwidth

Even if the software downloaded is simple desktop software with no SaaS component, there is the matter of the first download and subsequent updates. And presumably, the traffic created by polling to see if an update is required.

I understand that these costs, for an additional user, are not zero. But there is something called materiality. Is this particular cost material compared to the revenue from the next user? I doubt that Angry Bird or Omnigraffle worry about it. Evernote perhaps does, but how many apps do you know that users regularly use to scan and upload documents to? 

Two endnotes

In software, there is always more that can be done. More products, more features, better performance, better customer service. The only thing holding it back is the money available to do all this. As a company grows in customers and revenue, it expands its engineering and customer service teams. Because it can. But this is not because of marginal costs. The causation is the other way.

Marginal costs is a construct used in Economics. In real life, you can never really parse out marginal costs from fixed costs with any certitude. Nor should you waste your time doing it. Managerial decision making, most of the time, doesn’t need numbers to be precise. So when I say, marginal costs are zero, but they turn out to be 2% of the unit price, it is not going to result in a different decision on whether one should be on the App Store or not.

App Stores Galore

The Mac App Store launched yesterday and saw more than 1m downloads on its first day. Evernote, a note taking productivity app, saw 40,000 downloads because of the Mac App Store. Clearly, a nice first day.

Nowadays, it seems everyone is launching an app store. Google Chrome has a Web Store. Amazon.com announced an App Store for Android Apps, that will compete with Google’s Marketplace. And of course, there’s the big daddy of app stores – App Store on iOS for the iPhone and iPad.

For the App Store owners the motivation is straightforward – an additional revenue stream. Apple charges 30% to App developers plus a registration fee. For everyone this is an additional way to monetize users and a platform.

But what’s in it for users? Quite a bit, I believe. Which is why I think App Stores will succeed for mobile devices, consumer apps and enterprise apps.

  1. Inventory – Why is inventory on display important for a retailer? Because customers like to have options. If I’m buying a flat screen TV I want to see different models from different manufacturers, side by side and compare. Also, importantly, inventory on display means that I can, right there and then, buy a TV that I like and take it home. It’s the same thing with Apps. Having thousands of them in one place is of great value to the user. Yes, I could go put Personal Information Manager in Google search and then 20 mins later I might have a list of PIM software. But why go to the trouble?
  2. Confidence – When I see a TV at Best Buy, I know that their merchandising team would have done some due diligence on its quality. It gives me some confidence. On an App Store too I expect that Apple or Amazon.com would have tested the product to see that it works and won’t do anything malicious.
  3. Transparency – The App Store is Apple’s, not the software company’s. They can’t keep poor reviews or ratings out (although they can load it with positive ones). There is some level of transparency. You can’t hide your warts on an App Store. Bad for the App developer, good for the user.
  4. Payment mechanism – Do you want to enter your credit card details at every app developer’s website? I don’t. Apple, Amazon.com and Google checkout all offer an easy, secure payment mechanism.
  5. Auto updates – a much easier way to keep Apps updated.

Is the 30% cut of revenues too much? It depends on how much you expect your revenues to go up by. After all, software has no marginal costs. Every dollar of incremental revenue is a dollar of incremental profit (before taxes).

For small app developers its a no brainer. For established players like Omingraffle, if a significant portion of their revenue stream gets diverted to the Mac App Store, they will need to make up for what they pay Apple in App Store fees in the form of incremental revenues. I suspect that will happen. In any case, they don’t have an option. They have to be available on the Mac App Store.

I see App Stores taking hold and becoming a fixture. Which means that making a platform successful (Force.com, Google Docs) suddenly became worth a lot more.

My Wish “Less” for 2011

A very happy new year to my readers.

A couple of years ago I had posted a New Year’s Wish “Less”. Instead of a Wish List, which is mostly about wishing for things that you don’t have, I thought that I would ask for less of things that we have too much of. (no money is not one of those things!)

Fewer natural disasters in parts of the world that can’t handle them

Haiti

Less irresponsible government spending

One word – Greece

Less than 24 hours of news coverage from 24 hour news channels

If they can’t do that then can we get them to have fewer talking heads on the screen at the same time. CNBC, I’m talking to you.

Fewer pages in the US Tax Code

Unfortunately, every change that is deficit neutral, hurts somebody who goes and lobbies their senator who filibusters until the bill is killed. Either that or the tax accountants will kill it. Simplification reduces billings. Hmmm…that’s true about IT Services too.

Less complexity in our cell phone bills, banking fees, utility bills…

I eagerly await Bank Simple

Fewer Amitabh Bachhan ads

I propose a public service ad that has Amitabh Bachhan say “I endorse all products sold by all manufacturers”. The ad loops from 2am to 4am on all TV channels. When we want to see Big B, we go to the movies. Oh wait, when did he do his last movie?

And while we are on the subject of TV ads, can we have fewer ad minutes per programming minute in India?

Less disrespect for its readers from Times of India group websites

ET and ToI start video ads with sound, as soon as you land on the website. On the other hand, I click less and less on links from ToI.

Less corruption in India

It’s not like I am hopeful or anything, but this is a Wish List after all.

Less religion in politics. Less religion in education.

Leave science alone.

My personal resolve for 2011

Spend less time with the Web of Infinite Information and more time with friends and family.

@labnol’s resolve for 2011

…type less and spend more time with speech recognition…