EdTech 2020-12-09

Why Edtech Calls for a Serious Business Thought Now?

Edtech has been one of the biggest beneficiaries of the pandemic, and has grown at a breakneck speed in 2020. Learn the glaring opportunities that this space offers to prospective businessmen and entrepreneurs and why is the best time to enter this space

By Assistant Editor
Why Edtech Calls for a Serious Business Thought Now?

Edtech has always been pegged as a great equalizer that could deliver access to good education in remote areas. While the segment was already clocking a healthy double-digit year-on-year growth, it got a massive boost due to Covid-19 restrictions coupled with up-gradation in offerings and aggressive marketing push from most of the players.

So while businesses are adapting to work-from-home and virtual meetings, schools are leaning heavily on digital platforms and Edtech tools to ensure a consistent and effective education. Apart from K-12 education, professionals and students pursuing higher education have also turned to Edtech for vocational training, up-skilling, and several hobby-based learning courses, which have further added to the growth of the segment.

In fact, online education was a side-show till the Covid-19 outbreak; now it is mainstream. The general perception that nothing can replace classroom learning has changed in the favor of online education. Taking into account that the pandemic has brought plenty of momentum for Edtech adoption in India, the Edtech market is likely to clock 120 percent growth to cross Rs 26,000 crore by 2022, according to a joint report by RedSeer Consulting and Omidyar Network. As per market estimates, Edtech services and products are expected to have an addressable base of over 37 million paid users by 2025.

Beyond Top-10 cities

Online learning is gaining ground beyond India’s top-10 cities, which were the quintessential early adopters. A recent report by RedSeer Consulting and Omidyar Network found that on average, 70 percent of monthly active users on e-learning platforms hail from Tier-II towns or beyond. For instance, Byju’s already counting 65 percent of its users from non-metro cities.

To make the most of this widening demographic spread, many of the brands are focused on developing learning modules in regional languages. This is only going to increase as digital helps improve education access at the grassroots where physical infrastructure is limited. 

Coding Boom

As per industry experts, coding is the next big frontier for Edtech. In fact, Edtech startups in the coding and programming segment have come into the limelight post-Byju’s acquisition of WhiteHat Jr. In addition, the new educational reforms have mandated schools to initiate coding classes for students from Class 6 onwards to build analytical thinking at a young age. 

With coding becoming a hot segment in online education, a plethora of live coding startups has gained prominence including Tekie, CodeYoung, Codingal, Coding Ninjas, Codevidhya, Dcoder, Tinker Coders, CodeMonkey, Camp K12, LeapLearner, Tinkerly, and Masai School. 

Looking at the trend, many K-12 players such as Unacedamy, Vedantu, and Toppr have also brought in coding lessons to capitalize on this wave.

Experts say that coding classes help children build a cognitive and analytical thinking process and will be crucial for their career development. "The 21st-century workforce will be centered on technologies that did not exist 20 years ago and technologies that are yet to be created. Coding will be pivotal to this revolutionary change,” feels Zishaan Hayath, CEO & Founder, Toppr, one of the leading Edtech players in the country. 

Up-skilling Mania

With the work-from-home scenario prevalent during the pandemic, several people have more time to spare. Many of them are investing that time in up-skilling themselves through online courses. As per many experts, learning times shot up 250 percent compared to the earlier norms during the lockdown.

In fact, enrolments on Simplilearn surged 30 percent post lockdown during the March-May period as many professionals saw value in up-skilling themselves to future-proof their careers. In addition, there has been a significant uptick in free courses on top skilling platforms like Udemy, Coursera, upGrad, and others. Interestingly, ‘online free courses’ is the top-searched term on skilling sites, according to SimilarWeb (website data tracker).

As per estimates, the market for online up-skilling courses will expand further as the economic uncertainty establishes the need for continuous learning. Apart from Covid, existing skills getting increasingly redundant, job creation lagging behind new additions to the workforce annually, and a mismatch between industry requirements versus education curriculum in colleges are the other reasons for growth.

The K-12 Traction
The pandemic and subsequent lockdown across the country suddenly forced students to move their entire learning online. This has not only made schools pivot to meet this new way of learning, but also provided an opportunity for EdTech companies to meet the increasing demand for online learning.

Indeed, among the Edtech sub-sectors, K-12 education will have the single largest market share — 41 percent of the total Edtech market in India. Strong growth is likely across all three major K12 segments, with grades 1–5 seeing the fastest growth.

Franchise Push

There are over 4530 active Edtech start-ups in India, out of which 435 were founded in the last 24-months alone. Many of them are taking the franchise route for aggressive expansion into the markets beyond the Top-10 cities. In metro cities, most of the parents spend a good amount of time on social media, which makes it easy to target them. However, beyond Top-10 cities, it is difficult to reach parents through social media ads or digital marketing.

To target these markets, the Edtech firms are devising a franchise model to strengthen local networks. For instance, WhiteHat Jr offers partnerships to business owners at an initial investment of Rs 5-8 lakhs (depending upon the population of the city/town) for an exclusive zone limited to 2-3 pin codes. The franchise partners can earn over 15 percent of profits for each enrollment. The partner is responsible for the enrollment of students from the region and operational management of the franchise. The company provides marketing collateral, an online platform, content, and trainers/teachers.

Similarly, Edtech startup Testbook is creating a local partner network in Tier 2 and smaller cities. Notably, the price-points offered by the franchise partners are quite lower than the prices offered by the company directly, which helps in sales and building trust among the local customers.

Further, the leading test preparation startup Toppr offers its franchise at an initial investment of Rs 23-35 lakh, which consists of a franchise fee of Rs 10 lakh. The physical classroom setup requires 600-1000 sq ft space. On the other hand, supplementary education startup Eyelevel offers franchise at an initial investment of Rs 6-8 lakh and zero franchise fee.

Edtech is here to stay

As the world battles uncertainty and fear around the pandemic, parents are more than getting used to the concept of virtual classrooms where their child can have a consistent education from the safety of the home. Although this also demands increased parent involvement and a more hands-on approach to teaching, it is something that has found its place as a household phenomenon.

And even after the pandemic eases, a lot of parents may opt for complete or partial provisions for homeschooling via virtual classrooms. This may be extended to private tuition where minimizing social exposure for their children is going to be a top priority for parents.

Hence, Edtech will continue to be in the spotlight at least for the next few years. India, with its enormously large student population, is only getting started.

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