🤔 Is the Indian Edtech Market Over?

A recent move by BYJU's highlights that the company may no longer have faith in the Indian edtech market. Here's why.

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India has the world's largest education system, with over 250 million school-going children. 

No wonder edtech companies find the market very lucrative.

In the last few years, many of them even managed to become unicorns.

But now the world's biggest edtech, India's very own Byju's, is signaling that the Indian edtech market could be shrinking.

Wondering how? ReadOn!

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✈ BYJU's International Play

The world's largest edtech, with a valuation of $22 billion, is now trying to focus on other markets rather than India.

There are talks that the company's CEO and founder Byju Raveendran is now not going to look over the company's India operations anymore. 

He will be handing over the reins to the company's COO Mrinal Mohit.

So, what will Raveendran be doing?

Expanding operations to other countries. And a major hub for expansion is the Middle East. 

BYJU's has already signed a deal with Qatar's sovereign fund to launch a new edtech centre in Doha.

The region is more accepting of new technology with tech hubs like Dubai pouring in money into upcoming startups.

Just in 2020, edtechs saw a 500% growth in subscriber base in the Middle East.

Plus, due to the ongoing military conflicts in the region a lot of students may prefer edtechs to offline education sources.

So, BYJU's move makes sense.

But the startup had already expanded to 21 countries without the CEO handing over the reins of the India operation.

What's changed this time?

Well, it could be just a normal change in roles. After all, CEOs and founders are always looking for new problems to solve.

Or it could be that BYJU's feels that the Indian edtech market doesn't have as much meat as they earlier estimated.

But is it justified in thinking so?

Let's take a look at the current edtech scenario in India.

Most edtechs are struggling to cut down costs right now and are on a massive firing spree.

Over 1,000 edtech employees have been fired in the last few months because of it.

Wondering why the sudden struggle?

Because schools and coaching centres are opening up again.

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📚 The Condition of Indian Edtechs

These edtechs like BYJU's and Unacademy had never been able to create a stronghold in India.

Until the pandemic struck.

That's when these edtechs had their moment.

They got massive funding from investors who thought edtech was the future.

It was only after the pandemic that the 9-year-old BYJU's managed to make a profit  (something that other Indian edtech firms are yet to do). 

But with lakhs of physical coaching centres to choose from now, Indians are fast losing interest in the services of these edtechs, which sometimes charge fees which are more than a child's entire year's school fees.

This price point and these companies' tendency to make hard sales, false promises and then refusing to cancel subscriptions have also been a pain point for many Indian parents.

This has alienated them from these services.

So, BYJU's analysis that the Indian market will not yield much profits or sales is somewhat correct.

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🤨But Will Foreign Markets Budge?

Well, for starters countries like the US and the UK don't really have the same kind of physical coaching or tuition culture that we do.

So, companies like BYJU's may fare well there.

In fact, edtechs have been flourishing in the Western market.

Let's take the example of BYJU's itself.

It gained 45 million free subscribers in 5 years in India, whereas in the US it gained 30 million free subscribers in just a year!

But shouldn't companies like BYJU's try harder to woo the Indian markets?

They simply cannot afford to do that anymore.

You see, these companies already had insanely high customer acquisition costs: ~$131-$872 (around Rs. 10,000-70,000) per student (in the KG-12 category). 

Not just that, these companies had gone on major acquisition sprees to provide more services and eliminate competition.

These acquisitions are also not yielding results. For instance, BYJU's most precious acquisition White Hat Jr. is seeing major losses ( Rs. 1,690 crores) while expenses rise. The company also saw over 1,000 employees resign after they were called to work from office and even had to shut down its school division.

In doing all of this, edtechs have used up a lot of their cash reserves and with funding now set to become scarce, these companies will no longer have the capacity to go after students with the same vigour that they used to.

As a last resort, they are now planning on launching physical tuition centres.

But there is no uncertainty that this bet will pay off as well.

So, where did these edtechs go wrong?

Well, the problem with these edtechs is that they were trying to provide the same kind of education online that students could get offline.

BYJU's did try to gamify learning to some extent, but it was simply not valuable enough for parents to cough up the kind of money it was asking for.

Edtech will have to look at other ways to add value, to make the online learning experience more fun and interactive. For instance, many foreign-based edtechs are using AR and VR to provide children with a more holistic learning experience by taking them on virtual field trips.

Some have also created an entire new universe just to make learning mathematics more fun.

Another way these edtechs can make a space for themselves is by onboarding reliable and trusted teachers on their platforms. After all, it is the teachers that make a difference on an education platform, whether it is offline or online.

So even with Byju's changed stance, all doesn't seem bleak for the Indian edtech space.

Many small edtechs are still operating and trying to make a difference in the country. We will have to wait and watch whether they are successful in their mission or not.

And we're also looking forward to seeing if BYJU's, Unacademy, and Vedantu's offline education play works out for them.

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⚡ In a line: BYJU’s is trying to expand beyond the Indian market because India may not be as lucrative as it once thought.

💡 Quick question: Do you think edtechs can survive in India?

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