Market Spotlight: India
EdTech Trends in India
As in many countries around the world, EdTech adoption has been accelerated in India amidst the COVID-19 outbreak. With everyone forced to move to learning online, it provided opportunities for EdTech companies to meet the increasing demand. In June 2020, the Ministry of Human Resource Development in India estimated that EdTech expenditure would be $10 trillion by 2030.
The differentiators between the different EdTech offerings will be language, syllabus, pricing, pedagogy, offline support and teacher training. 22 languages are spoken in India and one key challenge for EdTech adoption is reaching the remote communities in the country. Now that the pandemic has decentralised education, the challenge is to deliver high quality education in local languages and dialects through online platforms. It may be that soon we will see a hybrid approach, with online learning and a live mentor/mentee approach nearly to provide support and reassurance to the student. By having centralised versus decentralised models students can succeed in their education at the right time. It cannot be a one size fits all market and distribution is key. This is something that BYJU mastered, successfully reaching the end customer and using a freemium model.
While K-12 used to dominate the EdTech market in India, K8, STEM and coding are now becoming more prevalent. The government also recently announced that 40% of a higher education course can now be provided online and with an exam driven culture, exam preparation and revision support companies are on the rise. Professional learning has also greatly increased with learning times in India increasing 250% since the pandemic started.
While many have welcomed the increased use of EdTech in India, the market is still complex and fragmented. 60–70% of the population still do not have access to internet or devices. While this is starting to improve with investment allowing the supply of hardware and infrastructure required, still more needs to be done. One alternative being explored is microfinance projects that create library style solutions, to help accessibility in remote areas.
Overall there is vastly increased growth for the Indian EdTech sector, likely to reach $4bn by 2022. The upskilling segment has seen a huge increase and the K12 market continues to dominate, with greater adoption of EdTech by schools and tuition centres. The key drivers and differentiators now for the EdTech market will be curriculum, pricing and offline support, with hybrid approaches to education soon becoming the norm.
Market Analysis
With the largest youth population in the world, education presents both a significant challenge and a huge opportunity for India. Like many developing countries, public education suffers from poor administration and limited facilities, resulting in high drop-out rates and low quality education. This has prompted parents to look for supplementary sources of education and has driven tremendous growth in adoption of online education and other EdTech tools by Indian consumers. Given the strong demand, the market is expected to be worth a staggering $3.2 billion by 2022.
The potential of this market has attracted investors from all over the globe who have invested millions into India-focused online education providers. 2018 was a particularly strong year for fundraising, with BYJU’s scooping almost $1 billion. Despite the COVID-19 pandemic, 2020 is not far behind, again driven by BYJU’s raising $700m in the year to date. M&A deal sizes are still comparatively small, and a number of local players are using this opportunity to scale. Unacademy has been particularly active this year and has acquired 4 online education brands — Kreatryx, Prepladder, Ono Labs and Coursavy.
Successful business models seem to focus on after-school study, targeted tuition or test-prep products. Interestingly, none of the large EdTech companies are targeting the in-classroom market as yet. According to Sequoia Capital, low tech use in the classroom may be down to current products not meeting the demands of an Indian school environment, rather than due to lack of demand. 94% of Indian teachers believe the use of technology can deliver better learning outcomes, but they cited lack of time, training, or infrastructure as a barrier to adoption¹. A clear opportunity exists for EdTech providers that can customise their tools to meet the in-classroom needs of both teachers and students.
India is currently a hub of IT and business outsourcing services due to its large, skilled workforce. It could soon be an educational hub too and is positioned to be the biggest online education consumer market in a few years time. With COVID-19 further accelerating EdTech adoption, we expect to see deal activity picking up as companies compete for market share in this attractive and fast-growing sector.
¹Source: CapitalIQ; Smart Business Box; Ravishankar G V, MD Sequoia Capital
