Strategies to thrive: how “flawed business models” and market turmoil highlight the need for clear strategic choices by UK universities

The University of Essex’s decision, made at the end of last year, to close its Southend campus with the loss of 400 jobs highlights the stark strategic choices faced by many of the UK’s higher education institutions.

Interviewed on Radio 4’s PM programme, the Essex Vice-Chancellor – Professor Frances Bowen – pointed to falling international student revenues as being the main driving factor in the cost-cutting decision.  Enrolment numbers of overseas students have seen severe declines at both Colchester and Southend locations.  Evan Davies, the PM presenter, suggested a “flawed business model”. Previous unsustainable expansion in international recruitment is now exposed to significant government immigration policy changes, he stated.

University of Essex to focus on its Colchester campus

Glasgow Caledonian University is facing a major crisis on its London campus with a £33m revenue shortfall and the loss of 100 jobs.  Its enrolment numbers have reportedly declined from 1,624 students in the 2024-25 academic year to only 31 in the current academic year according to the Financial Times*.   Over-reliance on postgraduate recruitment from Pakistan and India – two of the markets most affected by recent market turmoil – were exacerbated by internal compliance problems and staff claims that they were pushed to focus on student volume at the expense of quality, according to the FT.

With the UK government’s international education strategy high on ambition but short on practical detail on how it can be executed, and with the global economic outlook rapidly worsening, what choices do UK universities have to ride this crisis in the sector?

Here are some of the main strategies that higher education leaders need to consider with urgency and rigour.   

Double down on winning market share for inbound international enrolments

This is still a very valid approach for some, but it is one which requires focused commercial, operational and education execution.   Sales and marketing teams must have a coherent plan of delivery.  In relevant countries, an ongoing investment in targeted promotion is required. This cannot be half-baked, short-term only and it needs to be funded at the right level.  For many source markets, this means rigorous agent selection, close relationship management of those agents and dedicated marketing campaigns to support the network.  The old school approach of exploratory or ad-hoc international officer recruitment trips – with an endless procession of agent meetings and in-office training sessions –  will not cut through in today’s tight, crowded, competitive markets. 

Before the current wave of pessimism in the many parts of the sector, what we regularly heard from higher education providers was their need to grab market share in their key core markets and/or to diversify enrolments through expanding their reach into new markets for their institutions.  But failure to deliver against such objectives was still commonplace, even though rising markets may have previously hidden mediocre performance. Now everyone is more exposed.

Many UK universities have been heavily reliant on one or more of India, China, Pakistan and Nigeria: inevitably as 60% of the total 622,000 non-EU enrolments came from these four source markets in the 2024/25 academic year.  

Many universities are underexposed in South East Asia, Latin America, Sub-Saharan Africa (outside Nigeria) and Central Asia and therefore see these regions as opportunities.  South East Asia is a well-established recruitment region in which many universities are still punching below their weight.**

In South Asia, Nepal has been a boom market,  with enrolments increasing by 92% in the year to 2024/5 to 24,435 but there are still a number of universities which are underperforming against their potential there.

Just as thoroughbred racehorse trainers often know that their equine athletes do not perform to the same level of ability on every track, so university leaders must think carefully about the relevance of their own proposition to each target market. The success of effective market development needs sharp strategic planning, market selection and intelligent activation.

Horses for courses- but some universities are destined to be “also-rans“

Tilt to international undergraduates

Undergraduate students are a sweet spot for international recruiters, with their potential for much higher lifetime revenue returns on marketing investment.  A shrewd choice of markets can be part of the solution here as well. Nepal is an example of a growing undergraduate market and, crucially, one that is reachable faster through education agents’ access to existing demand for UK destination study.  However, in many cases, a coherent direct high school engagement strategy will be required alongside. Selecting the right high schools to focus on and giving decision makers in each school a reason to invest time in the relationship, is likely to be a slower burn, and needs a multi-year approach to the market development plan.

Select carefully from the many available flavours of transnational education

Transnational education received top billing in the UK government’s new international education strategy.  

Whilst some higher education actors have been called deluded, TNE is a rare growth story.  A recent UK Universities report highlights a 9.6% annual growth rate to over 650,000 students in 2023-24, closing in on the number of inbound UK students received in the same year.  In the current academic year, the TNE student volume level, when the data is eventually published, is likely to be higher than the inbound total.  A target of one million TNE students is achievable before 2030.   Countries including India and Saudi Arabia have regulated to encourage in-country ventures.   

But TNE is not a single uniform strategy, it is deployed in several forms with only 6.6% of registered students in 2023-24 studying in-person at overseas campuses of UK institutions.  Collaborative provision – such as joint or dual degrees – covered 42.8% of students.  25.9% of students were registered at partner institutions and 24.8% on distance, flexible or distributed learning programmes.  Over half the registered students were based in Asia.  173 UK higher institutions we involved in TNE, and nine providers taught over 15,000 TNE students each – with The Open University and the University of London leading the field.  China, Sri Lanka, Malaysia, Egypt and Singapore were the top 5 markets, and the 5 fastest-growing markets were Pakistan, Nepal, Kuwait, India and Vietnam.

Senate House, home of the University of London

And there is more to come – as the report covers a period before the branch campuses opened or planned by nine UK universities in India.  Other recent developments include the University of Exeter’s joint institute in Hangzhou with Zhejiang University of Technology.

TNE is evidently a UK export success story and remains an important strategic consideration for universities given the many and varied opportunities to scale it further.

But success is not a straightforward win as there the many failures demonstrate. Research from the Cross-Border Education Research team (C-BERT) reports that almost 1 in 5 branch campuses of universities globally have closed.  Remember the University of Lancashire (then named the University of Central Lancashire) campus in Cyprus or Aberystwyth University in Mauritius?  The universities involved will certainly want to forget those particular misadventures.

Distance and online provision by UK universities has grown but is maturing and is not as fast-growing as the market for in-person provision.  It is also very concentrated in a small number of high volume providers.

For franchised provision, quality control is of paramount importance. Scaling with a focus on quality is essential for the brand reputation of specific institutions and for the sector at large.

Commercially, TNE is not a panacea to counter the problems caused by the UK government’s changes to immigration policy.  Whilst TNE has likely over-taken in-bound student enrolment volumes in the current year, it delivers a much lower average revenue yield per student. The target audience is usually not as affluent. Nevertheless, there are considerable growth opportunities available.  Given the constraints on inbound recruitment, this could well be the era of transnational education as Mark Edwards and Cheryl Yu have claimed.

Mergers, shared services, outsourcing service provision to the private sector

With inbound international revenues at most UK universities declining, one clear strategic response is to create shared services that lower the cost, and improve the efficiency, of international operations.

The merger of the universities of Kent and Greenwich into one “super-university” sets the tone.  Full mergers require significant upheaval, difficult decisions and change management but can bring quick and major benefits to financial performance with reduced senior management and administrative overheads.

One half of a super-university

For some institutions a merger will seem a step too far.   International offices of complementary universities, such as those in the same city or region, could instead pursue shared operations including admissions services, agent management, international marketing and overseas recruitment teams.  Outsourcing different aspects of international service provision to private sector providers is a model which is already well established in many universities and these organisations could also step in to accelerate the provision of shared services.

Some university stakeholders will no doubt object, but the harsh truth is that many institutions are still deploying growth-oriented operating models in a period of sector stagnation or decline, albeit from a record enrolment base.  It would seem remarkable if shared services initiatives did not become more commonplace over the next few years.

Conclusion – is it time to re-think your university?

Perhaps it is the right time to be even more radical.  The current financial pressures faced by the sector is likely to worsen, with 45% of the UK’s universities in deficit in the current academic year.

The university funding model is broken with caps for domestic fees too low, and with previously lucrative inbound international recruitment in retreat from all-time highs. Reaching new audiences through TNE is to be applauded but with the revenue per student substantially lower than for international students studying in the UK, there would need to be very high rates of volume growth to compensate for the inbound declines seen at many higher education providers.

The expansion of universities in the last decade – taking on additional real estate, new campuses, adding to the programme portfolio and staffing levels – has made a shakeout in tougher times inevitable.  Many universities have become bloated, and there is evidence of some chasing volume at the expense of quality – as evidenced in the recent controversy about the dubious promotion by some institutions of Master of Research (MRes) programmes.

Do we need so many universities in the UK?  Have some universities overstepped their remit or attempted to move into areas of programme and service provision that they are not as capable of delivering effectively?  As in any market, if organisations do not take robust action in response to external trends, they will not thrive and some may not even survive.  Clear strategic choices and precise plans for execution are required from the UK’s embattled university leaders.

Footnotes

*This claim of only 31 students seems to be contradicted further down in the article, where it states “Students from Pakistan account for more than half, or 630, of the current intake at the campus”.   As the majority of programmes at the campus are single year full-time postgraduate programmes, the numbers need further scrutiny.

** Of course, these regions are not single homogonous markets but are often talked about as such by university decision makers.