Recruiting merger fuels competition

September 22, 2006

An online employment and training company with offshoots in the UK and New Zealand has bought a half share in Australia's biggest recruiter of foreign students.

Seek Limited this week paid A$36 million (£14.4 million) for 50 per cent of shares in the commercial arm of IDP Education Australia. As Seek expands its operations in Britain, the merger is certain to increase competition between Australian universities and those in the UK and America.

IDP was formerly a not-for-profit company owned by 38 of Australia's 40 universities. The company faced financial collapse 18 months ago when rapid growth of Australia's A$7.5 billion a year education export industry suddenly stalled. Savage cost-cutting pushed IDP back into the black last year and the company generated a profit of A$6.64 million from revenues of A$82 million. To boost capital, the university shareholders decided to form a commercial company and find a partner from the private sector.

Andrew Bassat, joint chief executive of Seek, said the partnership represented "the marriage of the unrivalled industry expertise of IDP's university shareholders with the marketing, sales, technology and business development expertise that have contributed to the success of Seek".

IDP, formed in 1969, recruits international students on a commission basis for all education sectors - universities, vocational education and training, English-language colleges and schools. Federal Education Department figures show that more than 330,000 foreign students are undertaking courses in Australia this year, with half enrolled in higher education. Their fees contribute A$3 billion a year to university coffers and represent the institutions' biggest single source of non-government revenue.

Anthony Pollock, IDP chief executive, said the financial turnaround had resulted from substantial cost reductions that included cutting 120 jobs and closing seven offices around the world.

Mr Pollock said the company planned to offer extra services to foreign students, such as assisting with accommodation, travel arrangements, healthcare, study resources, job search and career counselling. "New offices are being set up around the country," Mr Pollock said. "We're saying to parents and students that we can look after their interests in Australia once they arrive as well as assisting with the overseas application process."

He said that, despite a fall-off in the number of applications from foreign students in 2004 and 2005, overall enrolments were still on the rise, but it was unlikely that such a large industry facing increasing competition from other countries could continue to have double-digit growth.

Australia had considerable potential to retain its market share, Mr Pollock said, but it was no longer as simple to attract students when so many options were available to them at home and abroad.

Testing foreign students' competency in English is one of IDP's more profitable ventures, generating more than A$30 million last year. The company has one-third ownership of the International English Language Testing System through its majority-owned subsidiary, IELTS Australia. In 1989, IDP joined with the University of Cambridge Local Examinations Syndicate and the British Council to form IELTS. The following year, the first IELTS Australia centres were established in Australia and overseas, and now 75 are scattered across the world.

Mr Pollock said the validation and certification of students' language and communication skills was likely to be an expanding part of the business.

This was especially so in Australia, where there had been complaints about foreign students completing degrees with very poor English.

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