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All You Need to Know about Edtech in India

Editorial Intern, TRANSFIN.
Oct 1, 2020 7:10 AM 10 min read
Editorial

India has over 250 million students attending 1.3 million schools, and over 15 million competitive exam takers every year. While the race to develop a vaccine against COVID-19 has gathered unprecedented steam in the recent days, an end to the pandemic is nowhere in sight. Most students have been kept indoors - away from schools and coaching centres, but learning must go on.

Enter education technology, or edtech.

Higher digitisation and improved accessibility have got the wheels of change turning. By 2021, the online education market in India is valued at $1.96bn, according to KPMG.

The pandemic has catalysed the adoption of edtech in Indian households, leading with cutting-edge technology and pedagogy. India is uniquely positioned to capture this growing market with students and professionals equally engaged in its wide range of learning opportunities.

This begs the question - is edtech just a choice made due to the current situation of home-confinement, or is there more to it?

 

 

What is Edtech and How Does it Cater to its Users?

In layman’s terms, edtech is the facilitation of education through technological tools to enhance the learning experience. The categories vary based on the needs and levels of education. Students in the kindergarten to 12th grade (K-12) category are referred to as the K-12 segment. Other segments include college students and working professionals.

The objective of edtech platforms is to offer engaging and tailor-made education to all those who seek to learn. It also seeks to provide access to supplementary resources in addition to mainstream education.

The edtech landscape in India can be categorized into education delivery, institutional management and supplementary learning resources.

 

All You Need to Know about Edtech in India

 

Education Delivery

This segment offers education by way of lesson videos, tutorials and online courses to learners.

  • Under K-12 education, platforms offer course material and lesson videos on a variety of subjects like computer science, mathematics and history. K-12 learning is modelled around mainstream school syllabi and aims to offer an interactive study experience with their study materials and tutorials. Byju’s, Vedantu and Doubtnut are leading players in this segment.
  • Skill development platforms are targeted at college students and professionals who wish to pick up new skills or hone existing ones. Platforms like Edureka and Udacity offer courses on coding and cloud computing modules. Skill development for young students is offered on platforms like WhiteHat Jr. and Nurtr.

Institutional Management

These platforms help educational institutions and universities use an integrated portal to cater to all stakeholders. Ken42 is one such example. Here, students, faculty and the institution can interact on a single medium, making information dissemination and study-related information more streamlined. Features on these portals include reports on students’ grades and distribution of learning materials meant for assessment and classes.

Supplementary Resource Learning

Platforms in this segment provide supplementary resources for mainstream education. 

  • Platforms like Toppr, Testbook and Unacademy help students in entrance exam preparations such as for NEET, IIT JEE and other regional- and national-level examinations. Sample and past exam papers and peer tutoring are common offerings.
  • Careers 360 and MingleBox are examples of career development platforms that connect students to a network of individuals who offer counselling services on tertiary institutions in India and abroad.
  • Gamified learning platforms offer innovative ways of applying educational concepts for primary and secondary school-goers. PlayShifu and PlayAblo have games that help students advance their knowledge in an incentive-based learning model. Science, Technology, Engineering, Arts and Mathematics (STEAM) kits that involve inter-disciplinary learning in the form of games or toys.

FYI: Several of the edtech companies in India operate in more than one sub-segment and are horizontally integrated. With the number of seekers for “on-demand” education showing an upward trend, there seems to be a niche for each player in the industry, at least as of now.

 

A Sunrise Industry in the Horizon

The COVID-19 phase has seen a tremendous rise in consumers of edtech. Home-bound Indians who are in search of intellectually engaging paths invariably find a platform for their needs. Several platforms such as Toppr and Byju’s opened up some services free of cost during the early phases of the pandemic. This has been highly rewarding as Toppr saw a 100% growth in free user engagement in March, while Byju’s added 6 million new users at the same time. What seems to be the zenith for edtech players now was many years in the making.

A case in point is Byju’s, the renowned edtech platform domiciled in India, was set up in 2011. In 2013, they received the first round of funding which marked the beginning of Byju’s journey towards becoming the highest-valued edtech company in the world. Until 2015, Byju’s operated in a siloed – a majority of their tutoring classes were done in person rather than online. Finally, in 2018 Byju’s became the first edtech company in the world to achieve “unicorn” status, that is, a valuation greater than $1bn.

  

  

What has Made Edtech Such a Hit?

A confluence of factors has resulted in the recent edtech ambush.

From the perspective of students, edtech fills in the gaps in traditional schooling such as lack of personalised tutoring and standardisation.

It has made it possible to blend innovative pedagogy with a model of scalable education services, delivered at a low cost.

Macroeconomic factors such as increased internet penetration and wide smartphone user base have created a conducive environment for the growth of edtech companies over the years. Growing disposal incomes offsets the cost of online education making it affordable for India’s middle-income households. These factors have also bridged the accessibility gap through online learning modes.

K-12 education and test preparation are high-demand segments in India due to the country’s background in competitive examinations.

Finally, the need for a diverse skill set in the workplace makes the youth gravitate to platforms which provide such services on their personal devices.

 

How has the Government Supported Edtech?

The Government allocated $8.56bn for the Department of School Education and Literacy in its Union Budget 2020-21, with a target to achieve a Gross Enrolment Ratio (GER) of 30% by end of this year.

A key policy advantage is the provision for 100% foreign direct investment (FDI) in the sector through the automatic route. In July 2020, Google announced a partnership with the Central Board of Secondary Education (CBSE) to train 22,000 teachers and offer an integrated learning experience. These features may make virtual classrooms more engaging in the future, bringing in YouTube and G Suite for education.

A watershed moment in educational reforms came in 2018 when tertiary education institutions could offer online certificates and degrees under the University Grants Commission (Online Courses) Regulations. The government introduced a platform named SWAYAM to promote massive open online courses (MOOCs). 82 undergraduate and 42 postgraduate courses were added in July 2020.

More than 400 courses are now offered free of cost by acclaimed universities like the Indian Institutes of Technology (IITs) as part of the National Programme on Technology Enhanced Learning (NPTEL). In May 2020, an application to facilitate college entrance test preparation, known as “National Test Abhyas”, was launched. Other initiatives like DIKSHA and IITPAL have been launched to facilitate the continuity of education. These fall under the aegis of a broader plan to support online learning, known as PM eVidya.

 

All You Need to Know about Edtech in India

 

Decoding the Edtech Business Model

There are several ways that edtech platforms make money. In the case of online courses or skill development courses, there is usually a one-time course fee either before commencing or after a trial of the course.

Some platforms also charge by the session or module, as opposed to charging for a comprehensive course. In online tutoring services, a subscription model is common. Students pay to avail such services for a period of one year or a few months.

According to a report by Omidyar Network and RedSeer on Edtech in India, users of edtech spend between $200 and $250 per annum. In the wide menu of courses and tutorial services offered, prices can vary based on the level of advancement and additional materials offered. What ultimately reaches the pocket of these companies also differs if the education service is fulfilled by a third party, such as a tutor or instructor. In such cases, the edtech platform receives between 15% and 35% of the full fee paid, while the rest goes to the tutor.

In test preparation platforms, content is available readily in the form of sample papers, lesson videos etc., upon payment. Services like counselling can be topped-up at an added expense. Freemium models are also popular where users explore some features for free before unlocking other “premium” features at a cost.

The skill development segment has several young professionals looking to pick up transferable skills. The report also noted that 80% of mid-level white-collar professionals show a willingness to pay for courses that equipped them with technical skills.

 

Edtech Giants and Their Pacman Act

Acquisitions are rampant within the edtech industry. In the first eight months of 2020, there have been 13 acquisitions, as against nine in the year 2019. In August 2020, Byju’s acquired Whitehat Jr., a start-up focusing on coding for the school students for $300mn. This isn’t the first – Byju’s had acquired Osmo, a gamified learning start-up in January 2019. The goal of these acquisitions has been to combine synergies and expand Byju’s existing course offerings. To increase its user base Byju’s also hopes to tap on US markets with the Whitehat Jr. Acquisition. In July 2020, Unacademy acquired PrepLadder, a platform geared towards test preparation for medical entrances.

Byju’s and Unacademy’s strategy of acquiring a well-established platform is becoming a commonplace in the industry, especially for well-funded edtech giants. Horizontal integration and deepening of the user base are the end-goals of such acquisitions. These companies use their newly-acquired band of tutors or product innovations to entice more users onto their platform, in addition to the users added on account of the buyout.

Turning our gaze to venture capital (VC) investment, since March 2020 more than 14 start-ups have seen funding activity. A short while before the pandemic, Byju’s and Unacademy had received a round of investment led by Facebook. The promising aspect here is nine out of 14 start-ups raised seed funding, indicating the interest in edtech.

Perhaps the main reasons why edtech has piqued the interest of VC firms is the scalability of their business. This industry is also not a stranger to innovation as start-ups in the past have involved in artificial intelligence, internet of things and machine learning to optimize the learning experiences and offer a unique service to its users. Several start-ups are striving to integrate AI, AR and VR into the classroom experience.

 

All You Need to Know about Edtech in India

 

Is Edtech’s Story Too Good to be True?

25% of start-ups between 2014 and 2019 shut down their operations, right at the time when edtech was reaching its zenith. Despite the buzzing VC activity in the edtech space, there still isn’t quite enough of it. Start-ups take years to build a brand big enough to attract investor attention. Byju’s is a case in point.

Despite the growth spurt seen during COVID-19, a sizeable portion of the population remains resistant to adapting to online methods of learning. This could be due to the absence of face-to-face or personal interaction between instructors and students.

A challenge faced by edtech start-ups in India is the convoluted regulatory procedures. Education in India follows a federal system akin to its governance structure. For edtech startups, this means central and state boards must align on policy matters before integrating edtech with traditional schooling. Since there isn’t one consolidated body to overlook the edtech sector, approvals typically need to go through multiple departments. Financial incentives for starting such companies also remain scarce.

There is a high initial cost in facilitating online classes or tutoring. They also involve investment in hardware and other technology. It is an added trouble for institutions to adapt to edtech, specifically for educators who have used only traditional means of pedagogy. Reconciling the content taught in schools with students’ expectations of an interactive, virtual learning environment could take a few years.

From the consumer end, concerns about edtech relate to the lack of personal interaction between students and teachers and unhealthy levels of screen-time. The pandemic has forced students to adopt a fully online method of schooling to prevent the flow of education from being hampered.

A survey by OLX India noted that there was a 100% increase in children’s screen-time and 84% of parents have expressed serious concerns on this matter. Students are unable to interact with their peers and teachers enough, instead rely on a solely two-dimensional mode of learning. Moreover, long hours before the laptop or tablet screen has been a cause for parents to shun e-learning as a durable solution.

 

A Future as Bright as the Laptop Screen

Edtech plays a crucial role in bridging the accessibility gap for those who cannot access educational resources outside of schools. While digitisation has taken off rapidly in India, internet penetration in rural areas remains low, leaving these areas fairly untapped. Non-metro cities may be the new locus of edtech activity as this arena has been relatively unexposed to online means of education.

By 2022, K-12 education and higher education in India are estimated to reach $1.7bn and $1.8bn, respectively. Test preparation is the fastest-growing category within edtech, at a CAGR of 64%. Following the pandemic, it is estimated over half of India’s working population would need to expand their skill set to meet the demands of the labour market in 2022. This could be an opportunity for edtech platforms specializing in upskilling to grow their user base. It could also mean that perhaps after quarantine measures are lifted the demand for edtech will not drop drastically.

The highest percentage of users are attracted by reskilling and online certification programmes, according to a report by NASSCOM. The adoption of online learning methods is high amongst working professionals, followed closely by the demand for supplementary education for primary and secondary schoolers.

In the Indian context, big data and AI are yet to establish their presence in the way education is delivered. As start-ups look for new ways to attract users, a future in which state-of-the-art technology is the new normal in education doesn’t seem too far away.

FIN.

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