October 17, 2018
India needs to adopt a radical approach to education and skilling in order to leverage its huge demographic dividend. Edtech may provide some vital solutions to address this challenge.
Education and skilling are indispensable to the progress and international competitiveness of nations, particularly in the current day and age of fast-paced transformation. It is a key contributor not just to economic growth but also to greater economic equality. A study undertaken by the World Bank in 2014 titled ‘Comparable Estimates of Returns to Schooling Around the World’ establishes that the average rate of return in terms of earnings of every additional year of schooling is 10% a year 1.
India’s huge demographic dividend, with around 28% of the population in the age group of 8-14 years 2 , presents a huge opportunity to catalyse development outcomes provided they are properly equipped with the learning and skill sets required to compete in the 21 st century. However, the country faces a major demand-supply gap with an estimated shortfall of 200,000 schools, 35,000 colleges, 700 universities and 40 million seats in the vocational training centres 3 . Besides the issue of access, it is also critical to address the issue of quality of education and ensure that the desired learning outcomes are achieved. On the skilling front, the Ministry of Skill Development and Entrepreneurship, Government of India estimates a shortfall of around 128.2 million people across 34 sectors between 2017 and 2022 4 .
The Government of India is also driving major initiatives in terms of leveraging technology for education. The Hon’ble Finance Minister Shri Arun Jaitley has announced during the Union Budget 2018 that the government plans to improve “digital intensity in education” and move from black board to digital board. SWAYAM is an initiative by the Ministry of Human Resource Development to provide courses from Standard IX to post graduation via its IT platform, free of cost to all residents of India. E-basta is a platform that allows publishers of school books to upload digital formats of their books online for easy access by students. Diksha, an initiative by the National Council for Teacher’s Education, provides interactive learning resources to teachers, students as well as parents.
Simultaneously, a vibrant and dynamic edtech industry has emerged over the past few years, propelled by startups looking to address the issue of both reach and quality of education by leveraging modern-day technology. A 2017 study by KPMG in India and Google projects that India’s online education market will reach a size of around US$ 1.96 billion with a user base of around 9.6 million in 2021 compared to US$ 247 million and 1.6 million users in 2016 5 . While reskilling holds the major share as of 2016 with a size of US$ 93 million, primary and secondary supplemental education is expected form the largest component in 2021 with a projected size of US$ 773 million and a CAGR of 60%, primarily led by the potential addition of around 280 million students into the educational system by that year 6. Test preparation is expected to be the fastest growing category with a CAGR of 64% 7. Some of the major drivers behind the edtech revolution are low cost, enhanced reach, growing internet and smartphone penetration, rising disposable incomes, a relatively young demographic and desire for industry relevant training among job seekers 8.
Besides the obvious advantage of reach with the rising penetration of the internet, the success of the edtech field heavily depends on the quality of content providers as well as innovative modes of dissemination. They leverage various modes including video content, personalisation, gamification, contests, quizzes, DIY-based learning, synergisation of online and offline modes, etc to make learning more engaging and interactive for their target audiences as compared to conventional textbooks. Byju’s, for instance, is now a highly popular name in the K-12 learning space, which provides interactive learning programmes in Maths and Science from Classes 4-12 and also helps in preparation for competitive examinations like CAT, IAS, GRE and GMAT. It has over 16 million downloads and is the first in the edtech space to become a unicorn this year (valuation > US$ 1 billion). Other names in the K-12 edtech space include Eupheus Learning, LogicRoots, Vedantu, mGuru, etc. Reliance Industries Ltd has taken a majority stake in Embibe, an AI-based edtech firm that leverages artificial intelligence to improve learning outcomes.
The corporate training space is also a major growth area for edtech, with both companies and professionals across industries eager to update skill sets to stay ahead of the curve. A FICCI- NASSCOM-E&Y report in 2017 estimated that around 9% of the workforce in India will be in job profiles that do not exist today, while 37% of the workforce will be in jobs with radically changed skill sets 9. The segment has also seen a number of startups emerge such as Simplilearn, UpGrad, Mediknit (an edtech platform for doctors), Digital Vidya, Aeon Learning and Great Learning.
With its huge potential to radically transform the quality and reach of education, edtech players are expected to only grow in terms of scale and sophistication over the years as they aggressively compete for market share. A Research and Markets report projects that the global e-learning market will reach a size of around US$ 331 billion by 2025, growing at a CAGR of 7% 10. For India in particular, the role of edtech becomes all the more critical, considering that the country is expected to have the world’s largest work force by 2027, with 1 billion people in the 15-64 age group by that year accounting for 18.6% of the world’s total 11.