Online Education market in India: From humble beginnings to a $2 billion industry

Ed-tech in India has had humble beginnings right from its inception. From the elementary smart classes by Educomp to the current shape and state of the education industry where several ed-tech startups and foreign players are vying for a slice of the education market in India.

On a growth spree, the Indian online education market is presenting a lot of opportunities to ed-tech players in the arena. The industry is expected to achieve the growth benchmark of $2 billion by the year 2021, a joint report released last year by Google and KPMG stated. The report also found that the paid user base for online education services will also grow at least by six times, if not more.

While the report’s findings are quite impressive, the online education sector in India didn’t always possess the same grandeur or even garner the same interest that it does now. Initiated in the 1990s, Smart Class by Educomp launched by Shantanu Prakash was the first venture that brought a large scale change in the education sector.

Educomp Solutions started off with the business of setting up and maintaining computer labs in private schools till 1999. The company’s business grew in 1999, when founder Shantanu Prakash decided to expand the trading operations by including CD-ROMs and educational toys. However, the biggest milestone in the company’s decades-long journey remains the introduction of Educomp SmartClass – a ‘one of its kind’ model that revolutionized the way kids learn things at school.

Since then, the Indian education sector has seen quite some growth in terms of development and innovations. Ed-tech service providers and a few players in the industry are giving a makeover to ed-tech wherein the capital demands and investments have brought India to the forefront in the space.

While still nascent, India is home to thousands of companies providing education technology services to schools as well as individuals, with over 900 managing to come up in the past 2 years alone.

The innate efficacy of the tech-driven setup is still a hot topic for nationwide debates, the ground report says otherwise. Surveys conducted with several participating students have shown that the students aided with online education and smart class were able to achieve a more profound understanding of the subject matter, as compared to the students who stuck to conventional methods of learning.

The investors are surely past the over-stretched debate, with big names like the Chan Zuckerberg Initiative, Tencent Holdings, etc., having opened their coffers to Indian ed-tech honchos BYJU’s and AEON Learning. And that’s not it. The FinTech sector in India has also embraced its educational counterpart, with indigenous digital lending platforms like Zest Money and FinMomenta partnering with players like Upgrad and Edureka.

The use of technology in an already tech-driven world is not the only reason why investors are attracted to the online education sector in India. Another driving factor remains the large and rapidly growing consumer base. There are about 409 million Internet users in India, a country with 46 per cent of its population in the age group of 15-20 years.

Apart from the increasing Internet penetration, the low cost involved in pursuing an online course, as well as the convenience, flexibility and personalization also attribute to the popularity of ed-tech among students. This, in turn, amounts to growing interest from investors.

While some educators perceive online education as a looming threat to the very existence of offline education system, CEO of Embibe.com Aditi Awasthi believes that the ed-tech sector will remain a fringe play in the face of traditional methods of education until it hits at the heart of what matters to the students – outcomes. “There has to be a clear RoI from consuming education through high-tech channels beyond mere convenience. Data science-driven personalization can make that happen,” she says.