Current position and situation of the ed tech industry

Why ed tech industry suffered

India’s edtech sector has been experiencing significant growth in the recent years. It is the second
largest market for e-learning after the United States of America and has a market size of USD 6
billion. It is expected to reach USD 10.4 billion by the year 2025. This growth is fueled by India’s
increasing internet economy, which according to the IAMAI-Kantar ICUBE report, has 622 million
active internet users in 2020. This is expected to increase by 45% to 900 million by the year 2025
resulting from higher technology adoption rates in small towns of India.

Stats

1. According to the IAMAI-Kantar ICUBE report, India had 622 million active internet users in
2020. This number is expected to increase by 45% to reach 900 million by 2025 due to higher
adoption rates in rural and small towns in the country.

The widespread use of mobile devices and the internet in rural areas will make it easier for
edtech companies to reach a larger customer base and scale their operations.

In addition, it will lead to the development of new and innovative edtech solutions
specifically designed to meet the needs of rural communities.

Source - https://timesofindia.indiatimes.com/blogs/voices/how-is-indias-edtech-economy-
looking-to-shape-in-the-coming-years

Why is ed tech industry in India under heavy loss in 2022

For this we need to understand the revenue model of the edtech industry

The edtech industry boomed during the pandemic when the schools and the coaching institutes
were shut down. To further facilitate the usage of e-learning sources, these edtech companies
offered huge discounts and freebies to attract parents to their platforms. Due to the sudden increase
in demand of these services, the edtech industry attracted huge investments from Indian as well as
foreign investors.

However, as the world recovered from the pandemic and the schools and coaching institutions
reopened across the country, the demand for such e-learning sources reduced, thereby affecting the
revenue of the edtech industry. Students went back to schools, the edtech companies failed to
enhance the existing model of online e-learning to match with the offline learning experience.
Further, extremely high customer acquisition costs coupled with low retention rate contributed to
further reduction in the bottom line of the edtech companies.

Some of the top edtech companies are now foraying into the offline coaching and learning solutions
space, in order to diversify their business activities and reduce their dependence on only online
coaching. Byju’s acquired Aakash Educational Services in a USD 1 billion dollar deal and Unacademy
has opened Unacademy centres across major cities.
Source - https://www.business-standard.com/podcast/current-affairs/as-pandemic-boom-fades-can-
ed-tech-startups-survive-122060600051_1.html

https://www.entrepreneur.com/en-in/news-and-trends/whats-wrong-with-indias-booming-edtech-
industry/431482

India’s edtech sector is world’s second largest, valued at USD 6 billion and is expected to reach USD
10.4 billion by 2025. This growth is fueled by India’s expanding internet economy, which has 622
million active internet users in 2020 and is expected to increase by 45% to 900 million by 2025
mainly due to increased higher technology adoption rates in small and rural Indian towns.

The Indian edtech industry flourished during the pandemic with the closure of offline educational
facilities, i.e. school and coaching institutes. To capitalize on this situation and to attract parents, the
edtech companies offered discounts and freebies, leading to significant increase in their topline and
sudden growth, attracting investments from Indian and Foreign investors.

However, as the pandemic waned and schools reopened, demand for e-learning decreased as it
could not match the experiences of offline learning, further impacting the companies’ revenues.
Decreasing revenues coupled with higher customer acquisition costs and low retention rates further
affected their profits. To diversify and to reduce dependence on online coaching, top edtech firms
like Byju’s and Unacademy entered the offline coaching space, with Byju’s acquiring Aakash
Educational Services for USD 1 billion, while Unacademy opened centres across major cities.