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Apr, 17 2011

Growing tribe of entrepreneurs

The education sector is the most exciting landscape today for entrepreneurs, brimming with immense opportunities and possibilities. The success of new breed of edupreneurs has shown that it is possible to create highly profitable ventures in the highly re

FROM traditional talk-and-chalk to hi-tech schools, the evolution in the education and training industry has been immense. This metamorphosis is not only offering a platform to learners but to potential investors as well.

The education system in India broadly comprises play schools, K-12, supplementary education and vocational education. In the informal sphere, there are tuition classes, study centres, technology-enabled learning modules and so on. Out of these categories, play schools and informal education are high on the opportunity radar. Private sector has a strong hold in the education industry, starting from pre-schools to universities. By 2012, the overall pre-school market is expected to expand three times and the organised segment is expected to grow by leaps and bounds.

 

Why to invest in education

Education is the second largest household expenditure after food. While a middle class household spends around 25 per cent of the monthly budget on food, around 9 per cent goes to education and 3 per cent on healthcare. Today, even under-privileged families spend 20 per cent of their disposable income on private schools and universities. Various career options in fashion, retail, aviation, studying abroad, kids' library and many more have opened up several new avenues for potential franchisees.

Trend to look out for

Following are the trends to look out for, which can have a strong bearing on the future of education franchising.

Kids' zone: Toys, games and books, all under one roof. Ritu Nagpal's eight-month-old venture Planet Toyz is a novel, well-woven concept. Ritu, an M.Phil in Lib & Info Sc, Librarian of DPS, took the decision to open fun library for kids. After receiving good response, she plans to expand her brand through franchising. Besides this toybrary, there are many other concepts like day and night care crèches, which have a lot of potential for investors.

Online model: While online education in India is still in infancy, many organised players are cashing in on this trend. The attraction of online education is due to the flexibility through which education is imparted. Moreover, it is a low-cost opportunity, favoured by many, especially woman entrepreneurs. Renowned brands like NIIT e Guru, HughesNet Fusion and Tutor Vista are few examples of successful ventures in online training. These brands have set a benchmark for other unorganised brands and potential investors.

Immigration consultants - With increase in the number of students going abroad, the number of consultants have also risen. This business offers lucrative business opportunity for potential franchisees, as it requires low investment and high returns. HealthyWay Immigration Consultant Pvt. Ltd, Dalimit Associates Pvt. Ltd and many others have a strong network of franchisees and are now busy planning further expansion.

 

Chart your course with caution

The education sector in India has its own yawning gaps. Profit in this sector is made out to be immoral and there are entry-barriers galore. So edupreneurs have to tread with caution. And there are plenty of need gaps in all segments, especially in the higher education segment, where India's Gross Enrolment Ratio (GER) is a mere 11 per cent compared to the global standards of 25 per cent. Some estimates suggest that an investment of $100 billion is needed to increase the GER to at least 21 per cent by 2018.

Yet, the challenges have not stopped the march of edupreneurs. In the ensuing pages of our issue focus, we have talked about edupreneurs who have made it big and the brands that have made a mark through innovation and ideation. We also have a comprehensive review of each sector, divulging internal and external factors that affect the industry. The exclusive data offered about each sector is supplemented with details on the industries' past performances, present state and future projections, apart from the challenges faced.

 

BOX-1

Age no bar, thanks to franchising

Franchising has made it much easier for people in the above 30 years age bracket to start education again by providing them access to vocational courses in their vicinity. Special courses in share-broking, fashion design, retail, banking, etc are among the most favoured.

 

BOX-2

Facts & figures

= Expenditure on private education: 5 per cent of average HH income (12 per cent in US, 15 per cent in China). CAGR of 8.6 per cent vs 3.2 per cent in consumption; 8 per cent CAGR over FY08-20E (growing fastest globally)

= $50bn spent on private education a large opportunity canvas

= Private education sector will be US$ 80bn by 2012

= At 64 per cent, coaching classes dominate non-formal education sector of India

= 20 per cent of coaching class market scores medium to high on scalability

= Pre-school market to expand three times to $1bn by 2012

= Largest K12 aged population globally (5.5 times in US) form the largest $40bn opportunity in the space

= K12  a $40bn market by 2012

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