Favorable demographics, sizable student population, and voluminous demand for education are strong drivers for e-learning industry’s vigorous growth. The industry’s growth outlook is extremely positive despite prevailing education structure being tardy in its responses to the latest medium.
Despite reluctance on part of conventional education system to readily accept online learning as a viable mode of imparting education, online learning industry is making substantial (if not great) strides in mobilizing learners in its favor. India is eventually witnessing a stage where education is being driven by the needs of learners rather than the vagaries of lopsided educational policies.
Achievable Growth Projections
Some reports are credibly projecting the future of India’s edtech market with believable figures. These figures are not excessively high, nor so low to look pessimistic. Given the present state of e-learning in the country vis-à-vis acceptance among learners and their peers, these figures can only be considered as promising. Google and KPMG in their joint report of 2017 (May) estimated an eight-fold growth in revenues of online education from USD 247 million to USD 1.96 billion in 2021. This figure is too conservative and the growth is likely to touch it easily, more likely to surpass it.
Another statistics from Technopak’s white paper on Indian digital learning market (published in 2016) projects e-learning industry to grow at CAGR of 30 percent to reach USD 5.7 billion by 2020. Now, that’s something! The report is published earlier and figure is higher, even with lower growth rate! Given the CAGR and final revenue figure in 2020, the digital market revenue comes out to be 2 billion in 2017 only, which is the final figure of Google-KPMG report. This looks anomalous, but the difference may be arising out of respective sample sizes and industry segments covered.
While Google report is talking just about online education, Technopak’s estimates also covers the digital education segments beyond online like smart classes, reasons for higher figures probably. But, even with that factor taken into consideration, the Technopak’s figures are much higher than that of Google and that must be arising owning to different sample sizes considered by both. The high baseline figures of Technopak estimates is also because it took more number of companies in its sample, even smaller companies, seemingly inconsequential or unrepresentative for the other report.
Based on many such projections and averaging their revenue estimates, the e-learning revenue figure is most likely to go much beyond 2 billion USD in 2021, somewhat between USD 3.5 to 4.5 billion, mostly by virtue of online education.
E-Learning in India: Key Takeaways
Let’s take a look on few things we need to know about the e-learning industry in India. Let’s also take note of the key players who are showing remarkable progress in terms of providing quality learning experience to learners. These companies are attracting increasing number of paid users on their online portals.
India, an Upcoming Market for E-learning Companies
The industry is highly fragmented. Few large players are doing exceptionally well while numerous small and mid-level players are struggling to create a niche. However, the online education space in India is likely to become big enough to let everyone become profitable. In fact, when the demand rises in future, more e-learning companies will spring up to fill in the supply gap.
The growth of e-learning can be attributed to India comprising the largest young population in the world with every third person is a youth. India also is home to the second largest middle-class population in the world, only after Japan. These two factors indicate the need of young population to get quality education within affordable cost.
5 Major Categories of Online Education
The Indian online-education landscape can be broadly classified into 5 major categories, viz. 1) K-12 supplemental education, 2) test preparation, 3) reskilling and up skilling, 4) higher education, and 5) language and casual learning. Currently, the reskilling professional learning sector is leading over all the others with a major chunk of 38 percent revenue share. Adoption of online learning for reskilling and upgrading oneself can be witnessed more in the IT sector by its professionals, mainly due to the fast-changing nature of IT industry. Coming times will witness adoption from other service sectors too.
The K-12 school supplemental education via online courses is not much behind and it is expected to surpass the reskilling sector in terms of growth to share 39 percent of total revenue in 2021 and become the highest earner. K-12 schooling being the foundation education is a basic requirement for about 260 million school-aged students in the country, a massive clientele.
Test Preparation to be the Fastest Growing Category
As the number of job-seeking educated youth is set to increase in the near future, test-preparation segment will increase at a CAGR of 64 percent by 2021. Presently, majority of e-learning companies who are working in K-12 are also providing courses for the test preparation. Science stream students dominate as users of online courses for test preparation. This is because there is a lack of such platforms which provide online learning in commerce and humanities discipline. There will be a rise in number of course providers in commerce and humanities disciplines too because of the changing trend and increased orientation of students towards these disciplines.
There will be a rise in number of course providers in commerce and humanities disciplines too because of the changing trend and increased orientation of students towards these disciplines.
Higher Education to grow More Than Projected
Online learning in higher education is still at the incubation stage partly due to regulatory norms and partly due to its highly specialized nature which demand more resources. With the new UGC (Online courses) Regulation 2018 in place, things are set to change for online higher education. Previously projected CAGR of 41 percent may get a further boost and the year 2021 may witness launch of online courses by many HEIs and other institutes of repute.
Higher education institutes like IITs, IIMs, IGNOU, SMU and Symbiosis Centre for Open and Distance learning already had been running online courses prior to these regulation and received a huge response from the learners. All these courses will now come under a regulatory framework which will not only enhance its quality but also increase its acceptability in the job market. Quality and recognition would no doubt turn more learners to these courses. This would be a win-win scenario for the learners who wanted to pursue higher education but could not either due to less intake capacity of the brick-and-mortar system or the obligation to work.
Language and casual learning for personal growth and enrichment will also notice higher takers of such online courses. This is because, in the all-pervading knowledge era, it will become a necessity for everyone to learn and grow for self-actualization.
Tier-2 & Tier-3 Cities are Sleeping Giants
The paid user base for online courses is said to increase to approx. 10 million users by 2021. Apart from tier-1 cities, tremendous increase in enrolment from tier-2 and tier-3 cities for online courses is likely to happen. The main drivers are need for quality education, convenience to learn at own pace, low cost as compared to conventional education, need for a variety of courses, employment opportunities for youth, and personalised attention.
Affordable smartphones and increased internet penetration in these cities with the help of government’s digital initiatives will enable learners to get aware and also access these courses ultimately leading to their adoption. The online learning platforms will have to establish offline touch points for resolving queries and accepting cash payments as online transactions are still not much popular in some of these areas.
Moreover, use of multiple and vernacular languages for transaction of the online course may facilitate more registrations. Tier-1 cities are abundant in terms of variety, awareness and availability of the learners. The tier-2 and tier-3 cities are in dearth of these facilities and at the same time people residing there have increased disposable income for these services. The e-learning companies must direct their attention towards these cities for a more prolific outcomes.
Newer Forms of Oncoming Revenue Models
Various types of revenue models are currently prevailing in the online education space. In the content sharing model, the teachers/course providers are charged 15-20 percent on revenue sharing basis. Other models include course subscription priced at a nominal charge, or pay per session by the users and those who provide free content gets revenue from advertising commission. The freemium model is the most popular where the user gets free access to some of the features of the course but can upgrade by paying for accessing other useful features.
The revenue model is set to evolve along with the emerging trends of educational marketplaces like C2C platform similar to that of OLX and Quikr where anyone can buy or sell and the platform charging a little or no fee but charges a premium for upgrading and also get revenue from advertising commissions. This model works on economy-of-scale. Similar collaboration is also expected with academic institutions in near future.
Leading Players Across Key Categories of E-Learning
India has more than 3000 e-learning companies as of now, trying to establish themselves in the market. However, few have succeeded in creating a niche for themselves. In the K-12 and test preparation sector, Byju, Meritnation, Toppr, Embibe, Vedantu and Educomp are the renowned names. Simplilearn, upgrad, Talentedge, Edureka and NIIT are the most sought after for professional upskilling by individuals and corporates.
Higher education will see more e-learning companies collaborating with academic institutions like IITbombayX and SWAYAM. Casual learning, soft skills and language learning are not so popular because of the practical component involved as they are skill based. These course providers will gain more acceptance in future if they base their program on a blended mode.
Casual learning, soft skills and language learning are not so popular because of the practical component involved as they are skill based. These course providers will gain more acceptance in future if they base their program on a blended mode.
The overall climate is set for the e-learning industry to thrive and flourish within the Indian education ecosystem. There is no denial of the fact that traditional education provided in a brick and mortar institute is inadequate and incapable to meet the huge gap of supply and demand. As per the Google-KPMG report published in May 2017, higher education system in India was reported to cater to only 23 percent of the eligible population; this situation has only worsened now. There is a cumulative shortage of 2 million teachers, only in K-12 education system and this figure must be on the higher side currently.
The egalitarian goals of education mandates towards inclusiveness and democratization which seems an unachievable utopia, as far as the figures are concerned. The only viable alternative is leveraging technology to make things easier and reach a large number of people as has been done in other walks of life. Online learning can never replace face-to- face but will certainly become integral and a necessity of the education system in times to come.
(The views are based mainly on leading market reports and the reports cited in the article.)