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EduTech market in India to reach US$ 1.96B by 2021

In 2018, the EdTech market size reached just below USD 550 million growing continuously at a CAGR of 49%. The figure is projected to reach USD 1960 million by 2021.

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Definition / Scope

The education sector in India is a mix of government-operated & privately operated educational institutions and allied education products & services providers. These institutions are regulated primarily from the federal level, state level, and local level government bodies. To smoothly regulate and provide enhanced quality education, the educational system in India is divided into pre-primary, primary, elementary, secondary, undergraduate, postgraduate levels.

EdTech refers to the educational technology to leverage learning by creating, using, and managing technological innovation and resources and hence disrupt the orthodox way of gaining education because of its adaptive learning, greater reliance on graphical and video content.

Online Education:

There are five major categories of online education segment classified as follows:

  • Primary and Secondary Supplemental Education: The online courses act as an ancillary to school learning for students enrolled in primary and secondary classes in school.
  • Test Preparation: Students are provided with coaching classes for their competitive examinations preparation. Engineering entrance test preparation and government service entrance courses are high demand courses in this category.
  • Re-skilling and Online Certification: These include courses designed to assist users in skill development. Certification is issued upon successful completion of the course. This segment currently accounts for a significant part of the total online education market in India.
  • Higher Education: Such courses provide an alternative to traditional education courses through distance learning. Certification is issued by a licensed educational institution. Online MBA is a new trend in this category.
  • Language and Casual Learning: Learning of non-academic subjects such as basic English, IELTS, learning guitar, etc. are included in this category of education. English language learning comprises the majority of the user base.
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Market Overview

India has one of the largest education systems in the world with more than 1.4 million schools over 227 million students enrolment and more than 36,000 higher education institutes.

India has a total of 795 universities. Of which, 47 are central universities, 360 are state Public universities, 262 are State private Universities, 123 are deemed universities and 5 institutions established through state legislation, 3 Institutions under Special State Legislature Act

There are a total of 42,338 colleges in India. The education market in India currently stands over USD 100 billion.

The country has become the second largest market for e-learning after the US. The sector is expected to reach USD 1.96 billion by 2021 with around 9.6 million users.

Adoption trend

Adoption level is much higher among science students with 86% share. Commerce students relatively take less online classes comprising only 12% in higher secondary level.

In 2018, Indian EdTech start-ups saw the biggest round of funding. Of USD 690 million, Byju’s bagged USD 540 million funding from Naspers, Canada Pension Plan Investment Board, and General Atlantic. With this funding, Byju’s became the first Indian EdTech player to become the Unicorn.

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Key Metrics

Metrics Value Explanation
Base Year 2018 Researched through internet


Market Risks

Low gross enrollment ratio and high drop-out rates

The Gross Enrollment Ratio (GER) in higher education stands just at 25.2 percent in 2017. The ratio lags behind China and USA with a wide difference. In the same year, the GER of China and USA was 43.39% and 85.8% respectively. Further, the states which have the largest population of potential school going students but lie in the bottom of the pyramid have even lower GER. The data published recently shows that 57% of girl students drop out of school by the time they reach higher education.

Low penetration of devices and connection

In 2017, the smartphone penetration for India was 33%. The internet penetration in Urban India was 64.84% in late 2017. However, rural internet penetration was just at 20.26% during that year.

Top Market Opportunities

Global market:

Online education means not limiting to classrooms. Indian EdTech players have the potential to globalize the service beyond India. Byju’s is one example of this expansion. Byju’s is an online education provider based in India ranking under top 15 global EdTech companies. There is a growing number of people wanting to learn English. Indian companies can target global customers in this language learning category.

Covering rural Children within the Right to Education (RTE) policy:

62.1 million Children are out of school in India. The percentage of such children is much higher in rural India because of many hindrances such as traditional gender norms, sibling caring. EdTech could bridge the gap for out-of-school children but the implementation of such a mechanism should be strengthened by government support by allocating budget for providing internet access and smartphone availability to such children.

Market Drivers

Low-cost of online education

The education sector in India saw an increase of more than 170 percent in cost from 2008 to 2018. However, online courses are roughly 50 percent cheaper than the offline alternative because of the lower infrastructure and a larger student base to attain the economies of scale and hence reduce per user price.

For instance, graduating from a government college, which is the cheapest degree offered in India costs around USD 7,000-10,000 for an engineering course while the same course delivered online costs only USD 200-300. The cost is even higher in private colleges.

Employability quotient

In the re-skilling and certification category, the number of enrolments is significantly driving because of the industry-relevant training to land a better job. In India, 280 million job seekers are expected to enter the job market by 2050. This reflects the level of competition in the job market. The unemployment rate in India hit a 45 year high at 6.2% in 2019 and the annual growth rate in jobs availability is just around 2 percent. Due to such intense competition job, seekers are proactive in attaining the required skills before entering the corporate job race.

Government’s digital initiatives

Government’s initiatives such as Swayam, E-Basta, Rashtriya Madhyamic Shiksha Abhiyan will enable the infrastructure needed by students to enroll in online education courses.

Internet Penetration

India has a record high of 500 million internet users till date and internet penetration reached 31%. Increasing internet penetration in tier II and tier III cities provides high potential for the growth of e-learning. Nearly 735 million e-learning user bases are projected to reach by 2021.

Smartphone

Online content providers have designed their platform to be accessible in smartphones. The interface of the applications is compatible even in the low-end phones. There are more than 300 million smartphone users in India and is forecasted to rise by 500 million by 2021.

Tuition Culture

Tuition culture is prevalent in India in the K-12 segment. Currently, more than 80 million students are taking tuition to supplement their school education. Students seek for detailed understanding of the subject and this trend is growing as the societal influence to enroll in the online classes. BY 2021, 771 million students are projected to enroll in at least one category of e-classes.

Industry Challenges

  • Abundance of free content: Nowadays, students can find an abundant source of free content available on YouTube and other blogs. The abundance of such type of knowledge diminishes the value of paid content.
  • Multiple gatekeepers in decision making: Online content platforms are facing critical issue of whom to target the advertisement. Students are the one who consumes their content but parents actually make the decision to purchase the educational materials for their children. This makes the communication process challenging for service providers.
  • Digital Divide: Almost 85% of the Indian population does not speak and write English. Digital learning catered in the monolingual script will broaden the digital divide in India. To deliver content in the languages other than English is a cost challenge for service providers since multiple languages are spoken even in a single state of India.

Technology Trends

VR into content learning

Veative is one such company in India that is generating content accessible for virtual reality tools. The company has already built VR module in science and math available for high school students. It enables students to understand the subject matter at a broader dimension. VR contents assist students to cut a frog by not actually cutting a frog.

Pricing Trends

  • Content Sharing: Students are encouraged to share educational content on the platform and charged basis consumption of shared content.
  • Upgrades: Students are provided with free samples initially and charged for the complete course.
  • Course Subscription: Based on a one-time transaction, where students pay per course subscribed.
  • Pay Per Session: Students are charged basis duration of usage. Subscription is in the range of USD 150-130 per annum.
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Regulatory Trends

The Digital India program is a flagship program launched by the Government of India with a vision to transform India into a digitally empowered society and knowledge economy. Recently, 22 new initiatives have been launched to widen the scope of the Digital India Program to include projects in the areas of digital infrastructure, digital empowerment, on-demand government services and promotion of industry with the aims of universal digital literacy and universally accessible digital resources.

The government is supporting the adoption of digital and multimedia technology in schools through the ICT@Schools program under the RMSA and SSA schemes. The estimated expenditure on the program in 2016 was USD 600 billion by the various state governments. The government targets to educate 500 million students through the digital channel by 2022.

Other Key Market Trends

There are several evolving trend in the Indian online education segment such as the need to equip with new skills and technologies such as machine learning and artificial intelligence for working professionals. Such courses represent 40% share of total online education content with the re-skilling category.

Market Size and Forecast

The online education user base is expected to grow from the current 1.6 million users to 9.6 million users in 2021 at a CAGR of 44%.

The online education market was worth USD 247 in 2016. In 2018, the value reached just below USD 550 million growing continuously at a CAGR of 49%. The figure is projected to value USD 1960 million by 2021.

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Market Outlook

Re-skilling and online certification account for 38% share with a current market size of USD 177 million. This segment is forecasted to grow at a CAGR of 38% to reach USD 463 million in 2021. Primary and Secondary Supplemental Education is valued at USD 186.88 million in 2018 with a share of 33% and is projected to rise at CAGR 60% to total USD 773 million by 2021.

At the same time, online test preparation is expected to be the fastest growing segment with a growth rate of CAGR 64% in the few years and will cross over USD 500 million by 2021 from the current size of USD 115.65 million.

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Technology Roadmap

AI tutoring

Currently, the student to teacher ratio in online education is widely deviated. A pre-moduled class is delivered to mass students. K-12 teachers don’t have that much capacity to cater the specific need of every student. Evaluating a progress of an enrolled student has also been structured on common standards. The performance matrices in online education delivery are hard to measure.

Nevertheless, the current gap could be solved with the help of an AI tutor in the near future. AI tutor could deliver one-on-one instruction to each student need. This system is referred as Intelligent Tutor System (ITS) and it might have the potential to provide customized classes. Companies such as Thinkster Math, Carnegie Learning, and Front Row to name a few are working to make the dream come true where they are simulating AI powered tutors in the field of tracking student’s performance, student’s difficulty level with the subject as well as the learning methods to best fit for them.

AI on the other hand will help track the data generated by millions of users on self-directed platforms as well as MOOC platforms to find pattern that help identify the lessons to focus on. Quizlet and VIPKid combined raised USD 520 million funding to leverage AI in content delivery in the global online education market. Similarly, a Norway-based edtech company EdTech Foundry has recently launched Differ, a chatbot to assist students with their higher education.

Distribution Chain Analysis

Content providers create and deliver educational content to online platforms. College professors, educational institutions, content publishers, and freelancers generate such content to be delivered online.

Such content is delivered to online players. Online players act as content generators or curators, they also facilitate interface. Revenue generated from such platforms is shared between these players and content providers. The end users of the generated content on the marketplace are consumers categorized as K 12 students, college students, job seekers, and working professionals.

Corporations and co-creators along with promoters who are affiliated with online players act as enablers for the robust functioning of the online education ecosystem. Internet service providers, digital equipment manufacturers, and other institutions such as banks support the online education system by providing platform as a service or software as a service.

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Competitive Landscape

Initially, most of the edtech companies were B2B focused. They delivered their service by approaching schools or colleges and pitching about the new content. Most of the players had little differentiation in service offering. But, currently, there has been a paradigm shift with the entry of innovative players such as Byju’s, B2C segment has evolved because of the service differentiation.

The current user base for online education in India consists of school students and working professionals. Some start-ups are offering standardized test preparation courses and K-12 tuition courses. Other start-ups are providing skill-based courses.

Start-ups are focusing on a particular business model to differentiate themselves. These models include primary and secondary education, test preparation, reskilling, higher education, and language learning. Online test preparation is the fastest growing category with CAGR of 64%.

Key Market Players

The ranking is made based on the current valuation and number of registered users on their platforms.

Byju’s Classes

Byju’s has become India’s largest Education Technology (Learning) company by reinventing the way students learn, through its learning app. The Learning App makes use of original content, watch-and-learn videos, rich animations, and interactive simulations. It is the only Indian startup to turn a unicorn within seven years of its inception. Byju’s valuation reached USD 4 billion and it acquired 20 million registered users in 2018. It has 1.26 million paid users in 2018.

NIIT

NIIT Limited offers learning management and training delivery solutions to corporations, institutions, and individuals in 40 countries. From 2006, NIIT Limited focused on Corporate Training, Vocational Training for Services

Sectors, and Education and Training in schools. Its market capitalization stood USD 196 million in 2018. It had 200000 registered users in its Practice Plus Platform in 2018. Overall, it had more than 35 million registered customers in all the products categories offered.

Everonn Education Limited

It started delivering VSAT-enabled education in India in 2004, and by June 2011, had over 8 million students at 10,139 learning centers across 27 states. The company provides a blend of traditional and digitalized content to schools, colleges, and retail segments. Everonn’s strategy has helped in offering quality education to students even in the most remote parts of India. It had a market capitalization of USD 4 million in 2018.

Educomp

Educomp is the largest Education Company in India and the only company spread across the entire education ecosystem. It is a leader in digital content solutions for the K-12 segment. Its flagship product, the Educomp Smart Class is a teacher-led educational content solution using VSAT (Very Small Aperture Terminal) and focusing on K-12 and test preparation. It claims to have improved educational outcomes in private schools. The company had a market capitalization of USD 3.2 million in 2018. It had educated 30 million students till 2018.

UpGrad

UpGrad was founded in 2015 as an online learning platform intended to offer professional diploma and post-graduate courses. In 2018, the company has received USD 1 million in funding. The company is in talks to raise USD 40 million at a valuation of USD 400 million.

Meritnation

Meritnation was founded in 2007 as an online education portal to provide interactive study material for K-12 students. It has over 9.5 million registered users on its platform.

Strategic Conclusion

Basic internet facility and affordable smartphones are the backbone of EdTech ecosystem in every country. In India, only 32.5% population resides in urban cities while the percentage of people living in rural India remains double the number of people living in urban cities.

The overall internet penetration in India is 35% of its total 1.3 billion populations which means 500 million people have access to internet. The figure seems positive but internet penetration in rural India is just 21% comparing 66% in urban India. Moreover, the country had just below 500 million smartphone users in 2018.

However, the figure is projected to cross 800 million by 2022. It gives an immense opportunity to online education providers to target a growing number of people having internet access on smartphones. Also, it is expected that number of school going students to reach more than 400 million from the current 265 million. By the time, most of them will have smart devices to enrol in online courses from anywhere in India and globe.

As the number of job seeking population is dramatically increasing each year, learning education for continuous learning for employment purpose will drive the demand. Similarly, there has been a trend for dropping out of college to become an Entrepreneur. For those people, the demand for learning the skills to venture a new business is fulfilled by online education providers.

Further Reading

  • Online Education In India 2021, KPMG, 2017
  • Whitepaper on Digital Learning Market in India, Technopak, 2016

Appendix

EdTEch-Education Technology


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