How edtech Cos are recalibrating their business operations in post-pandemic times

The education industry in India has evolved greatly over the years and has seen some major transformation. Gone are the days when education was only limited to traditional modes of teaching on the blackboard and within the four walls. Now, anyone with an urge for learning can learn from anywhere with the rapid emergence of online ed-tech platforms, some of which are now also setting up offline centres. With the help of technological infrastructure, education has been given a major boost in countries such as India, which has seen the emergence of a number of ed-tech platforms such as BYJU’S, Unacademy, Simplilearn, Cuemath, Vedantu, upGrad, iSchoolConnect, Toppr, Whitehat Education, Edukart, Mentoria, Practically, Internshala and many more.

These platforms have introduced immense potential for students and learners to save costs in learning anything from their homes or anywhere, with structured guidance and informative study materials. Starting from educational classes for kindergarten to guidance for cracking competitive examinations and learning new skills, every need around education can be fulfilled with the help of these ed-tech platforms. These platforms also offer the opportunity for employment for educators and others.

According to industry data, between 2014 and 2019, over 4,450 EdTech start-ups emerged in India. The global pandemic saw students transitioning to online study mode almost overnight. The pandemic period also saw a meteoric rise of the online edtech industry, with several new players entering the market. As per industry data, edtech platform BYJU’S included 7.5 million new users during the lockdown period. According to an industry report, around $4.7 billion was invested in the edtech sector in the year 2021, which became the third sector in India to be most funded. By the year 2029, the edtech market is predicted to reach $320 billion.

Meanwhile, the Government has been introducing new policies to further streamline the education sector in the country. The National Education Policy (NEP) was launched in July 2020 with an aim to regularise education to provide universal access to it, with an emphasis on e-learning and using the technological tools of providing education. The policy has the objective of ensuring 100% school enrollment for children within the age group 6 to 14 years. In future, the hybrid mode of teaching will emerge strongly with a combination of offline and online modes of teaching and the 4Es – Ed-tech, Edu-content, E-learning and Entrepreneurship – will drive growth in the education sector.

However, in the post-pandemic times, where schools and educational institutions have reopened full swing, the edtech industry in India is facing some tough market realities and is recalibrating their operations to remain relevant and profitable.

Nikhil Rungta, Chief Growth Officer, Vedantu, admitted, “Currently, the external environment is tough. War in Europe, impending recession fears, and Fed rate interest hikes have led to inflationary pressures with massive correction in stocks globally and in India as well. Given this environment, capital will be scarce for upcoming quarters. With COVID tailwinds receding, schools and offline models opening up, the hyper-growth of 10X that the Edtech companies experienced during the last two years, will also get moderated.” At the same time, he affirmed, “We understand that the market might not grow at the same pace, but given the opportunity we still see 2-3 times growth in the coming years.”

Ashish Fernando, Founder and CEO, iSchoolConnect, noted that the pandemic had brought the conventional education methods to a screeching halt and accelerated the pace of long-due digital transformation. “As students turned towards the digital mode of education, the Indian e-learning industry tapped into the opportunity brought in by global adversity. As a result, the EdTech sector witnessed phenomenal growth. However, as the pandemic waned and offline education resumed, dwindling the demand for online education, many companies started to falter with layoffs and shutdowns as the only option,” he added.

But did the entire EdTech succumb? “Well no!,” said Fernando emphatically, adding, “On the contrary, EdTech companies operating in the overseas education domain are witnessing an upsurge in the number of students who wish to study abroad and seeking expert assistance. Students who deferred their admission plans owing to the pandemic are adding to the yearly count of aspirants. The pandemic made bare the importance of health infrastructure coupled with certain other determiners, which now students are factoring in when planning for their higher education. Thus, the quest for quality education, quality life, and better health infrastructure is steering many to foreign destinations.”

Education through edtech platforms is also more affordable and accessible than the traditional methods of teaching, with just the exception of it being a lone learning process, though learners get the opportunity to interact with other learners during live classes. The road ahead for edtech platforms is bright even if the students go back to their schools and traditional mode of learning, this is because of the added support and guidance that they get through these edtech platforms as well as the innovative technologies which make learning interesting. Moreover, the demand for guidance for cracking competitive examinations and skill development programmes is increasing, which make Edtech platforms a viable choice.

“All Edtech companies will have to go back to first principles and focus on looking at the big picture around the huge market opportunity and the need gap of access to quality education. They will have to remember every day that Edtech is a marathon not a sprint and focus on two key fundamental strategies:

Continue to innovate for the students
Build a long term sustainable company with a resilient business model

We at Vedantu keep going back to our mission – ‘To enable quality teaching for each and every child’; this keeps us energised and excited. Also, we have seen tough years and years of strong momentum, but what has stayed consistent is our undying passion towards our Mission, no matter how long it takes because it's worth giving a lifetime to. We also learnt that building anything worthwhile takes time, for the compounding to take its effect, it's important to just ‘Be in the game’ and run the marathon,” said Nikhil Rungta.

According to Arjun Mohan, CEO - India, upGrad, “It is imperative for organisations to create a business model that is scalable, sustainable and non-negotiably adds value to its customers. Instead of focussing on short-term valuations and growth, edtech companies should focus on products and strategies that are for the long run in the business ecosystem.”

Mohan felt that there may come a time when there is a greater emphasis on unit economics and less on acquisition in the very dynamic field of education technology. “Since businesses also need to concentrate on sustainable development, efficiency, and profitability, it is best to return to the principles of business in order to create possible chances. Having a product differentiator is essential for the long term viability of unit economics and acquisition costs. At upGrad, our topmost focus is on Career Outcomes where we ensure that each learner gets desired results for the efforts they put into the online programs. Multiple upGrad learners have also crossed the CTC threshold of Rs 1 crore+ during the year for in-demand courses like Machine Learning, AI, and Data Science, thus creating an unprecedented milestone in the online higher education space,” he added.

There have been some groundbreaking technological introductions in the education sector over the years, with opportunities to learn for free as well from any part of the world. Rungta noted that the education sector is not new to disruption. From the advent of MOOCs to the rise of home-schooling and online degree programs, the sector has seen a transformative technological innovation at least every few years. “Post-covid offered a major acceleration in the growth of the edtech industry as a whole. But there is a large market still untouched, because all the edtech companies combined in India are less than 5% penetrated yet. So, despite the current trend of the offline shift, there is a larger potential market. And I believe the ed-tech industry’s future in a post-Covid-19 world will be a combination of online and offline,” he added.

Rungta further said, “At Vedantu, while we continue to focus on our online business, the ‘hybrid model’ is one of the several initiatives being tested as a potential growth driver. Considering that the key objectives of Vedantu is making education accessible to students who are even in the remotest areas of the country, and create an impact at scale, the hybrid model presents an opportunity to combine the brand’s online capabilities, platform & teaching methodologies with an offline presence to deliver unique learning experiences & outcomes. The future remains extremely exciting, as the problem of quality education for the masses has still not been solved and the size of the opportunity is huge. With 300 million students in the K12 segment (that is, Kindergarten to Grade 12), out of these almost a third take on some or the other after school tuition or coaching, and within that the penetration of Edtech is less than 5%, which clearly shows the huge opportunity for Edtech companies like Vedantu.”

The business model of most edtech brands can undergo changes in the post pandemic times. According to Arjun Mohan, “While some organisations are on a cost-cutting spree to maintain their valuations, it’s important for them to re-evaluate their marketing preferences for driving cost-efficiency. It’s important to cut spends as compared to people who will grow with the brand, thus making it resourcefully rich. At upGrad, we have always believed in spending strategically to foster efficiency to drive business results. We have been making relevant marketing pitches to attract the eyeballs of our target audience and relevant stakeholders for sustainable ROI. Talking about strategy, while our target audience now knows what upGrad is, it's time for us to tell them what is in it for them, thus making it more personalised and precise through our vertical-wise marketing initiatives. We have launched different campaigns for domains like MBA, Study Abroad, Tech, and Doctorate and will continue to work in the direction of making upGrad a household name within the higher education segment. To support such targetted plans, we have increased our marketing spends by 130% during the current fiscal - FY23.”

“For any edtech company, customer retention and acquisition is imperative. Therefore, the investments will be focused to achieve this specific goal – whether it is product upgradation or marketing. Before Covid-19, a significant part of the company’s business was outside India, after the pandemic set in, India started contributing to 45% of our revenues and the remaining was from our international business. Simplilearn has made mindful investments in advertising and marketing, as well as towards business growth. The A&M focus has been on OTT ad given the viewership and reach of the same,” informed Krishna Kumar, Founder & CEO, Simplilearn.

Along with advantages, there are some disadvantages as well for the edtech sector in India. “If we look at the current scenario, the primary concern that the edtech sector is facing is the lack of trust between the parent and the organisation,” noted Vivek Sunder, CEO, Cuemath. According to Sunder, to address this, a customer-centric, value-driven model is imperative for any organisation to sustain, and the education sector is no exception. “Unfortunately, most organisations fail to interpret consumers’ concerns and succumb soon,” he lamented, while adding, “The core purpose of edtech companies is to impart knowledge and drive enhanced learning outcomes. As schools reopen, edtech companies need to leverage technology to reinvent learning procedures and add valuable learning in a student’s life on top of school education. Intuitive curriculum, creative teaching methods to engage with students, and the ability to elevate student’s performance within greater community are a few aspects that edtech companies need to consider to remain relevant and sustainable in the long run.”

Ashish Fernando added here, “Covid taught us that experiential learning for kids is important for overall development and growth. Addressing a student’s learning, social and emotional needs is crucial. While online learning was able to assist in learning the curriculum, it couldn’t compensate duly for the in-person learning that leads to the holistic development of an individual.”

“Companies who continue to cater to their consumer needs will remain in business. It is important for Edtech companies to stay ahead and tap into market needs consistently, to prepare for programs and skilling opportunities beforehand, catering to learner needs effectively. Further, credible programs that offer measurable outcomes will be of merit. For example, Simplilearn’s #JobGuarantee program is a success, where the learners are provided with a guaranteed job upon completing the program successfully. The assurance helps learners upskill without the fear of unemployment. Additionally, our partnerships with renowned institutions to bring global, quality upskilling for our learners has been beneficial. Being the leading digital training skills provider, and online bootcamp, we are certain that the future looks promising,” said Simplilearn’s Krishna Kumar.

Edtech brands are also relooking at their business spends in the post pandemic period. Shadab Alam, Head, Internshala Trainings, said, “I have a simple philosophy – any spend that is not directly contributing to the revenue, maybe reconsider that. There are other things that can be thought about:

Any new geographical expansion that you have coming in soon - maybe reconsider that.
Optimise your organic channels
Any paid marketing channels that is not making sence ROAS wise, pause that.
Do not fall into the trap of hiring candidates at ‘any cost’.
Keep your service top notch to grow the stickiness of customers”

He further said, “The transformation from offline to online is underway and is going to be a massive one. Any such change is not easy. I personally believe that though this change is going to be bumpy and challenging, the future is bright for players who make it to the other side.”

"The online industry will adopt a hybrid model in order to ensure they are able to provide quality education both online and offline and provide consumers with flexibility based on their convenience. This will not only add to their product base but will help consumers make better buying decisions. While professional learning will be slow to adopt this because it is booming post-pandemic, we will see the k12 industry adopt it sooner; however, in the future, I believe all education institutes, whether online edutechs or offline centers, will adopt a hybrid model." said Alex George, Chairman and Managing director at ITLH.