The New Economist notes that India's higher education system has enormous problems:

New Economist: Indian higher education in disarray : Bloomberg columnist Andy Mukherjee warns that substandard higher education may thwart India's call-center dream:

To maintain its global share of 65 percent in information technology and 46 percent in business-process outsourcing, the country will need 2.3 million professionals by 2010. According to McKinsey's calculations, India may face a deficit of as many as 500,000 workers. As much as 70 percent of the shortage will crop up in call centers and other back-office businesses, where proficiency in English is the No. 1 prerequisite for landing a job.

People within the Indian outsourcing industry are aware of the problem: A number of executives cite high employee attrition and galloping wages as signs that the labor market for undergraduates in India is getting tighter.

It isn't obvious why that should be so. In a country where millions of educated young people are unemployed, why do call centers feel compelled to give pay raises of 10 percent to 15 percent a year? Why don't they boot out the highly paid workers and grab the eager aspirants? And why do they offer their employees free dance lessons on top of a $4,000 annual wage -- worth $36,000 when adjusted for purchasing power in the local currency -- when they can't pass on the increase in costs to the U.S. bank or the European insurance company that is paying for the call centers' services? The answers may have a lot to do with India's education system... only about "10-15 percent of general college graduates are suitable for employment" in the outsourcing industry.... About 8 million students in India begin their undergraduate studies each year.... Mukherjee... discusses the well known problems of affilated colleges:

The globally renowned Indian Institutes of Technology and Indian Institutes of Management are islands of excellence; they produce India's technological and managerial elite. The foot soldiers of India's knowledge economy are produced in lesser institutions, the so-called affiliated colleges.... A typical Indian university has scores of -- sometimes several hundred -- related colleges. The university administers examinations and distributes degrees. Other than that, "the entire higher education in India takes place only in the ill-equipped, understaffed, affiliated colleges" that produce 89 percent of India's undergraduates, Kulandaiswamy wrote in May in India's Hindu newspaper. Large, single-campus universities that have economies of scale must replace the affiliated colleges, most of which don't even have decent libraries.... [A]ll university students in India should be able to pick up the minimum English language skills required for call-center employment. That doesn't happen now.