How edupreneurs are changing the future of education business
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Education Blog 2016-10-19

How edupreneurs are changing the future of education business

The education sector in India is poised to witness major growth in the years to come as India will have world’s largest tertiary-age population and second largest graduate talent pipeline globally by the end of 2020.

How  edupreneurs are changing the future of education business

About Indian education sector

India holds an important place in the global education industry. The country has more than 1.4 million schools with over 227 million students enrolled and more than 36,000 higher education institutes. India has one of the largest higher education systems in the world.

India has become the second largest market for e-learning after the US. The sector is currently pegged at $ 2-3 billion, and is expected to touch $ 40 billion by 2017. The distance education market in India is expected to grow at a Compound Annual Growth Rate (CAGR) of around 34 per cent during 2013-14 to 2017-18. Moreover, the aim of the government to raise its current gross enrolment ratio to 30 per cent by 2020 will also boost the growth of the distance education in India.

Market Size

The education sector in India is poised to witness major growth in the years to come as India will have world’s largest tertiary-age population and second largest graduate talent pipeline globally by the end of 2020. In FY 2015-16, the education market was worth about $100 billion and is expected to reach $116.4 billion in 2016-17. Currently, higher education contributes 59.7 per cent of the market size, school education 38.1 per cent, pre-school segment 1.6 per cent, and technology and multi-media the remaining 0.6 per cent.

Higher education system in India has undergone rapid expansion. Currently, India’s higher education system is the largest in the world enrolling over 70 million students while in less than two decades, India has managed to create additional capacity for over 40 million students. At present, higher education sector witnesses spending of over Rs 46,200 crore ( 6.78 billion), and it is expected to grow at an average annual rate of over 18 per cent to reach Rs 232,500 crore ($34.12 billion) in next 10 years.

According to Suchindra Kumar, Directory Advisory Services, EY LLP, “Education sector in India is evergreen, a sector which has a positive working capital cycle, which is immune to all sorts of ups and downs of the economy. At present in India there are 300 million people at different stages involved in the education system in the country.” He further added that, “ This huge market spans from pre-nursery, K-12, higher education, skilling, tutoring, test preparation and to services which revolves around it. These services are fee-based model with full fee paid in advance so the positive working capital makes it attractive. However, the sector is being regulated to a big extent but that doesn’t deter people from working along the regulations. There are ample opportunities for people with ideas and people who can execute those ideas to make big money and difference to Edtech which is also about social investment and social returns.”

About the pre-school industry and its inception

Market research analysts have predicted that the preschool or child care market in India will grow impressively during the forecast period and will also post a CAGR of almost 22% by 2020. It has been identified that the low regulatory requirements in the country to start a preschool or child care centre is one of the primary growth factors for this market.

As put by S.K.Rathor, Managing Director, Sanfort Group of Schools, “The pre-school concept in India was started three decades back by a neighbourhood aunty at her house which with time was taken over by a single unit play school with no planned curriculum. Despite this, these play schools were doing well. When people like us who run a single unit play school wanted to expand, then we came up with the concept of franchising. So now the branded pre-schools have set infrastructure, structured curriculum and well planned activities.” “Our country has more than 50 per cent of population below the age of 30 years so we would require more than 2 lakh additional K-12 schools and many more lakhs of pre-schools to educate our younger generation. The pre-school industry has grown to 3.24 billion and branded pre-schools are supposed to contribute Rs 45,000 crore by the end of this financial year and franchise fees is expected to reach 21,000 crore by March, 2017.”

Building a branded pre-school requires lots of hard word, dedication, patience and energy. It requires thorough research too.

One should always go with starting a branded pre-school. Selecting the best pre-school franchise is another important thing. There are many advantages of taking a pre-school franchise. Here are few of them:

  • Not impacted by business cycles
  • Awareness for quality preschool growing
  • All cash business
  • No stress of unsold inventory & wastages
  • Low real estate cost
  • Easy work timings
  • A positive work environment
  • Respect from the community.
  • High degree of satisfaction as you give a foundation to so many children’s lives.

About the private sector K-12 education in India and its contribution

The current K-12 school system in India is one of the largest in the world with more than 1.4 million schools with 250+ million students enrolled, reveals EY-FICCI report on the education sector in India.

  • India has 300 million students enrolled as compared to the US or the UK that have 5.1million and 504,000 private school students respectively.
  • A report shows increasing enrolment in private schools in rural India- from 18.7per cent in 2011 to 25.6 per cent in 2015 and declining enrolment in government schools.
  • The share of private schools enrolment at the primary level is 30.6 per cent and 37.1per cent in upper primary levels. Secondary education accounts for 54.4 per cent in the junior secondary level and 60.3 per cent in the senior/higher secondary level.
  • 69 million students study in 247,843 private schools at the elementary level making the average number of students per school at 280.
  • India has more than 339,000 private K-12 schools, growing in the last five years at a CAGR of 4 per cent.
  • Private schools enrolment in the top 20 states account for nearly 55 per cent share of enrolment at the secondary/higher secondary level

Opportunities and challenges in K-12 education sector

According to Shreevats Jaipuria, Vice Chairman, Jaipuria Group, “The opportunities in K-12 sector are large, vibrant and growing at an unimaginable pace. There are more than 25 crore students in K-12 schools and it is one of the highest in the world. Although to build a K-12 school one requires huge investment but this business is not just for 2-3 years but a legacy for not less than 20-25 yrs.”

The financial returns are outstanding from a long term perspective and one requires to be committed in terms of quality provided and in terms of what your vision of education is. The business partnerships one gets helps in building a brand along with the support services, teacher training modules and pedagogy. One needs to ensure that is more effective in town or city from the one already existing in neighbourhood schools.

The pros about investing in K-12 sector is that it too has a positive working capital cycle wherein you get paid in advance, no collection issues and customer retention is much higher than in other sectors of education as a child after admission usually spends 12-14 years of his life here. Word of mouth also plays a big role as students and parents refer the school to many others thus marketing takes care of itself.

Factors to consider while looking to choose a brand of education

India has the highest number of schools and the highest number of students enrolled in the K-12 system as compared to the US or the UK.

According to Venkatesh, Director, MVN Group of Schools, “ We need to look into the vision and mission of schools. A good school would provide all-round development to child with good culture. A school needs to hire good faculty which should be consistently trained and retrained. “ The main motto to develop a brand is to ‘Learn, Unlearn and Relearn’.

Growth drivers for K-12 education

India is at the growth stage at the global front. As families in India are becoming nuclear, parents want to give the best of education to their children. The per capita income is also growing y-o-y.

With these facts, the growth drivers determining the growth of K-12 sector of education according to Atul Vohra, CEO, Reliance Education are content and faculty. Stressing on the need for trained and certified teachers, Vohra gave an example where he once visited an IT school which had hired all expat teachers. He found that the way they taught was all application based.

Good and quality content is a must to differentiate your educational brand from others. Developing well structured pedagogy sets one apart from others thus helping build the brand.

Need for skill education

In India, there is a huge gap between what a child learns in school and what industry requires. Thus , there is big number of unemployment and underemployment. In the 15-29 age group, only two per cent have undergone any sort of formal vocational training and only about eight per cent have received non-formal vocational training, according to the National Knowledge Commission Final Report.

As Narendra Shyamsukha, Chairperson, ICA Edu Skills Pvt Ltd puts it, “Out of 24 crore students presently in schools, 39 per cent of students enrolled in K-12 schools are dropouts as they leave their schools before completing their 12th. Out of 3 crore pursuing graduation, only 24 per cent clear it. In India we have 4 crore graduates who are unemployed.”

Barriers

  • Values and viewpoints
  • Entry requirements
  • Infrastructure
  • Financial Support
  • Career opportunities

Tackling barriers to Skills Development

  • Introducing special mechanisms in the delivery of training to increase participation by women, including mobile training units, extension schemes, and in-plant training;
  • Monitoring progress in increasing the participation and integration of women in training and employment and holding training institutions accountable for equitable intake of women;
  • Significantly expanding training provisions for rural poor, youth, and vulnerable groups in rural areas. This could be achieved through greater equitable integration into existing institutions, structures and facilities;
  • Designing targeted interventions to address vulnerable groups such as people with disabilities, to increase their economic empowerment;
  • Combining income skills training with provision of technical inputs, credit and supplies, careful selection of students that are capable of using the supplies and providing continuous support and mentoring schemes;
  • Introducing more work-based learning and linking trainees with mentors/masters to gain experience of a specific trade; integrating business, self-employment and entrepreneurial concepts into training activities, especially in follow-up phases, and search for trainers with relevant backgrounds and familiarity with both the formal and informal sector.

Thus, there is a huge opportunity for employment in India but there is a gap to be fulfilled by skilled education. Government initiated Skill India, Digital India and Make in India are helping growth in this direction.

Mistakes edupreneurs make

Many educational entrepreneurships are seen started and shut very often. There could be plenty of reasons for an edupreneurship to fail. According to Amit Agrawal, Chairman, Times & trends Academy, “People do not form good strategy before initiating. This is very important as it forms the direction of the business. Second, edupreneurs should have standard prototype in place. Third, they should work on sales and last they should be ready to come out of their comfort zone as edupreneurship requires one to go through many stages.”

Education is a founding stone of any civilisation, pedagogy techniques have been evolving since ancient times and the trend will persist till the end of civilisation, hence education is one of those industries which will evolve with time. India is one of the global centres of education and hence edupreneurs have a big role to play in future education business.

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