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Mon 1 Jan 2007 12:00 AM

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Top of the class

No one else quite fits the description “educational entrepreneur” better than Sunny Varkey, the controversial figure behind the GEMS group. James Bennett discovers his plans for worldwide expansion, and why his schools are under fire from the very sector he wants to help flourish

We’re going to build the world’s largest school,” says a confident Sunny Varkey, over dinner in a top-notch restaurant in Dubai. The chairman of the Varkey Group, founded when he took over his father’s business in 1979, has his focus firmly set on global domination of the education market and during our time together repeatedly re-emphasises that his pupils’ grades, his teachers and his schools are the best on the planet.

Not only that, he has grand plans for Global Education Management Systems (GEMS) to become the “leading player in the world”. And with a growing network of 65 international schools, including 29 spread across the Middle East with 16 in the UAE alone, its hard not to agree that his empire of privately run educational establishments are making massive progress in the sector.

The figures would make impressive reading for any of his thousands of staff and pupils, or students as he calls them. The group has a total of 65,000 students from 124 nationalities and employs over 5200 “education professionals”, as it likes to brand them, across the GCC, the Middle East, India, Europe and the UK. He may be firmly established in the Middle East, however, it is in the UK that the company and Varkey personally, have faced the biggest criticism, clashing with a traditional British education system blend of state run schools for low to mid-level income families and privately run, high-fee paying establishments for those parents who can afford to pay large fees. Take a look online and some stinging comments come across.

One article accuses Varkey of not only wanting to set up new privately run schools, but also wanting to “take over” and run part of the state run sector offering cut-price schooling and delivering a “crippling blow” to British state run education.

This refers to GEMS merging with a company called 3Es (in reference to British prime minister Tony Blair’s “education, education, education” speech) that owns several state schools.

Under fire

The UK press has taken major objection to the way GEMS’s 13 schools are run as a chain, taking advantage of economies of scale with centralised purchasing and teachers shared among schools; the approximate US$11,800 (AED43,400) a year fees – less than half the normal cost; the less luxurious product with a narrower curriculum; and that in a market-driven education system, you only get what you pay for meaning that this could damage state schools by removing their customers, therefore narrowing their social base.

The principal concern voiced in the UK, however, is that he is simply out to make a quick buck in the process. Varkey admits that he has faced “unexpected problems” in the UK because education is an “emotional business”, but refutes his critics emphatically by saying that he is doing a “service to the community” and “creating a better generation”.

“Unfortunately in England the business models of schools are very different. To me they are obsolete because today if you want to get a good head teacher you have to pay good money. This is changing here and in the UK but the funny thing is that literally every service provider makes a profit,” he says proving a point.

“Everybody else makes a profit whether you are supplying or serving schools but we need to get over it and change people’s perceptions. For example, when you talk about for profit, if you go to Welllington school in Dubai we spent US$16.4m to US$20.4m (AED 60m to 75m) so it takes you years before you make a profit.”

Varkey’s principal argument is that when you run a school or, in his case a network, there should and can be no shortcomings in the amount of money you spend and “invest”. “We have to establish the schools in such a way that when parents come and see them they think ‘yes we can pay a US$13,600 (AED 50,000) fee and we’re going to get value for money’. There can’t be any shortcomings.”

The perfectionist

“It’s like going into a restaurant where everything has to be laid out to perfection before you have one single person sitting down to dine.

“We have spent all that money up front so that in years to come the children get a great education and that we are covering the money invested that could take between four to ten years. On top of that, in order to be on the cutting edge you have to keep on re-investing in new technology, new teachers and constant training. This concept of profit only comes if you run schools which are under resourced, and have under paid teachers, but in our schools we are always there to ensure the children get value for money because that’s the promise we give parents.”

The chairman of the self-titled group suggests that it “takes time” to transform a school as well as to change mentalities but if, as Varkey says, he is really set on “taking on the world” due to a massive demand for his educational vision, it seems he is going to have to put up with the tradition versus modern schooling debate for some time to come.

Fighting back

“One of our schools has received some very negative publicity although we have done extremely well in transforming it to getting better results, but some parents say that ‘we want the school to be the greatest, we don’t want any change’. We can’t do anything about parents like this.

“You have to remember we are there to make a profit because we are a business but we are not profiteers,” he adds avidly fighting his corner. “There’s a big difference between making a profit and profiteering in education. You must have the right fundamentals and keep in mind that you are doing a service to the community and creating a better generation so it cannot be just money, money, money.

You go to any of our schools and you’ll see that.”

Varkey is a big fan of the private school model, and no wonder – he has been extremely successful in the 25 years he has been at the top of the GEMS class. Acknowledging he and his valuable team have “come a long way” he says the model has been able to “really make an impact” not only within the UAE and the Gulf but also on a global basis. “When visitors see our schools they always say it’s not the normal way private schools are run. Normal private schools are under resourced, they don’t spend money and the teacher’s salaries are not always right.

“In our schools we make sure we pay people right, we resource the schools absolutely fantastically. It’s the same format all over the world.”

He explains that when schools are run on a not-for-profit basis “you know there are a lot of inefficiencies and no innovation” and sites the Royal Mail, British Gas, and British Airways in the UK. “They were all losing money at some stage and today making tonnes of money. Private schooling is like cleaning a fish. You have the fillet and that’s what private schools are all about because we cut out all the wastage.

“People like us we seem to lead the private education pack at the top and we think you can have a very lean management team.

Today, if you look at schools they have a head master and a head of this and that and it just goes on and on and on. We are lean at the top just like any other successful business.” And it is this format that has attracted large numbers of expats from their home countries and often state run schools to work in GEMS establishments.

Raising standards

On one hand, however, you could argue that these nations, including the UK, have suffered at the hands of the private school model with foreign teachers often filling the gaps left behind and standards slipping, however Varkey clearly sees this to the company’s advantage and as a natural move for talented teachers from home and abroad.

“We are the largest employer of English and Indian teachers in the world outside of the UK and India so if you want to attract them you have to pay them very well. Standards have gone up tremendously,” he says.

But with increasing standards come increasing fees with costs in mid-market level schools rising by up 70% or 80% over the course of the last few months. This in turn means that the mid to lower income families suffer and could eventually mean the disappearance of the lower paid families in private schools. Varkey, however, attributes growing fees to general rising costs of living throughout the Emirates and the rest of the global economy and can’t see fees dropping, only matching the economic trends of the day.

“The cost of living has gone up. We were offering our mid-market schools at US$1200 a year and we can’t run those schools any more because the cost of living and rental prices has gone up and the recruitment and retention of teachers is very important. If you want to attract them you have to pay them very well.

The chairman adds that if lower income families still want to send their children to higher fee paying schools employers will have to seriously look at raising parents’ salaries.

“It is for the employers to decide. Food, rent, petrol and clothing have gone up, so why not education? Why should people think that education should be cheaper? How do you get teachers, if you don’t pay them right you can’t have a good school and parents have to understand that.”

As Varkey ends by saying GEMS is “like a Mercedes S-class and G-class, quality is the backbone and at each level we give parents value for money”. Fortunately, in parents eyes, there is no price too large to pay for a child’s education and private schools, while achieving high standards of education, will inevitably reap the financial rewards.

Varkey and his expanding network is setting new and exciting precedents to previously traditional and stagnant markets. He will, as with many of Dubai’s projects, complete the construction of the world’s largest school, but will also face constant criticism in what is, in his own words, a very emotional business”.

Sunny says:

Parents expectations

“There is no compromise on quality because at every level parents expectations are the same. If you send your children to a school that charges US$2000 a year you are not expecting the children to go horse riding.What they are looking for is for children to get good grades to go to good universities. You take the case of Ryanair or Easyjet, there are people who say ‘listen, I want to go safely from a to b, I don’t want a five-course meal, I’d rather just get there’. In our mid-market schools we ensure the children get good grades. Some of them got the best in the world, like the Westminster school and they pay US$1600 (AED6000) a year on average.”

State versus private schools

“In state schools teachers have a problem with discipline, in a private school it’s very different, teachers can teach 90% of the time and in smaller classes. And parental support is fantastic in a private school because when parents are paying money they really want to get the best out of that money which in a state school is rare. Beauracracy exists in state schools and with us there isn’t any. If there is a problem we can deal with it within 24 hours.”

Healthcare

“In a hospital most people come with problems, sometimes mental health problems and if you don’t know how to care or treat for them then you’ll destroy them because they’re already sad. Even if people are coming to the hospital to see someone else, it’s one place where you have a humbling feeling so we have to be hospitable and the same thing in education, because children are the most important thing in their lives.”

His first teacher

“There was a priest who was…in those days caning was alright and I was very naughty. ‘Why are you so naughty?’ he used to say.”

Global education trends

“85% of children in Dubai go to private schools and in a few years probably 100%. This takes all the government’s problems away, all the investment and balances out the choice for parents.”

“You must have the right fundamentals and keep in mind that you are doing a service to the community and creating a better generation.”

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