Indian Online Education Market is set to Grow at a Massive Pace
It will be an understatement to say that India’s service industry is not on a cusp of a digital revolution. Rapid internet penetration, availability of cheap internet services, and young demographics (over two-third of the population is aged below 35) have made India an enabling ground for digital commerce to thrive. The recent COVID crisis has also played a significant role in mirroring a new era for the Indian service industry underpinned by the wider use of digital commerce.
India’s USD 120 billion education sector is also witnessing a major shift on the back of the rise in online education and other Edutech services. In the past few years, India’s Edutech space has been gathering momentum. By 2018, the burgeoning sector has racked up investment of around USD 700 million.
However, a major gear shift took place during the Black Swan event, when the compulsory lockdown resulted in a steep jump in demand for online education.
From March to October, India’s Edutech space has racked up around USD 1 billion of capital. It is believed that online education will reach ~ USD 4 billion by the end of 2023.
Numerous factors are fuelling demand for online education in India
- India’s thriving internet market is one of the key growth enablers in the online education market. By 2021, India’s internet population will reach 600 million. The smartphone penetration in India stands at 290 million. Apart from a few specific courses such as coding, most of the pedagogical modules can be consumed over the smartphone without the need for the desktop/ laptop.
- India’s attractive demographic dividend makes it a fertile ground for the Edutech industry to grow & evolve. Two-third of the Indian population is aged below 35. Likewise, around half of the population is aged less than 25.
- The accessibility of regular education is still limited in numerous rural parts of the country. However, in the recent past, internet penetration in rural parts of the country has soared high. Rural India has now a larger number of internet users than its urban peers. Going forward, rural Indian will be one of the major growth drivers of online education in India.
- Besides, school & higher education, online education is registering a remarkable growth in skill enhancement, soft skills, competitive exam preparations, etc.
- Alongside socio-economic factors, there are also strategic dimensions to the rapid rise in online education. In comparison to regular classes, online education can be provided at around 20-30% of the total cost. It is believed to be more engaging, interactive, and can offer real-time support just like offline classes.
Why Investors should eye on the sector
India’s burgeoning Edutech space is set to grow at a massive pace. The uprising is not just a response to the current crisis but is backed by strong structural fundamentals. Large population, young demographics, the surge in disposable income, and demand for quality education will continue to accelerate the market towards larger growth orbits.
Already India is home to numerous indigenous Edutech start-ups such as Byjus (40 million subscribers), Simplilearn, Vedantu, Unacademy, Toppr (10 million+ subscribers), Gradeup (15 million subscribers), doubt nut (13 million subscribers), etc. Lured by attractive yield potential, various domestic and international PE players such as Tiger Global, Kalari, Excel, Sequoia Capital, Omidyar, Helion, SAIF Partner, etc. have made notable investments.
Going forward, online education in India will continue to see prominent placements amongst major PE players. Numerous factors will drive the uptrend.
- Large young demographics and transforming consumer behaviors will steer the online education and the Edutech space in India towards vigorous growth. So far the current market is just the tip of the iceberg and there is tremendous untapped growth potential.
- During March- November 2021, the total online user volumes have increased by 5X. In terms of revenue growth, the rise has been to the tune of around ~ 1.8 to 2.5 X. The online education market will continue to move in an upward trajectory.
- Besides formal education, upskilling will be a major growth driver. As in a new normal, increasingly professionals will upgrade to adjust to the new digital technologies, online skilling and certification courses will see a jump in demand. Courses in digital marketing, cybersecurity, and data science will proliferate.
- Major differentiation factors will depend on the personalization of learning, engagement, and quality of pedagogy, availability of content in vernacular languages, etc. Likewise use of offline support to complement online education, pricing, and teacher’s training will also play a significant role.
- Indian Edutech start-ups will also eye the lucrative international markets. The availability of quality teachers at a relatively affordable cost can help India consolidate its position on the global education map. In the USA, a tutor is available for USD 50-100/ hr. In India, the same can be availed at a much cheaper price.
- Ample opportunities will unfold in complementary industries such as information security, data threat management, payment gateways, etc.