Indian online education market to touch USD 1.96 Billion by 2021!                                                                           

Google India and KPMG India recently released Online Education in India 2021 research report.Click on the below link to read the full report:

http://bit.ly/2u9tYYA

This report highlighted the growth opportunity in India's online education industry. According to this report the Indian online education sector is expected to grow over 8 times between 2017-21 and reach a market size of USD1.96 Billion!                                                                                                                                                                           The current Indian online education market size is USD247 Million. According to this report India has the world's 3rd largest higher education sectors in the world with over 1.4 Million schools and 36000 higher education institutions with over 227 Million enrolled students. However this sector faces huge challenges especially w.r.t. access to quality educational facilities, resources and learning outcomes.It is here that Indian's online education market has a huge role to play.                                                                                                                 The Indian online education market is currently worth USD 247 Million and is already the 2nd largest E-learning market after the USA.Below are key highlights from this report. As VSPL focuses on providing Online certifications, below we have highlighted key findings of this report w.r.t Professional Skills Development and Corporate Training.

Key Definitions

Online Education: Learning modules which can be accessed by individuals through internet enabled devices

Reskilling and Online Certifications (ROC) Market: Courses designed to assist users in skill enhancement, which may result in certifications. Reskilling offers standardized product offerings resulting in certifications. These certifications enable horizontal and vertical career movements.


Key Highlights

  • Demand for online education is set to explode during 2017-2021 with a CAGR of 44% and this market is expected to grow by 8X in the next 5 years.

  • Current market size of education market in India is $100 BB.

  • Current market size of online education in India is USD 247 MN and number of learners is 1.6 MN. This is expected to grow to USD 1.96BB and 9.6 MN learners.

The key drivers of overall online education growth are:


Lower cost of online education VS offline educationEmployability quotient
Increasing Internet penetrationGovernment’s digital initiatives
Availability of quality educationRising usage of smartphones and tablets

Key benefits of online education for India's ROC (Reskilling & Online Certifications) students

  • Perceived convenience

  • Flexible batch / start dates

  • Variety of study materials


Top sources of information about online ROC education players brand awareness

  • Peers

  • Internet search


Top reason for selecting a ROC brand - Quality of course content

  • Learners prefer laptops over mobile phones for accessing content

  • Online education to be backed by a phenomenal rise in paid user base.


Preferred Access Devices for ROC learners

  • Laptops


Key Growth Drivers for ROC Online Education

A- Demand

  • Presence of large working age population and increasing requirements for skills upgradation / reskilling is pushing the growth of vocational education in India.

B- Supply

  • Improved Internet connectivity and adoption of digital payment methods have singularly aided in the growth of online education.significant increase in Internet population from 2011-2016 with overall internet penetration@31%

  • 409 MN Internet users in 2016 are expected to grow to 735 MN by 2021.

  • Exponential rise in smartphone sales to 290 MN (2016).

C- Macroeconomics

  • Young population open to online education

  • Rising disposable incomes




Key Highlights for Reskilling & Online Certifications (ROC) Online Education Segment

  1. Currently is the largest subcategory accounting for USD 93 MN. 2017-21 CAGR 38%

  2. ROC Accounts for 38% of the current market

  3. Driven by healthy adoption rates by IT professionals. reskilling / online trainings for certifications is currently the largest category , driven by IT professionals with a preference towards online trainings for skill development / enhancement.

  4. 2021 ROC market size USD493MN

  5. Technical certifications are the most popular ROC courses

  6. Driven by increasing reskilling and upskilling needs of working executives in India.


The Future Outlook for Online Education in Reskilling and Online Certifications Segment

1.Gamifications

Gamification enhances user engagement. Components of game based learning include simulation based concepts , incentive based learning, badges and likes. By making learning fun and interactive , learner knowledge acquisition increases.


2.Blended Learning

Collaboration of online and offline channels to provide ubiquitous content and learning. Online players to provide offline touchpoints such as meetups, workshops etc. Further offline players to broaden their online components to provide VAS and enhance overall learning experience.


3.Continuous Learning

Online education to be driven across age groups to meet 3 kinds of needs.

  • Employability- Need to stay relevant in the job market

  • Social Learning- Causal learning and social skill development

  • Entrepreneurship- Enable entrepreneurship


4.Business Model Evolution in line with changing customer requirements

  • Increase perceived value of online education through tie-ups with industry for co-developed content. Such tieups assist in co-creation of industry certified content , which enhances overall acceptance of online education amongst the target user base.

  • Peer-to-peer learning (P2P) amongst students to gather pace. (Whatsapp, Twitter, Facebook, Google Hangouts, LMS Forums etc.)

  • Value Added Services such as internships and live projects along with regular courses, to provide hands on experience to students.


5.Technological innovations in the supply and demand ecosystem

  • Big Data and AI to assist in design of customized content

  • Content consumption will evolve through usage of wearable devices and virtual labs

  • Data storage in the cloud will enable anytime, anywhere data access


Online Education Revenue Models                                                                                                                                            In tutor market places, content providers operate on a revenue share model, wherein a % of the subscription fees paid by students is deducted by the platform as commission.

1.Course Subscription                                                                                                                                           

  • One time transaction

  • Learners pay per course / bundle

2.Pay Per Session / Module                                                                                                                                 

Learners charged based on duration / nos of modules enrolled

3.Fremium Upgrades                                                                                                                   

Learners charges based on duration / nos of modules enrolled

4.Content Sharing                                                                                                                   

Learners encouraged to share educational content and charged on the basis of shared content consumption

5. Advertising Commissions                                                                                                                  

  • Additional commissions charged from tutors who choose to be featured by the platform


Reskilling & Online Certifications: Stage of Development

  • Large customer base

  • Industry Recognition

  • Future growth driven by reskilling needs of new entrants in the working population


Current Market Scenario


Consumption (Demand)Online Platforms (Supply)Product Offerings
User Base: Currently dominated by school students and working population.
ROC Category Dominated by IT professionals
Dominated by large sized players offering a wide variety of product offeringsCertain categories are dominated by standard courses, while others require adaptive, innovative course modules. ROC offers standardized course offerings resulting in degree or certification

Category Level Market Projections

ROC is currently the largest category in the Indian online education industry, driven by IT professionals with a preference towards online trainings for skills development / enhancement.

Expected Future Market Characteristics

  • Enhanced Learner Support attracts learners to online platforms

  • Self-motivated, value driven users will research courses extensively online before making purchase decisions

  • Competitive differentiation by players via alternative technology enabled learning solutions

  • Value added services such as industry interactions, career counselling and soft skills development can further enhance customer retention

  • Online players are likely to move towards blended education solutions i.e. create offline touchpoints to enhance value

  • Practical component of course content to be enhanced through live projects offering real-world application of educational concepts

  • Customer feedback in terms of reviews and ratings will help generate trust in tuition marketplaces

  • Government initiatives are expected to enable infrastructure support in rural areas

  • Freemium model i.e. providing students an opportunity to assess course content and quality prior to buying decisions is likely to continue to drive adoption


Growth Drivers of Online Education


#DriverDetails
1Lower CostOnline skill enhancement courses are 53% cheaper than their offline versions.lower infrastructure costs and rising student enrolments leverage economies of scale and reduce prices of online courses.~175% increase in cost of offline education from 2008-14.
2Quality EducationOnline channel provides quality education to studentsRegions and states with poor access to offline education witness higher enrolments in online courses.10 MN enrolments @10CAGR for open enrolment distance courses by 2021.
3Employability Quotient~280MN job seekers to enter job market by 2050. Unemployment rate at 5 year high of 5%.Annual growth rate for job availability at 2%.Increase in eligible working population 300MN (1991-2013) out of which employed population 140MN.
4Govt Digital InitiatiesSkill India, Digital India, SWAYAM, E-Basta, Rashtriya Madhyamik Shiksha Abhiyan to enable infrastructure needed to enable students to study online.
5Internet PenetrationExponential growth of Internet penetration. 31% with 409 MN Internet users and 735 MN projected users by 2021. Increasing penetration of semi-urban and rural areas provide high potential for growth.Internet penetration will enable reach and increase traffic for the online education players.
6Smartphone Usage290 MN smartphone users currently in India, to be expected to grow by 180 MN new users by 2021.
7Disposable IncomesDisposable incomes in the country to grow by 55% by 2020 with India having the 2nd largest middle class till at least 2030.
8DemographicsCurrently 46% of population between 15-40 age group. Young population with high aspirations but lower income is a good target market for online education. Online education has higher acceptability amongst younger learners.


Reskilling & Online Certifications Category Details


Overview

  • 38% CAGR 2016-2021 due to need for working professionals to continuously learn evolving technologies and the demand from new workforce entrants seeking space.

  • Online adoption relatively high for technical certifications

  • Working professionals need to up skill / re skill opt for short term certification courses on niche subjects.

  • ROC categories is mature comparatively to other Higher Ed, Test Prep and Language / Casual Learning. This is due to higher adoption of online education amongst target users.

  • Online channel preferred due to convenience factor and shorter duration of courses.


Market Characteristics

A) Market 

  • Market Structure: Oligopolistic with a few large players accounting for a majority of the market share

  • Significant presence of international players in India and Indian players have a presence in different international market

  • Market Segment: Current market is predominantly B2C, while B2B segment rising due to increased emphasis by companies for employee training

B) Product

  1. Duration: 3-6 months

  2. Pricing: Rs8-16K

  3. Product Delivery: Via Instructor Led Training, Live Projects, Case Studies, Assignments and Query resolution

  4. Revenue Models:

    1. Course Specific Subscriptions: More prevalent revenue models whereby user is provided faculty access, study material and issued training certificate post successful completion of the evaluation.

    2. Duration Based Subscriptions: Users provided access to all courses for the duration of subscription

    3. Value Added Services: Recruitment services gaining popularity for courses designed to meet industry standards.


Key Trends

Free Content Drives Online Adoption- Adopters access free content to get basic course understanding and then they pay for certifications

Constant Need for Reskilling in Industries- Large% of working population sees re skilling as a necessity for career progression and job role changes, creating consistent demand.

An average user signs up for 2 courses in a year and 5 courses in a lifetime.


Challenges

Key challenge for existing players in this segment

Content Obsolescence

Short Shelf Life > Constant Updates > High Costs


User Profile, Channel Preferences, Device Preferences and Key Challenges

Who is the current user?

Higher adoption of IT and IT related courses

  • Certifications related to business management , taken to progress in management roles, have a high adoption in Metros/Tier1

  • Adoption of tech related courses are evenly distributed across tiers, but other certifications have varied consumption patterns.

  • Adoption of niche courses e.g. arts & design, healthcare, social services have higher adoption in Tier 2 cities.


Why are students opting for online courses


Key Motivational Factors To Adopt Online Education
Metro / Tier1Tier2
Current Offline Access: HighCurrent Offline Access: Low
ConvenienceAccess to Study Material
Reduced Travel TimeBetter Concentration at Home
Self-Paced LearningConvenience

Due to the high availability of offline courses in Metro / Tier1 areas, students primarily look at online channels as a convenient alternative



How is the online content consumed?

  • Owing to the nature of their work, working professionals have easy access to laptops

  • As an increasing number of working professionals are opting for online certification courses, laptops are the preferred mode of course content consumption (92%)

  • Working professionals use mobiles along with their laptops(57%)


What are the key challenges faced by students adopting online education?

  • Availability of Internet a key pain point for current users

  • Content on certification platforms are majorly in video thus requiring huge bandwidth.

  • Once there is more awareness and the value proposition of online courses is clarified and communicated, issues relating to pricing and selecting the appropriate courses can be resolved.


Key Challenges(%)
Connectivity39
Pricing37
Brand Selection33


Brand Selection & Payment Preferences-Why do students choose a specific brand?

Awareness- Driven via Internet searches

Purchase Decisions- Driven via Quality

Customer Lifecycle

Stage1: Discovery- Finding out about the brand

Brand awareness in this category is significantly research driven.

Result driven working professionals seeking certifications which add immediate value to their profiles are major adopters in this category.


Modes of Awareness (%)Metro/Tier1Tier2
Internet Search5871
Peers5454
Advertisements4340


Stage2: Subscription- Key reasons for subscribing to a brand


Factors Driving Purchase (%)Metro/Tier1Tier2
Quality of Study Material5056
Value for Money4147
Quality Tutors3946


Stage3: Engagement- Reasons for being engaged with a brand


Factors Driving Engagement (%)Metro/Tier1Tier2
Accessibility4952
Course Variety4847
Download Enabled Content4447


How are students paying for the courses?

Digital payments in Tier 2 cities lag behind metros/Tier1 cities for ROC category.

Higher preference for 1 time payment due to shorter duration of courses


Mode of Payment (%)Payment Period (%)
ModeMetros/Tier1Tier2Payment TypeMetros/Tier1Tier2
Cash327One Time Payments6048
Digital9773Installments4052

Acquiring & Retaining Customers

Students Using An Offline Channel

Key Challenges Faced By Students In Offline ChannelsKey Barriers To Adoption of Online Courses
Travel TimeReal Time Query Resolution
FlexibilityTeaching Methodology
Individual AttentionAuthenticity

Students Intending To Adopt An Online Channel


Why Have People Intending To Use Online Channels Not Used ItMotivation Factors for Adoption Of An Online Channel
Lack of requirementConvenience
AwarenessReduced travel time
Lack of Interesting CoursesSelf-Paced Learning

Enhancing customer experience for online students

  • Pricing

  • Free Courses

  • Video Content


Future Outlook

  • Employee motivated user traction and B2B offerings to gain pace in the near future.

  • Highly customized product offerings for specific industries is expected to witness traction over the next few years.

  • Existing players in online higher education segment are looking to diversify in this category

  • B2B:Expected category growth via product differentiation and service offerings by current players looking to cater to the B2B segment.

  • B2C: Rising disposable incomes and need to differentiate in the workplace will fuel adoption in this segment.