Table of Contents

  Executive Summary. 2

1.     Introduction and Background. 5

2.     Vision and Strategy. 7

3.     The Project 10

4.     Stakeholder Analysis. 13

5.     Curriculum and Content Production. 15

6.     Technological Delivery Options. 18

7.     Management and Organizational Structure Management and Organizational Structure. 22

8.     Marketing and Advertising. 26

9.     Financial and Economic Analysis. 28

10.     Conclusions and Recommendations  41

Annex A: Technological Delivery Options. 44

Annex B:  Financial and Economic Analysis. 48 Not Available online.

Annex C: List of Institutions Visited and Persons Interviewed. 83

1.   Introduction and Background

There is a severe shortage of quality IT faculty in Pakistan, and the same can be said for many other countries in the South. Academia has lost a large number of qualified individuals to the software industry and this loss has not been replenished. What little faculty is left in institutes of higher learning is spread out in various universities without forming a critical mass at any single point.

Similarly, the output of qualified graduates from the various Bachelors in Computer Science programmes from all Pakistani institutions is estimated at about 4-5000 annually. Out of these, only 500 or so are classified as having international level skills. This number needs to be drastically increased if Pakistan is to get on the IT road map. There is an immense shortage of skilled IT manpower worldwide, which is projected to increase exponentially in the coming years. Pakistan should make all efforts to benefit from this.

The motivation behind the VITU is to bring together a critical mass of quality faculty to provide world-class education in the IT sector to a large student body. The Virtual IT University (VITU) will utilize the services of quality individuals wherever they may be without relocating them. This may involve faculty members located outside the geographical limits of Pakistan.

A parallel development will be the establishment of the South Institute of Information Technology, initially a separate project proposed to the G77 Summit in Havana in April 2000 by Pakistan’s Chief Executive. We propose that these two projects be merged. However, the analysis in this feasibility study is based largely on the VITU. Estimating the additional costs and revenues which would be generated by including non-Pakistani participating institutions and students resident outside Pakistan requires an international study which could not be undertaken in the short time available.

VITU aims to provide quality education to a very large number of students. Considering only the Bachelor’s level, it is estimated that annually over 40,000 students would want to pursue a career in Information Technology after qualifying their Intermediate examinations (12 years of study). This is in addition to a substantial number of engineers who want to re-train and enter the IT job market in the pursuit of more lucrative careers. The existing colleges and universities can only cater for a small fraction of these. VITU would be able to provide large-scale educational facilities for these students nation-wide. Further, by eliminating the need for qualified faculty at each VITU campus, the project would be able to provide this environment nationwide, even to remote areas.

Private sector institutes are generally better equipped than their public-sector counterparts as far as equipment used for the teaching of Computer Science is concerned. Local Area Networks are slowly replacing stand-alone computer systems. A recent scheme that has allowed the collaboration of private parties with public-sector colleges has been especially beneficial in establishing modest computer laboratories in many colleges of the Punjab. Other provinces are following the same path and it is anticipated that availability of computing resources will become widespread for the majority of higher secondary school students in the very near future.

The staff situation, on the other hand, is especially critical. Very few institutions (colleges or universities) can boast of adequate numbers of faculty, and even fewer would claim quality. Hence, the quality of education being imparted at the Bachelor’s level and higher is generally dubious. 

2.   Vision and Strategy

The starting point and key for the expected success of the VITU and SIIT is that there is a documented, strong demand for computer science graduates meeting world standards of quality. There is a shortage of such graduates in the OECD countries, witness the active recruitment of IT workers in developing countries such as Pakistan and India. This demand is felt and articulated in Pakistan as well – witness the hollowing out of computer science departments in all the first and second tier universities and the springing up of literally hundreds of IT institutes of to say the least, questionable quality. And then the VITU has been declared the highest priority project in the Ministry of Science and Technology’s IT Action Plan, with the highest budget allocation of any project. In short, the project meets critical, felt and articulated need for IT personnel for domestic and international markets. Similar needs have been expressed in neighboring countries.

Second, the project may be seen as the first step, a proof of concept, for a “smart, learning nation” approach to socio-economic development in Pakistan. It will use learning centers in public and private universities and institutes all over the country and beyond to teach vital skills. This will accelerate human capital formation and unleash the creative talents of the population, even in remote areas. From teaching IT, Pakistan can proceed to teacher training to improve the quantity and quality of primary and secondary school teachers, and the VITU could expand into other strategic areas of knowledge.

The smart, learning nation strategy will improve learning for all, from pre-school children to retirees – from “k to gray”.

In today’s globalizing, knowledge-based economy, knowledge embedded in the labor force is a critical productive resource, equally if not more important than physical capital, land, and other natural resources. The future will belong to those individuals, companies, and nations who are able to capitalize on the revolutionary rapid and sustained fall in the cost of processing, storing, and transmitting information and knowledge – for which no end is in sight – to increase their competitiveness. It is now technologically possible to learn any thing, any place, any time, and in the not distant future, with the advances in automatic translation, in any language.

The key to a smart, learning nation development strategy is to organize institutions and the population at large to take advantage of the technology now available to unleash and nurture the talent in the full population, not just a mostly-urban elite. The Internet and the telecommunications technologies that can make it accessible to anyone (through public and private learning centers for those who cannot afford connections in their homes) can be a great leveler.

Investing in education of the people is the easiest and most politically acceptable way to redistribute income and wealth. When we make knowledge available to those who do not have it, we do not need to take it away from others who do. It is a win-win development strategy. The only “losers” could be those who enjoy temporary monopoly rents from possessing knowledge – their relative incomes could fall, but then they could learn more and new things, investing in themselves.

The real losers will be those individuals, enterprises, and nations, which fail to invest in knowledge using new, more efficient Internet-based teaching and learning technologies. They may be left behind, perhaps irremediably. There is a real danger of national and global “digital divides”.

IT can be a catalytic engine of development, spurring productivity increases in other areas of the economy. This essence of this realization has been captured in the IT Policy of the Government of Pakistan, which states as its vision:

“To harness the potential of Information Technology as a key contributor to development of Pakistan”

The IT Policy goes on to outline its mission as “the rapid development of infrastructure in synchrony with the creation of highly trained individuals and teams and directing them at transforming our society into a prosperous and dynamic one through the creation and free flow of information and knowledge. The Policy is directed at encouraging and assisting the entrepreneurial spirit, and making the fruits of this technology available to every citizen”.

VITU will become a critical component for achieving this vision. It will encourage business/academic “fusion” by bringing together the various stakeholders (producers, educators, consumers, and employers)  to focus on their common objectives. Further, by actively involving a broad base of public and private sector educational institutions, the market-oriented approach of VITU will encourage the development of strong, collaborative partnerships thereby leading to a general improvement in the quality of education being imparted to the coming generations.

Pakistan has made considerable strategic investments in its telecommunications infrastructure in the form of optical fiber backbones, satellite links, microwave communications etc. Cable TV with broadband Internet connectivity as well as DSL projects have been initiated. Two-way VSAT broadband connections are possible today and will prove to be a cost effective means for reaching neighboring countries in the near future. The process is in fact accelerating and there are several current projects aimed at bringing communications in general and Internet connectivity in particular to a major segment of the population.

VITU intends to actively capitalize on these investments and assume a key role in realizing the benefits promised by the introduction of these technologies.

Submarine fiber now provides communications towards both the East and the West and there are several alternatives available for connection via satellite to the neighboring countries. The coverage includes South and South East Asia, the Central Asian states, the Middle East as well as Africa. VITU would therefore be able to command a large audience even beyond the geographical borders of Pakistan – evolving into a premier information technology institute for countries of the South.

There are no technical obstacles to the concept. The challenges are principally organizational.

The feasibility study includes low (minimum necessary to justify the effort), most likely, and high (most ambitious, stretching the envelope, most effective, highest-cost) scenarios/options. 

 3.   The Project

VITU will address this situation by using the following approaches:

·         Public and private sector institutions that could provide adequate computer laboratories would be invited to participate in the VITU programmes. This would alleviate, to some extent, the pressure on the VITU to establish its own dedicated campuses. Hardware already installed at these institutions would be validated and put to proper use, thereby increasing its utility manifold.

·         Faculty expertise would be identified and utilized from its original location. Thus if an expert in networking was located in Karachi, while an e-Commerce expert was located in Islamabad, both would be invited to become part of VITU’s faculty. These resources would not be hired on a full-time basis but would be signed on for a particular course and paid on the basis of their time involvement. The concept of utilizing these resources from their original locations would not be limited by the geographical boundaries of the country. Thus, if cutting-edge expertise were available in the United States, VITU would also utilize this.

In order to maintain a high standard in the quality of education imparted by the VITU, a tutor-network is envisioned. These tutors would be Master’s level graduates who would have undergone teacher training. This tutor network would considerably value-add to the interactive experience of the students of VITU.

VITU will establish one administrative centre, which will act as the hub coordinating all activities of the University. This Administrative Centre will house the management as well as the basic electronic infrastructure for enabling the activities of the VITU. This will include, but not be limited to, Servers, Communications equipment, Content development workstations, CD-Writers and print media duplication facilities.

VITU will help establish a network of over 100 “Virtual Campuses” countrywide over the next four years. VITU itself, however, will own and operate only one such campus. Direct contacts will be established with all major national universities, both public and private sector, and they will be invited to subscribe to VITU programmes, both as providers as well as consumers. Participating institutions will then act as “Virtual Campuses” for VITU. Where there is a lack of such institutions, VITU would actively seek private sector involvement to set up “pure” virtual campuses. These would only be consumers of the VITU courses and would allow the dissemination of world-class education to remote areas. Subsequently, VITU would consider directly establishing Virtual Campuses only in areas where no major institutions exist and where private sector involvement cannot be obtained.

The Virtual Campuses would develop a total capacity for 50,000 students nationwide. Utilizing the centres on a full-day basis with a possibility of round the clock usage will further enhance this capacity to 100,000 or even beyond.

The Virtual Campuses will be equipped with state-of-the-art multimedia projectors and screens and multimedia personal computers. A Virtual Campus will be networked internally and also be interfaced to a high-bandwidth Wide Area Network (WAN), thereby allowing it to connect to all other Virtual Campuses as well as to the Internet. Video equipment to receive television broadcasts and display via the multimedia projectors will also be incorporated in these centers.

VITU will also set up a “Virtual Library” which will provide electronic collections of course and supporting material. A CD-ROM library will be kept on line through CD Jukeboxes that will allow a huge amount of literature to be accessed directly by students of VITU. Subscriptions to electronic databases and libraries will also be established and offered through the Virtual Library. The library will also scan and make available useful resources from the Internet on a continuous basis.

The Virtual Library will also maintain the entire course collection of the VITU on-line. Electronic books will be made available by signing agreements with major international publishing houses. Linkages will also be sought and established with other electronic libraries, regardless of their location.

A comprehensive Courseware Management and Delivery system is also part of the facilities to be provided by VITU. Courses will be delivered through television broadcasts, online webcasts, video on demand and web-based content. This way, if any student misses the actual lecture/broadcast, he/she would have the opportunity of reviewing it at a later date or time. Similarly, by providing the entire lecture material in the form of web-enabled content (video-on-demand as well as hypertext), the full power of hyperlinks will be utilized to further enhance the learning process.

The Courseware Management and Delivery system will involve the use of television studio facilities, as well as multimedia content development facilities. The television production facilities of the Allama Iqbal Open University could be utilized for this purpose after an agreement to this effect is made. The multimedia content development will be done at the Administrative Centre or outsourced to other institutions/experts wherever they may be, in line with the concept of the VITU.

Project benefits: The impact of this project is multi dimensional.

1.       It will provide a pool of highly trained professionals, which is non-existent at present.

2.       It will enhance the quality of education in the existing IT institutions.

3.       It will alleviate, to a certain extent, the severe faculty void in the existing IT institutions.

4.       It will enhance the skill set of IT professionals

5.       It will provide companies a core of trained manpower and it would encourage companies to expand into new areas. Internationally, there is an acute shortage of qualified manpower and the opportunity exists for companies to make major inroads if the necessary expertise becomes available.

The country is IT deficient at present. There are not enough professionals to cater to the requirements of the local IT industry, let alone the huge international demand. This project will provide quality manpower in IT. This trained manpower will be able to tackle large-scale projects in bigger organizations such as WAPDA, Sui Northern and Southern, CDA, PIA, Railways etc. as well as allow the local software industry to undertake sizeable international projects.

4.   Stakeholder Analysis

Public and private sector universities and educational institutions were visited in several major cities of Pakistan. These included chartered as well as un-chartered institutions. These institutions were approached with both perspectives: as potential “sellers” of courses, as well as potential “buyers”. The interviews showed strong support from these institutions without any visible opposition. In fact, a considerable amount of excitement was generated by the project. All institutions were very aware of the issues faced by them, which were the very same factors, driving the VITU project: lack of adequate faculty and the requirement of a large, highly trained IT workforce. 

International analysis, especially for countries of the South, would require a separate mission.

The two principal stakeholders in the telecommunication area – PTCL and NTC – were also interviewed with a view to determine the technological infrastructure. The study found that excellent communications infrastructure existed in the form of redundant optical fiber backbones in the country and both institutions were found very willing to collaborate in the exercise. Whereas PTCL owns the fiber backbones, the NTC has been charged with carrying the public sector communications traffic and has two fiber pairs at its disposal on each of the backbones. It is currently involved in setting up the switching equipment in various exchanges and has outlined a plan for nation-wide coverage as well as connecting major educational institutions. As such, the NTC seems to be the logical choice of carrier for VITU requirements.

The study also interacted with the principal consumer segment – software houses. It found complete support for the project. Software houses are already collaborating with several educational institutions by providing internships for students, validation of examinations and also by providing adjunct faculty to several Universities. This is an excellent example of industry-academic cooperation as this collaborative approach is critically needed and industry has to provide a direction for the educational institutions, especially in the fast paced IT sector.

5.   Curriculum and Content Production

Major Universities have expended considerable efforts in developing curricula aimed at providing high quality IT education. Out of these, the institutions having qualified faculty members would classify as “content-providers”. Content could also be acquired from participating non-Pakistani institutions. However, these content-producing institutions are also potential buyers of content from VITU. There remains the challenge of developing common courses accepted by all the content-producing institutions for use in their own curricula. For the mainstream computer science courses, this should not pose too much of a problem because of the existence of standardized courses as outlined by the IEEE, ACM, and other such bodies. The overall curriculum would depend on the degree being offered.

Content producing institutions would have the option of offering their own degrees, filling holes in their teaching staff with courses purchased from VITU. However, they could also offer the VITU degree if they so choose. Pure Virtual Campuses would, of course, offer the VITU degree exclusively.

The Allama Iqbal Open University (AIOU) is actively seeking a role in this project, and in principle it is worth building on their infrastructure and experience, but perception of low quality as found in interviews with software houses and other institutions may be an obstacle. Their curriculum and content are currently under revision and content originating from AIOU could be utilized by VITU if it satisfies the quality requirements. Another role for the AIOU would be for their regional centers to upgrade to VITU learning centers and become pure Virtual Campuses for VITU. This may be especially valuable if the AIOU centers are located where no other major educational institutions exist or where no valid private sector participation can be found.

As an overall quality assurance mechanism, the establishment of a national computer science association as a professional body, would be crucial in developing external assessments (examinations), as well as raise the prestige of the profession. The proposed National Testing Service (part of the IT Policy) would be the primary mechanism for conducting the assessments. VITU would actively look towards the National Testing Service as a third-party quality assurance body and would require that its graduates qualify the NTS test. This would also allow VITU graduates to be ranked with their peers from other conventional universities.

VITU envisages a three-tier delivery model for its courses. An acknowledged master of the field would be the overall in charge of a course. He/she would act as the “knowledge-provider” for the course material and would also deliver lectures over television/streaming video where applicable. The course material would be transformed by instructional designers into web-based video content or hypertext, and webmasters would then be used to deploy the content. The entire group from the course in charge down to the webmasters would act as a cohesive team.

In order to maintain a high level of interactivity, a tutor network would also be used by VITU. Local instructors would be available at the learning centres to guide students where needed. An Instructor Supervisor would manage a defined group of Instructors and answer student questions beyond the capabilities of the local Instructors. Advanced or important questions would be forwarded for reply to the Professor in charge of the course and also for incorporation into the Frequently Asked Questions (FAQ’s) list. All student queries would be responded to within a defined time period. All instructors/tutors would have to be validated by VITU and may even undergo instructor training at VITU before being employed at their Virtual Campus.

A fast-track option for VITU would be to focus on re-training qualified engineers and other holders of two-year scientific degrees. As this student population would already have covered the basic mathematics and humanities requirements, VITU could concentrate on CS courses and start turning out qualified computer scientists in a short period. Subsequently, VITU could move on to inducting fresh entrants into the four-year degree program.

The suggested sequence of events for VITU is to start short updating courses for existing IT professionals as soon as possible. These courses would be used to test the system during the period (January –August 2001) and ascertain the quality of knowledge/education delivery as well as the feedback mechanisms, while also testing the content development models. Subsequently, VITU could start the 4-year degree program with a fast-track option for engineers and other graduates as outlined above.

It is important to develop the understanding that the lecture is not the ideal unit of content for e-learning. Instructional designers will help in the “translation” of traditional content into modern web-based interactive instruction, with clear learning objectives, time budgets (for students), study guides, on-line tutoring, group project development, and other forms of interaction. Many students will eventually be doing collaborative work with distant partners over the Internet – their training should include doing work in this mode.

Developing a group of competent instructional designers will require technical assistance for training them, possibly technical assistance from abroad. This should be an integral part of the project.

While the “camera in the classroom” approach may be used to capture content initially, this is only a first step toward creation of a balanced mix of text, graphics, animated graphics (Flash animations, etc.), audio clips, and video clips. Bandwidth will not be a major constraint for the institutions on the optical fiber system, but “talking heads” should be used with discretion, and probably selectively where personality, body language, and “performance” really make them worthwhile.

One obvious place for video is for the professor to introduce himself to students, and outline the course objectives, methods, etc. establishing his “telepresence”. Another good use of video is for live debates on controversial topics, where the interaction between participants is well captured by video and done in a studio setting. Studios may be rented for this purpose.

Video may also be useful for introducing difficult topics, motivating students, and the like, where the personality of the guru and his felt presence is important. But excessive use of video runs the risk of being a poor competitor with high-production-value TV programs, and it is not worth investing the kind of money necessary.

6.   Technological Delivery Options

This section summarizes the detailed analysis contained in Annex A. The Pakistan Academic Intranet (Educational Network) is also part of the IT Policy. VITU should give high priority to delivering content over the proposed network. TV-based delivery is an immediate option and promises the broadest coverage. This would have to be coupled with the provision of a reverse interaction channel over the Internet. Major educational institutions in the larger cities would link to VITU over the optical fiber backbone but could also use TV-based reception of contents to relieve data congestion on the intranet.

The optical fiber backbone is already in place. The academic intranet would involve rings in major cities, with the rings connecting over the backbone to other cities. Institutions would be linked to the city rings. The academic intranet should operate at OC3 level (155 mbps) if possible, but a minimum of 2 mbps would be required.

The national fiber backbone has ample redundant connectivity to the Internet via satellite and submarine cables as shown in Figure 1. The planned expansion of the backbone through 2004 is shown in Figure 2. Coverage is expected to be quite complete, but last mile connectivity would have to be implemented for the educational intranet. New fiber could be laid, or spread-spectrum radio modems could be used. Radio-modems would offer a fast solution (possibly temporary) for up to 10 MBPS of connectivity to participating universities and other institutions providing learning centers. Cable TV infrastructure as well as DSL are also becoming available and could be considered for last mile connectivity. Remote sites could be connected through 2-way VSAT connections. Several satellite options are available for the country and the region providing wide-area coverage. Thaicom 3 and AsiaSat 3S are modern satellites that are available today. Intelsat 902 is a latest model satellite scheduled for launch in third quarter of 2001. Their footprints are shown in Figures 3-5.

Figure 1: Current National Fiber Backbone

Figure 2: Planned Development of the National Fiber Backbone through 2004

 Figure 3: Thaicom 3 Regional Downlink Beam Footprint

Figure 4: AisaSat 3S Footprints

Figure 5: Footprints – Intelsat 902 60 E

7.   Management and Organizational Structure

A Board of Governors should be the principal governing body for VITU. It should be composed of eminent scientists and professionals, renowned educationists, prominent businessmen and entrepreneurs, as well as representatives of the Ministry of Science and Technology and the Ministry of Education. The BOG would set overall VITU policy and direction, approve the budget submitted by the Vice Chancellor, order and review financial audits, hire (and have the right to fire if necessary) the Vice Chancellor (basically the CEO, who would recruit his own core staff).

The SIIT Board would include representatives of the most important (in numbers of students) countries participating in the SIIT.

An Academic Council, composed of prestigious computer scientists from public and private sector universities, software houses and research institutions inside and outside Pakistan would review all courses proposed for the VITU/SIIT curriculum and its approval would be required for a course to be offered. The Academic Council would also approve changes in the curriculum, including recommending short updating courses for IT professionals in the VITU/SIIT continuing education program. Assessing the quality of content would also be one its main concerns.

Overall leadership of the VITU requires a Vice Chancellor (VC) with the following skills:

• Entrepreneurial, capable of mobilizing financial and human resources
• Technically world class, with the respect of the Pakistani and international IT community
• Diplomatic/political, capable of motivating stakeholders and getting them to work in harmony toward common objectives

The staffing of VITU should be kept at the minimum level necessary to operate efficiently. There would be no gurus at VITU headquarters, but there would be a core academic group responsible for overall maintenance of the content, assignments, quizzes and other  mechanisms to assess student performance. The same group would be responsible for the FAQ’s and e-mail responses to student questions. The “gurus” would be contributed by content-producing member universities and institutes, Pakistani and foreign.

VITU/SIIT could and should have a group of expert instructional designers and webmasters to work with the gurus to translate lecture-and print-based content into web-based learning materials. Below the VC we propose the following key staff for the VITU

• Dean IT (Academic responsibilities)
• Registrar (Record keeping responsibilities)
• Treasurer (Financial responsibilities and negotiations with outside agencies)
• Network Executive (VITU Network and communications responsibilities)
• Dean Instructional technology and design
• Business/Marketing manager/PRO (Negotiating with participating institutions, marketing the concept, media relations etc.)

The academic infrastructure will also be kept lightweight with the concept of the core group being policy makers and facilitators, capable of utilizing the services of talented individuals wherever they may be located. Thus, education through VITU will be carried out using the core academic group, instructional designers, audio-video experts, and webmasters working with a distributed adjunct faculty.  

The academic and management staff of the VITU is anticipated to start out with 22 individuals, including the VC, growing to a total of 81 in four years, including the VC and other managers. The majority of this staff would be the instructors responsible for student interaction. The growth of the academic group is anticipated as shown below:

Another important group of the staff will report to the Dean, Instructional Technology and Design.

The Dean, Instructional Technology and Design would be one of the Instructional Designers

This group, composed of instructional designers, audio-visual experts, and webmasters, will be responsible for developing VITU’s online educational materials, using the latest e-learning technologies and web-based instructional design methods.  

Recruitment and training of this group will be a major responsibility of the VC, and the group must work closely with the staff reporting to the Dean, IT. This group is a service group to the academic staff, who are responsible for the intellectual content of the VITU/SIIT courses. 

But there is a big difference between lecture-oriented classroom instruction and web-based distance learning, making full use of all digital media (e.g. e-mail and derivatives such as threaded discussion forums, listservs, chatrooms and recorded chat archives); video and audio clips delivered via streaming from a server (all delivered over the Internet by landline and/or satellite) and possibly broadcast television. This group will help the academic staff make and manage the transition. 

The Dean, Instructional Design and Technology should have, or be acquiring at least a master’s degree in online distance education – several such programs are being offered through online instruction from US and European institutions. 

Since these skills are in short supply in Pakistan, a national / international search for instructional design and technology experts should be conducted to find a suitable person to occupy the position at least temporarily, and a training program using international experts undertaken as a high priority for the staff reporting to the Dean, Instructional Design.

If feasible, all courses will have externally assessed final examinations. The comprehensive examinations prior to awarding the BCS degree should definitely be assessed externally, preferably by the National Testing Service.

Feedback mechanisms will be employed to get constant input from students, tutor supervisors, and tutors to make necessary mid-course adjustments and constantly seek to upgrade quality. 

Annual evaluations of the VITU program will be conducted by an international review board selected by the Board of Governors

VITU will establish a virtual placement service, on the Web, which will allow graduates of VITU/SIIT to display their résumés, transcripts, recommendations, e-mail address, telephone numbers, and other relevant information for hiring. VITU will also promote its graduates through advertising, face to face (F2F) job fairs, and the like.

8.   Marketing and Advertising

The study found strong support to the concept of VITU/SIIT among the various stakeholders that were interviewed. However, to create an environment conducive to long-term survival of VITU, a focused effort would be required through strategic communications, marketing and advertising of the concept to create a favorable climate of opinion and build client support. It is important that the support base among stakeholders should be as broad as possible.

The objective of this effort is to build political and financial support for the concept of VITU, more broadly, for a smart, learning nation strategy where the delivery system for IT education points the way to K-to-gray education and training – lifelong learning for anyone, anyplace, anytime, with just-in-time learning being an important part.

Electronic media will get heavy emphasis: in part the medium is the message – Television, and radio programming, use of websites, some push Internet material to selected mailing lists (via e-mail). Print media will not be neglected – newspapers, magazines are important to obtain the widest and long lasting coverage.

Initial contacts with a TV production company which is also developing an ISP and a print/electronic media conglomerate which is moving into ISP business and already puts its newspapers on its website (and gets a lot hits from Pakistanis living abroad) produced enthusiastic support, with a strong willingness to be involved.

All formats of TV should be considered – segments of news programs, documentaries, public service announcements (IT Minute), talk shows, round table discussions, dramatic serials (soap operas / telenovelas / mini-series with IT and development, learning nation themes built in). Dramatic serials are the most expensive, and would be in the high-cost (and benefit) scenario.  Most of the same format would apply to radio.

Print should also consider a variety of options – normal news coverage, special inserts in newspapers and magazines, op-ed pieces, editorials.

Advertising should be used not to build political and financial support so much as to inform the public on courses available, fees, application deadlines, and the like.

 9.   Financial and Economic Analysis

Project Capitalization

The capital expenditure on the various expense heads of the Virtual University is projected to be incurred over a period of 24-30 months by which time it will evolve into a full-fledged distant learning institution with maximum/ full capacity. The capital expenditure for the Virtual University is projected to be incurred from January 2001 to December 2003 under the following main expense groupings: 

Summary of the proposed capital expenditure heads and their budgeted amounts and funding is given below, details of which are given in Annex B-1.

Capital Expenditure Budgeted Amount and Timeframe

Table-1

Rs. In ‘000

Assumptions on project cost

Connectivity costs: These pertain to connecting the 40 proposed Universities participating in the program and relate to ‘last mile’ costs and comprise of routers, digital cross connect etc.

Building costs: It includes refurbishment of the existing facilities provided by the government. It is proposed that the facilities shall be operational gradually over the 3-year period and include air-conditioning and furnishing for a area of 96000 sq ft

Computers, accessories etc. The cost of computers pertain to the proposed computer lab for the flagship campus and also provision has been made to replace all electronic and telecommunication equipment after 3 and 5 years respectively

Content development. This comprise of the cost of developing course material capable of broadcasting from both local and foreign sources.

Initial years deficit: This pertains to cash deficit likely to be incurred in the initial years of running the University. It relates to large infrastructure facilities cost as well as yearly costs to have the entire infrastructure in place to start distant learning from the start but all the costs will not be recovered in the initial years because of low volumes

Underlying Assumptions

Assumptions have been made regarding availability of certain infrastructure that is absolutely necessary for the running of the Virtual University while making the capital and financial projections. These are given below:

National testing service: It has been assumed that the National testing service which would take the exams would be in place by the time the Virtual university is in full operation. No cost of setting up this service has been included in the capital expenditure of the Virtual University, as it has been assumed that the cost of setting up this testing service shall be met under different budget

Band width costs: Estimated cost of bandwidth both local and foreign for the purpose of internet connectivity of the various institutions have been provided in the projections. These would have to be closely monitored by the government as any abnormal deviation could have a major impact on the sustainability of the University.

Content development : It has been assumed that main capability for producing the course contents is available within the country to produce quality lecture material which would then be used to broadcast and only a small portion will be bought from abroad. Provision for both types of costs have been provided for.

University Intranet: It has been assumed that the proposed University Intranet proposal will be in place and the cost needed to have the intranet in place are not included in the projected cost of the Virtual University.

Broadcasting cost: The important delivery medium of television has been assumed in the model for delivery of the course content. Full cost of the broadcasting for 12 hours per day have not been provided for in the projected model although certain cost have been provided as given in the assumption sheets

Proposed Funding

Funding of the projected capital expenditure is to be made from the government’s budget allocated for the setting up of a Virtual University and is to be made available over the period of capitalization of the Virtual University. The summary of proposed funding is given below:

Table-2

Rs. In ‘000

Operating & Financial Assumptions

The main areas of the financial feasibility of the project for a period of five (5) years ending 30^th June 2006 with an initial start-up period of six months starting 1^st January to 30^th June 2001 is given below. However for the purposes of financial and economic analysis the projections have been made for a 10-year period. Some of the major assumptions used for forecasting revenues and expenses are given below. Detailed assumptions are given in Annex B-2

Major Assumptions

Table-3

Assumption on key areas of financial projections

Land and building: Government of Punjab has provided building for setting up the first campus of the Virtual University. Projections have been made for refurbishment, air-conditioning etc of the campus. Provision for rent of the building has been in the projections.

Students fees, books and courier services: Projections have been made on the basis of student intake in the first year of 4500 students which is then projected to gradually increase to 30,750 by year 30 June 2005 in each year. The capacity to handle students in all the semesters of the various courses have been fixed at 126,500 students and this capacity is projected to be achieved by the 30 June 2008. Also adequate provision has been towards cost of study materials and their delivery charges. The fees has been kept low  to make it affordable. The model provides for participating institutions to charge extra for their services

Rate of inflation and exchange rate: The projections include 5% increase per year on account of inflation and exchange rate

Bandwidth costs and percentage absorbed by the Virtual University: Initial estimates have been made for the cost of foreign and local bandwidth lines available. The entire cost of the bandwidth has not been absorbed in the projected income statement as it has been assumed that the Universities using this bandwidth will be using it for other purposes as well and not for the distant learning exclusively. The costs absorbed in the income and expenditure statement have been kept on a sliding scale taking into account the increasing usage with the passage of time.

Content development and lecture delivery cost: The financial projections include yearly expense equivalent to 20 % of the capital cost of content development for updating and addition of new content after the entire content of the course has been developed

Other assumptions: Provision has been made for strategic advertisement as a lump sum cost per year and marketing expenses as a percentage of revenue

Financial Projections

Financial projections for the Virtual University for a period of 5 years starting from 30^th June 2001 and ending at 30^th June 2006 are given hereunder. These have been prepared on the basis of the underlying assumptions given in the report and the Annexes and show a healthy state of affairs whereby the Virtual University is projected to attain self- sustainability within three years of full operations. Thereafter starting from the fourth year of operations i.e. June 2004 onwards the projections show that the University shows considerable profit, surplus cash and growth in assets and these keep increasing provided it attains the projected outreach (number of students)

The salient features of the financial projections are given in table 4 below

Income & Expenditure

Table-4-A

Rs. In ‘000

The income and expenditure account has been prepared on the following basis:

§         Total Nos. of students intake comprise mainly of BCS 4 year students whereas there will be a small number of students who would do advanced credit courses and other professional short courses

§         The fees has been provided at 12000 per year and increased  @ 5% per annum.

§         The costs of offering courses comprise of cost of workbooks and study guides, estimated bandwidth charges, broadcasting costs of lectures and depreciation

§         The administrative and marketing costs comprise mainly of salaries of vice chancellor, professors and other faculty and technical persons, strategic communication and advertising and fee collection and marketing expenses, courier and repair and maintenance expenses etc

  The University is projected to show a small surplus by the year 30 June 2004 and thereafter by year 30 June 2006 the projections show a large surplus.

Detailed projections are given in Annex B-3, while the graphical presentation of the projected revenue generation, costs of offering courses and the administrative & marketing costs over the period of 5 years is given below:

Cash Flow

There is a cash deficit for the initial 3years but in the year 2004 the situation improves and there is a net cash surplus on operations of Rs.173 million which increases to Rs.940 million in the year ending 30 June 2006. There is no financing from Government from 30 June 2004 onwards. The positive closing balances in the initial years up to 30 June 2003 are basically derived from the government funding. Detailed projections are given in Annex B-4:

Table-4-B

Rs. In ‘000

Balance Sheet

Project’s net assets start increasing from year 30 June 2004 onwards where after the University attains self-sustainability. Government financing is also increasing till 2004 and thereafter no funding is required. The initial years deficit of Rs. 45 million in the year 2001, increases to Rs. 412 million in the year 2003 but is completely wiped off in year 30 June 2005 and there after the capital and net assets of the University increases manifold rising to Rs. 2.12 billion only in 30 June 2006. Detailed projections are given in Annex B-5:

Table-4-C

Rs. In 000’s

The graphical presentation shows the increase in current and operating fixed assets of the Virtual University over the projected 5-year period up to 30 June 2006.

Financial & Economic Analysis

The financial & economic analysis carried out on the basis of projected financial results show the Virtual University as self sustainable having high net present value, low capital cost per beneficiaries, a comparatively early payback period and low project risk after the initial years. Some of the important analysis carried out is given below:

1.                  Discounted Cash Flow:

The internal rate of return (IRR) of the project calculated over a period of 10 years is approx. 38% and the payback period is 4 years and 6 months. The Net Present Value comes to Rs. 1.56 billion, presenting a benefit over costs of 2.1 X, discounted at 16% per annum being the opportunity cost of capital. The table showing the various elements of the analysis is given below and detailed calculations are given in Annex B-6.

Table-5-A                                Rs. In 000’s

2.                  Project Value-Added:

The projected total revenue generation calculated over a 10-year period is Rs. 13.771 billion with a value addition of Rs.10.091 billion. The total benefit in terms of salaries over the life of the project is Rs. 0.958 billion and the total bought-out services is Rs. 3.680 billion. The total number of employees including teaching staff, technical staff and administrative staff is 137 and the direct beneficiaries in terms of students comes to 206,250 students giving capital employed per beneficiary of Rs.5,786. The table showing the various elements of the analysis are given below and detailed calculations is given in Annex B-7

Table-5-B

Rs. In 000’s

3.                  Foreign earnings from remittance of students working abroad:

The potential of the Virtual University producing IT experts capable of getting Jobs abroad is enormous. A conservative calculation based on the assumption that if only 20% of the graduates get jobs abroad and they remit only 10% of their earnings to Pakistan over a 10 year period then they would have remitted a minimum of US $ 447.53 million on the assumption that the graduates going abroad shall earn a minimum of US $ 2,500 per month which will grow at a average rate of 5% per annum. Detailed calculations are given in Annex B-8. 

4.                  Break-Even Analysis:

The Virtual University is expected to achieve the projected out-reach of enrolling a minimum of 96,500 students per year by 30 June 2006 and ultimately rising 126,500 students of all types of courses by year 30 June 2008 however it is projected to achieve breakeven by year 30 June 2005. The financial projections show that by year 30 June 2005 the university will reach a operating risk of 29%. The table showing the various elements of the analysis are given below and detailed calculations is given in Annex B-9

Table-5-C

Rs. In ‘000

5.                  Key Financial Ratios:

The profitability and asset-based ratios show a considerable improvement over the 6-year scenario showing that University is financially sustainable. Some of the salient ratios are given below:

Table-5-D

Following is the graphical overview of the project’s financial performance over the period of 5 years.

 Graph 3: Financial Ratios Analysis

6.                  Sensitivity Analysis:

The sensitivity analysis of the projections of the Virtual University has been carried out  by considering the effects of 10% changes in the following key variable factors and its effect on the various financial and economic figures and ratios

§         Student In-take – decrease by 10%

§         Fee Income – decrease by 10%

§         Operating Costs – increase by 10%

§         Capital Costs – increase by 10%

The effect of changes on the projected key figures and ratios of the project given a change of 10% in the 4 key variable factors of the University as defined above are given below. This is based on the operating results of year ended 30 June 2006 and shows that the project is most sensitive to the fees per student whereby a 10 % decrease in the fees lowers the projected gross surplus by 13 % and net surplus by 17% and the IFRR of the project by 16 %

Table-5-E

Rs. In ‘000

SWOT Analysis

The motivation behind the Virtual University for IT is to bring together a critical mass of quality faculty to provide world-class education in the IT sector to a large student body. Following is the SWOT (Strengths, Weaknesses, Opportunities, Threats) Analysis of the University.

STRENGTHS

Strengths of the University relate to those micro and macro economic, financial and social benefits that will accrue through its establishment. These benefits will have their impact both in the short as well as the long term.

Human Resource Development:  It aims to produce large number of IT professionals who undergo extensive training through the easy accessibility of the program. The human resource development in the IT sector will reduce the demand supply gap leading towards self-sufficiency for this upcoming need.

Highest Quality Education: Quality, not only in terms of the course contents but also the pedagogues who will be veterans in their field.

Economical/ Affordable Rates: In Pakistan, shortage of IT universities deprives many deserving students of their right to education. The proposed tuition rates will be economical as compared to the local as well as foreign universities.

Industrial Orientation: The teaching methodology will be industrial orientated that in turn will ensure quick market acceptability of the graduates.

 Developing Domestic IT Market: Right now, for Pakistan, one of the rudimentary needs is to develop the domestic IT market that includes the computerization of commercial areas, government offices etc. The graduates of Virtual University will be utilized for developing the domestic IT market, which needs considerable attention. 

Credibility: Stakeholders of the University are both from the public as well as the private sector. Involvement of private sector, that includes both private universities as well as faculty, ensures credibility of the program in the long run.

State of the Art Technology: The setting up of the University involves introduction of sophisticated cables, routers, digital cross connect and other equipment for the daily broadcast of lectures on the two-way system, multimedia, generators, UPS, PCs, printers etc.

Low Fixed Cost: Public and private sector institutions that could provide adequate computer labs will be invited to participate in the graduation programs. Thus the Virtual University will not be required to establish its own campuses everywhere, which in turn will lower the fixed cost.

High Opportunity Cost:  It has a very high opportunity cost. The following two alternatives can substantiate this fact:

a)      The first alternative is to have conventional ‘campus based universities’ for which not only the cost would be quite high but also the ultimate objective of producing large number of quality IT professionals will be lost. It has already been proved through the facts and figures.

b)      The second alternative would be to abort the idea of giving IT education to the large number of students. This is not recommended as this would mean that our objective of educating large numbers of IT experts cannot be fulfilled in a short span of time and that would leave our country behind both economically and technically

Both the alternatives are absolutely non-feasible resulting in high opportunity cost for the Virtual University. Thus prudence demands undertaking this project as a high priority. 

WEAKNESSES

Weaknesses relating to the Virtual University are those factors, which may cause hindrance for the proper execution of the plan thus leading to non-fulfillment of objectives. Some of the weaknesses relating to this project that needs genuine consideration are given below.

Management and Control: One of the weaknesses is that the University is being set up as a State owned project and the government might have considerable involvement in its management and control. There are several examples to substantiate the fact that state owned organizations are not efficient enough to ensure quality and excellence.

Non-Proctored Academic Environment: One of the inherent weaknesses regarding distance learning is the methodology itself. Most of the people, especially the fresh college graduates, are not used to a non-proctored academic environment and thus they will have difficulty getting accustomed to the system.

Extensive Initial Marketing: Virtual University is a relatively new idea for Pakistani people. Initially there will be resistance and apprehensions regarding its methodology, management, and credibility. 

OPPORTUNITIES

The objectives of the plan will be achieved only though proper implementation, which in turn will open doors of opportunities having positive implication on the economic status of Pakistan. Some of the opportunities generated through establishing the Virtual University are discussed below:

Increase in GDP:  It seeks to generate employment. Through employment the standard of living of people will accentuate and so would the per capita income. On the other hand, expatriate Pakistani graduates who will get employment abroad will be a source to generate foreign exchange, thus strengthening the economic state of the country.

Attracting foreign nationals from other developing countries: Given the proper implementation of the plan, it will develop long-term credibility. This will help to form an IT education platform not only for the Pakistani nationals but will also attract people from the developing countries specially the South.

Creating a positive IT image abroad: The graduates produced would help in the development of IT culture and would be a source of software exports and expertise of highest quality. This will impart a favorable IT image of Pakistan abroad.  

THREATS

Threats are those contingencies, which need to be addressed from time to time. Ignorance of these factors will have serious consequences resulting in the failure of the project.

Proper Execution of Plan: The success of the project lies in the collaboration of various stakeholders. If they fail to perform their due part, the project may face difficulties.

Rapid Change in Technology: The rapid inherent change in the IT industry is the threat for the project. The consequences of this fast technology transition are manifold including the requirements in education. The Virtual University cannot afford to neglect this factor. Once the technology regarding the existing hardware & its related software changes, the expertise may become obsolete or not upto date. In order to compete globally the rapid changes in technology have to be accounted for and changes will be needed in the curriculum and methodology. 

Scenario Analysis 

Virtual University’s (VU) standalone risk depends on both (1) the sensitivity of its NPV to changes in key variables and (2) the range of likely values of these variables. As sensitivity analysis considers only the first factor, a comprehensive Scenario analysis of VU has also been developed which takes into consideration both the sensitivity of NPV to changes in key variables and the likely range of these variables.  

For Scenario analysis, we have developed three sets of circumstances: High, Medium, Low. The following four key elements have been identified upon which this analysis is based: i) Student intake, ii) Fees, iii) Operating cost, and iv) Capital cost. Medium scenario is the most likely actual situation which has been taken as a base for the development of High and Low scenarios. 

High scenario assumes a higher student intake by 25% and an increase in the fee of courses by 20%. This scenario also assumes that both the operating costs and capital costs of the project will be low by 10%. This is the ideal situation under which the NPV of the project is Rs.4.268 billion whereas the IFRR is 68%. Other key financial performance indicators are given in the table below. 

Low scenario represents the worst situation and assumes that the student intake will be less by 10% and the course fee will be less by 15% than those expected in Medium scenario. This scenario also assumes that the capital costs of the project will increase by 25% whereas the operating costs will increase by 20%. This scenario takes into account the provision for high exchange rate fluctuation and unforeseen events. This is the worst scenario where the project has a negative NPV of Rs.(0.287) billion where as the IFRR of the project is 12%. Other outcomes of this scenario are given in the table below. 

9.   Conclusions and Recommendations

The principal risks to the VITU and SIIT projects are

• Institutional and individual egos – the lack of a collaborative tradition between institutions in Pakistan, and between Pakistani and other teaching institutions in the South

• Lack of a tradition of instructional design for distance education outside the traditional distance education institutions, principally AIOU, and consequently a lack of skilled instructional designers for online distance education.  

• The shaky reputation of distance education as regards quality, particularly in computer science, in Pakistan, and probably other countries as well.  

• Lack of experience in organizing the production, marketing, and delivery of individual courses (both short and long) and degree programs.

• Lack of support from future Governments could be a problem if the project does not develop strong support in civil society.

These risks can be minimized by

• Providing the carrot of high-bandwidth connectivity to the participating institutions. The driving force is the lack of qualified professors even in the best institutions. If the institutions are connected, we believe the required collaboration will materialize, driven by the felt need for more and better professors. Thus a first priority is delivering on the promise of broadband Internet connectivity, the academic Intranet. Given the low levels of connectivity currently available, even a 2Mbps initial connection will result in a quantum increase in the speed of web access.

• “Importing” an instructional designer with experience in online distance education for at least one year to serve as Acting Dean of Instructional Design. International assistance should be sought to fund this position, perhaps within the context of the SIIT project.

• Beginning with the “camera in the classroom” approach using traditional lectures, and moving as fast as possible toward web-based learning using all the interactivity and multimedia delivery potential of broadband Internet. A lower-bandwidth variant, using only small compressed video clips in 4-6 square inch windows, and assuming 28.8 kbps speeds should be developed. The strategic communication campaign should also help break down resistance to new ways of teaching and learning, showing that they can deliver learning results of equal or better quality than the F2F, televised, or streaming video lecture mode.

• Hiring (1) an experienced Vice Chancellor with high academic, entrepreneurial, and diplomatic skills; and (2) a business manager to help with marketing and with welding the participating institutions into an effective business-like organization, building strategic alliances with the participating institutions, the private sector, government agencies, and international donors.

• Investing significantly in a strategic communication program using both print and electronic media and a broad range of formats to build excitement about, understanding of, and support for the smart, learning nation strategy in general, and the role of the VITU in particular in that strategy.

A study tour to visit institutions offering online courses in computer science in Singapore or Hong Kong, USA (UC Berkeley Extension, UCLA Extension, NTU, University of Maryland University College and possibly one or two others), possibly Canada or Australia also should be undertaken. This study tour could also be used to scout out potential candidates for the Acting Dean of Instructional Design position.