Growth and Expansion of India’s Edtech Industry

Growth and Expansion of India’s Edtech Industry

Last updated: Feb, 2023
Growth and Expansion of India’s Edtech Industry

Education has always been a prominent sector in the development and growth of India, and the government has always been focused on implementing policies with respect to education to create more opportunities in this industry. In 2020, COVID-19 hit the nation, and subsequent lockdowns further increased the visibility and need for a hybrid model of education, which eventually led to the expansion of ed-tech companies across the globe. This was the time when ed-tech companies came into the limelight and students started using their services, resulting in the expansion of operations which eventually contributed to higher revenue and growth for companies. Their growth is not only limited to the diversification of their products; it also includes a series of mergers and acquisitions to target the global market. With such significant growth in the edtech industry, companies are always working to put the best services out there, and hence, the industry can witness the emergence of new companies in this segment.

With the rise of ed-tech start-ups in India, entrepreneurs have found a number of gaps in this segment and pioneered new-age education with modern business models. Some of the key gaps which existed initially are as follows:

  • Lack of cost-effective and quality content
  • Lack of connect between content curator and content absorbers
  • Skewed teacher-student ratio, particularly in tier-2 and tier-3 regions

Around 26% of India’s population is under the age of 14 years and the scarcity of teachers became one of the biggest issues with the traditional education system. With the adoption of technology, the industry can perform better in the current modern education system.

Market Opportunity for the Ed-tech Industry in India

There’s a huge opportunity for India’s Ed-tech industry to grow to around US$ 10 billion economy by the year 2025. Numerous factors have been supporting the growth and expansion such as high penetration of the internet and smart devices, increase in online content consumption, and the demand for young skilled professionals in the workforce.

Growth of the Edtech Industry

There has been prominent growth in the ed-tech industry since COVID-19, as the education industry has been negatively impacted during that phase. The need for technological advancement in the existing traditional educational system has contributed to more companies entering this industry with better services. According to the PGA Labs and IVCA report, India's education sector is expected to grow from US$ 117 billion in 2020 to US$ 225 billion by 2025.

The following are the few factors that contribute to the growth of the ed-tech industry in India:

  • High Internet Penetration

According to the IAMAI-Kantar ICUBE 2020 report, the country's estimated number of active internet users will increase to 900 million by 2025 from a user base of 622 million in 2020. One of the key stimulators for the expansion of the internet in India is the rising use of smartphones, and their use for communication, entertainment, and social media. As per the report, nine out of ten active users access the internet every day with the average time spent on the internet being around 2 hours per day. Most of users access the internet for entertainment and recreational purposes, for communication while some use it to access social media platforms. Other major activities on the internet include video streaming, gaming, and learning.

The continuous growth in the number of internet users in India is contributing significantly to the expansion of the ed-tech industry since the population gets the chance to access mobile phones with better connectivity.

  • High Penetration of Smart Devices

The penetration of smart and connected devices is picking up in India. According to the latest report of the Internet of Things (IoT) - Spring 2022 report, the number of global IoT connections grew by 8% in 2021 to 12.2 billion active endpoints, representing significantly lower growth than in the year 2020. By the end of 2022, the market of IoT is expected to grow by 18% to 14.4 billion active connections.  It is expected that by 2025, as supply constraints ease and growth further accelerates, there will be approximately 27 billion connected IoT devices.

With mobile being the most preferred gateway for online content consumption in India, deeper penetration of high-speed internet and smartphones is creating a sustainable network of digital users who are exploring the internet for applications beyond social media and e-commerce and creating another open opportunity for ed-tech start-ups.

  • Increasing Online Content Consumption

Online content creation has been quite appealing and attractive to Indian audiences in terms of educational and other content. The majority of ed-tech start-ups in India today have a line of products in video format, besides visual and textual offerings. With the share of video consumption in overall internet traffic estimated to rise to 77% by 2022 from 58% in 2017, the traction of online educational content in the country is poised to grow exponentially.

  • Young Employable Population

The majority of ed-tech start-ups in India today have a line of working population in the age group of 15 to 64 years comprising the existing employed or employable groups as well as the people potentially joining the workforce in the near future. As of 2021, the working population made up more than 68% of the total population in the country. The two important parameters for ensuring employability in today’s market, skillset, and certification, underpin the foreseeable demand for companies providing skill development and online certification, products in video format, besides visual, and textual offerings.

  • Increased Demand for Skilled Professionals

New-age technologies such as machine learning, artificial intelligence, blockchain, augmented/virtual reality, and natural language processing have already contributed to millions of jobs in India. But these domains need people with specific skill sets often missing in Indian graduates. That in turn means it is essential for graduates and professionals to upskill by unlocking the potential of online learning platforms. With around 280 Mn individuals expected to enter the jobs market by 2050, the demand for reskilling and acquiring new skills is poised to become the need of the hour for working professionals.