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An Overview of the Education Market in India

Posted on Sunday, Sep 6th 2009

By Guest Author Shipra Agarwal

Education has long been receiving the major wallet share of the Indian middle class. The education market is generally regarded as the only market towards which Indians are not price-sensitive because it has helped them reach their present standard of living and promises better earnings and prospects for their children.

India’s education sector currently offers an estimated US$40 billion market, with a potential 16% five-year CAGR. This spans the kindergarten through grade 12 (K-12) segment (US$20 billion), private professional colleges (US$7 billion) and tutoring (US$5 billion), vocational training (US$1.4 billion), test preparation (US$1.7 billion), and preschools (US$1 billion).

The most attractive and scalable sectors in this group are test preparation, K-12 and preschools. Parents increasingly prefer private institutions in all domains due to the low quality and poor infrastructure of government-owned and -aided institutions. While just 7% of the more than 1 million schools in India are privately owned, they account for 40% of the country’s 219 million students enrolled.

An increase in GPRS use and the introduction of 3G technology in India should also give a boost to concepts such as e-learning in the country. The e-learning market is currently estimated at US$21.5 million and is projected to grow to US$225 million by 2012. A few companies are also concentrating on management systems for schools and colleges which help maintain attendance records, conduct examinations, and manage timetables, administration, reports, and many other things. The publishing of textbooks and other books for children is a low-growth market because of the high (70%) reusability of these books.

The Indian middle class is expected to expand significantly, from 300 million people today to 583 million people in 2025. By 2025, about three-quarters of India’s urbanites will be part of the middle class, compared with slightly more than one-tenth today. As Indians continue to climb the economic ladder, the composition of their spending will likely change significantly. Spending on education is expected to grow by 11% over the next 20 years, to 9% of the household income. With the growth of the Indian middle class and the increase in its members’ spending power, there is expected to be a major supply-demand gap, which opens up many entrepreneurial opportunities in this sector.

I will be working with Sramana to publish Deal Radar posts that profile some companies in this sector. My work will also include a detailed analysis of the various opportunities in and challenges for the Indian educational market.

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Well Shipra, I must congratulate you for this wonderful post. You have hit absolutely on the head of the nail.
India has been deprived of social engg for a long time. I mean social engg as two things one health care another education.
Any countries capital is its human capital. India has a peculiar problem with its education sector, the middle class Indians have really got the dividends by giving education to their kids.
But education has to be dealt very cautiously; the private education sector has really made a mark in India, especially in the school and private university.
One very successful example is Mr. Subash Chandra’s Kid Zee; it’s operating in the retail format.
The biggest challenge today is to find good school teachers, specially maths, physics, and chemistry.
In the higher education the private engg and management colleges has come up, but there is a very big question mark, that’s the quality of students and the quality of faculty.
A few years back McKinsey-Nasscom report came out that India needs quality man power, but here again McKinsey said that only 25% of the grads are employable, to be honest only 15% are employable the balance is all junk product.
The students are not to be blamed, it’s the curriculum that is to be blamed, in a general AICUT mode and engg, B.Tech course has 48-52 subjects that a student has to cover in just 40 months, which is very difficult.
Regarding management they have to study 52 papers in 20 months time, each paper has got 30-35 sessions, (1.25 Hrs per session). Very difficult for a faculty to finish the course, and the students to absorb it.
I took some classes in reputed B-schools as a visiting faculty in Calcutta, I faced same problem, say a topic like Balance Score Card, I was allotted only 1 hour, it’s just impossible to cover up, same with technical papers like OR QT or IT. Average 35-40 hours in class room per paper.
Now these institutes are in connection with major corporate, students think and treat these as employment exchange, campus placement is the main attraction for students.
Engg and Management students in private Institute take private tuitions at hoe or in coaching centers.
I know that the parents pay abnormal money to put their kid in Engg and MBA institute as if thinking that they will get Nirvana, which is not actually true.
In the job market, a friend of mine works as an Asst Vice President in a reputed IT firm in India, he said I take only 10 seconds to browse thru a CV, them we may take 10 fresh candidates, make them work for six months, and fire the eight and keep the rest two, here again a survival of the fittest.
I came across an engineer in a KPO & ITES working at Rs 20,000 Per Month , ( US$ 430 Per Month Approx) KPO, working 12-14 Hours a day, even on Sundays he may have to go to his office. He considers himself lucky, others settle down with Rs 15K( US$320 Approx)per month.

I told this to my one of my NRI friend about the situation how the Indian tech companies are working, the overseas clients are bargaining, I think India is the cheapest destination for trained quality manpower who can communicate in English, with good mathematical and analytical reasoning, and coding capabilities, with large no of private Engineering and MBA institute coming up to cater to the KPO/BPOs.

With a young demography (55% below 25 Yrs of Age) it will continue to be the best destination for outsourcing for next ten years.
It has to climb up the value chain to be the next global engg R&D center.
Yes the only thing that you require in private education sector is the quality education , I suggested you must have six sigma in this sector.
Fly by night oporates should not be allowed to enter in this sector, govt must have an unbiased body to look afert the quality of education.
If you call this a service sector, it’s people, process and a bug free product, i.e education system carriculam and delivery.
With Warm Regards

Debashish Brahma Sunday, September 6, 2009 at 9:24 AM PT

Spot on analysis & interesting figures. One of the sectors I am very keen on, is highly rated ‘private professional college’ which lack in India. Market reports claim huge institutionalized investments (both domestic & foreign) in the upcoming domain.

Gaurav Sunday, September 6, 2009 at 11:02 AM PT

Great summary! Could you please cite the sources for various numbers that you have quoted? Look forward to company profiles. Thank you.

RK Sunday, September 6, 2009 at 11:58 AM PT

Any light on what kind of an impact such large scale privatization will have on the quality of education in the country? Contrary to public perception, private institutes and Unis in India survive only because of marketing and a mediocre system they are a part of, they are no good. IIPM and Amity are examples, among others. It is perhaps important for us to keep an eye on the quality of the education provided to children and adults. It is rather sad to give education such a capitalist "business-only" perspective.

Also, we should look at making education, knowledge and skill oriented, not just "placement" oriented.

Please, give some space to good issues like these amidst mindless chatter about how good a business it is to fool children into believing they are getting "educated".

Ram Sunday, September 6, 2009 at 9:21 PM PT

Great post. There is a detailed report on investments in education called Education PE Pulse published in April 2009 by Venture Intelligence.

Private education sector in India (schools or coaching) is definitely doing great. What needs to be seen is how are and how can govt run schools actually use technology to their advantage in their schools.

Also do we need reform when it comes to teachers as well?Most of the low budget schools have the same teachers teaching kids from classes 5-10. Training centers for teachers where they can learn how to use technology to their benefit.

Another area which is probably under invested in is affordable career counseling . So if you are bright and or your parents are educated after Xth you know what you are going to get into. But there is a large number of people that don’t know what they should do or where to start or what the affordable career choices are.

I think someone mentioned vocational training above. Great idea.

Part time professional training.
Most of the part time programs in India are MBA programs or correspondence degrees like MA, MCom etc. Good quality part time training programs can easily be set up in already existing institutions.

Deval Sunday, September 6, 2009 at 9:34 PM PT

Indian education sector in spite of the limitless opportunities has certain drawbacks to deal with. As rightly said by Debashish, lack of human capital is one. Teaching is not seen as a lucrative career by many. In fact it comes to most of the Indian youth as the last option. Integration of technology with teaching may lead to some developments in both private and government institutions. The other problem facing this sector is government regulatory issues. The government policies was a major reason to keep investments away from this sector for a long time. I will be writing on great detail on both of these issues.

Also, as rightly spotted by Deval,the area of career counseling needs to be explored. Many of the reputed schools and colleges have career counseling, but it is essential that counseling is made available to the larger mass at an affordable price.

Shipra Monday, September 7, 2009 at 12:38 AM PT

Good start Shipra,

In the entire spectrum of education,two issues needs a quick action
1.The seed- primary education segment is yet to be addressed. The notable issue here is multi-dimensional. As rightly pointed -the govt. model of consolidated cost(expediture) and diffused beenfits has been a failure.
2.Private players esp in higher education space- To add to the woes, mushrooming of shops which has taken the existing gap in the quality space to its advantage needs to be checked from creating the nuissance. It is to be held responsible for hitting the economy with a double whammy-
a.It is creating a high level of expectations in the youngsters
b.It is unable to mark up the skill set required to meet up their expectations

The result of this mindless business pursuit has resulted in misery for the youngsters

aditya modi Monday, September 7, 2009 at 1:30 AM PT

I believe education sector needs voacational institute for rural and tier 3 youth’s,these lot a are generally job less coz of not acquring right skills.Currently ITI’s are there across states but at the end of the day its a gov run body and the quality doesnt match the requirement.

Also for professionals colleges like MBA,someone has correctly mentioned that need of the hour is Practical part time professional modules,which can enhance the employability factor of these graduates.

kali Monday, September 7, 2009 at 2:50 AM PT

Aditya, I agree with you that Indian education needs tremendous development with respect to primary education. Again a major factor has been the government regulations, and the requirement of being affiliated to the state or central board. As more and more schools are adopting the curriculum followed abroad, we can expect some considerable development in the coming years.
Also, for the higher education space, a huge amount of investment is needed for the resources and other capital. Ram is not wrong in saying that many of the private institutes are flourishing because of their marketing strategy. But a bigger factor, is the supply-demand gap and lack of quality education.

India needs privatization, but it requires so with quality human capital and an aim to deliver education, not profit making. We have some start ups by young IIT and IIM graduates in this space. Two of them Lakshya Institute(for competitive examination coaching) and Elements Akademia(vocational training) have been covered for the deal radar posts.
But more such efforts, specially for primary schools and higher education are needed for an effective education system.

Shipra Monday, September 7, 2009 at 7:02 AM PT

Education and Internet are the 2 biggest equalisers in life. People in India have realised that Education gives them the toe hold to compete with others and make their own space. Internet, on the other hand is providing them the access which was unavailable a couple of years back. Even people in rural areas can become ICT entreprenuers without leaving their hometowns.

Coming to the status of specially Higher Education, it has been seen that a major impediment in Tier 2 & 3 institues is lack of awareness of what the industry requires. During campus interviews, seen students dumfounded with simple problems that just require the right kind of problem solving skills and not very high technical or domain experience.

Companies generally are looking for people who can fix problems with minimal direction. They don’t want to have to tell people to react when fires are burning – the employee should know how to fix the problem.

Colleges should focus on Problem solving which could include :

The ability to assess a situation, gather more information if necessary
Identify key issues that need to be addressed
Break down complex problems into simpler manageable problems
Analyse a problem to develop workable solutions

and so on. I think there has been too much debate on what the colleges and industry should do to develop talent. However, if we focus on the basics, all the rest of the things will be taken care of. For example while constructing a building – Laying bricks in not everything – you have to test the soil, meet your architect and prepare the floor plan, do the design for structure, electrical systems, interior, etc . Only after that one starts construction. In short if the scaffold is right, things will fall into place and the same goes for our edu system. Am sure our proactive Minister is on the right track

Lokesh Monday, September 7, 2009 at 8:40 PM PT

Nice post, and Debashish Brahma excellent comment.

Nikhil Tuesday, September 8, 2009 at 11:32 PM PT

Chalk Pad technology – an ERP solutions company has been recently featured for the deal radar post. It is integration of technology with the education, which will help India move towards quality education.
More such initiatives are currently needed in the Indian education sector.

Shipra Thursday, September 10, 2009 at 11:35 AM PT

India’s demographic dividend has been the focus of policy makers for sometime. The overwhelming concern is that this advantage is thwarted because of lack of employable skills. The situation can become a nightmare with unemployed youth drawn to nefarious activities. To achieve some very lofty goals the Government has initiated several policy level initiatives and budgeted large amounts of money. However, the work of implementing such audacious goals is yet to begin. Moreover, several hurdles have to be overcome before this can become a reality. More funding, by itself, will not solve the problem. The need is to enhance the basic skills of all youth so that they can be prepared for a broad range of present and emerging jobs. While large numbers of brick and mortar goals have been floated by the Government, the initiatives to produce the number of quality teacher/trainers to bring these goals to fruition have received short change.
Deeming the number of teachers/trainers is easy but producing them in quantity and of quality requires a change in mind set to remove some deep rooted systemic factors. This is particularly urgent in the five states of India and in the 600,000 villages of India.
The central and state governments are coming to a realization that participation of the private sector is necessary for making a dent in this daunting task. Slowly, the long standing policy precept that education should not be a business is crumbling. Whatever path it takes, one of the inevitable shortages will be well trained personnel in all different segments of training and education!
One of the exasperating risk factor is the selection and retention of high quality talent that are attracted to the education/training field. Society all over the world compensates its teachers inadequately to their contribution. In the emerging world, the compensation may even be below a sustainable level. Simply ratcheting the compensation program of teachers upwards is a slow, unreliable solution. The Government schools have proven the un-viability of this approach. Predictably, the most suitable people are drawn away from this profession. When salaries are increased for political reasons, the politically connected fill those spots without consideration of merit. A vicious cycle is created of teachers doing poor teaching, creating an even poorer next generation of teachers after the cream is drawn away. This ever downward spiraling ends up having an adverse impact on all aspects of society. Without a high quality Teacher/Trainer corps, all the investment in money and material will be for naught.
Today, the system prepares only the exceptionally motivated self starters or the very privileged. The need is for innovative approaches to develop exceptional teachers that are part of a long unbroken chain of people that carry forth the wisdom of generations. In the process the process reverses the downward spiral and at the same time prepares a wide range of youth for world class needs. Yes, there will be books and buildings, but, we need talented people who ignite the spark to absorb that data into knowledge?

rajiv tandon Saturday, September 12, 2009 at 1:38 PM PT

Integrated Student Management System (Plug and play system) is a complete management system intended to manage all resources, domains and tasks of an education institute in simplest way possible i.e. by just clicking a mouse. Internet Based System – 365/24/7 Access everywhere. The IEMS system is developed after an intense research especially about the present Indian education system and consulting with some highly experienced educationists.

Rahul Sharma Monday, May 3, 2010 at 7:23 AM PT

Different syllabi,different institutes with varying needs,lack of a central agency to collate and disseminate info,cavalier attitude of recognised schools & colleges in casually conducting own teaching while integrating with private coaching classes,pvt tuitions by college & school teachers,reservations of all kinds so that a “higher caste” student of merit gets callously left out,endless meddling by uneducated politicians,ignorance in devising a percentile system to rank students on an uniform scale…..

Need:
-structured education
-merit based admissions
-subsidise fees for lower classes/castes in lieu of undeserved admission reservation
-IITian/MBA(of merit) in charge of education sector
-more institutes than malls,incentivise investments in education
-let institutes make profits as opposed to super profits,quality competition will insure this

Shipra’s and all of your observations come as a fresh air of optimism in midst of this seemingly escapeless dark situation the sector has got mired in.

Deepak Thursday, May 27, 2010 at 1:45 AM PT

Hi,
While it is true that education is a HOT sector & also very valid are some posts in this page that only the privileged have access to quality education, it is also nice to see some initiatioves like smartlearnwebtv.com that offer hi quality test prep over the net for as low as Re1/- a day. The usage of ICT in education has not only brought about the affordability but also access to some of world class teachers who other wise would not have been reachable. I am proud brother of a trich based student who cleared the IITJEE yesterday using these methods…Thanks to the net, thanks to the power of technology….

shyam Thursday, May 27, 2010 at 6:10 AM PT

great post well done ……..

yogesh Thursday, July 29, 2010 at 12:46 PM PT

Hi

I completely acknowledge the sheer market potential in the field of E learning. I would like to take this to the millions and be part of Vision 2020 . I personally feel we can build a far more effective solution which will be affordable at the same time.

Avinash Wednesday, August 4, 2010 at 5:19 AM PT

I am very supportive of the views expressed by everybody in this thread and am glad to have stumbled upon it. I have been looking at online education startups in the US for some time now. My aim is to build a video based primary education solution. I believe such a system is the answer to the Indian education problem.

My idea: This system will firstly through a diagnostic understand how much the child has understood at school, if at all. Then through short bite sized videos, it will explain the weak concepts. These videos will be adaptive and continuously take student feedback. At the end of the videos, the student will take another test to confirm that he has achieved the learning outcomes. This system will over time understand the pattern in which each student learns best and be more personalized in the future. A lot of other things can be done to make it the ideal solution.
Its a combination of khanacademy.org and a learning algorithm.

Question: What are your views on the efficacy of such a system. Are you people aware of people who share such a vision and are working on it in any way. If yes, I could love to connect with them. I am currently based in the US and plan to move to India to work on this soon.

Thanks.
Varun

Varun Khaitan Saturday, October 30, 2010 at 1:29 PM PT

Hi,

We are working on career counseling model from past 2 year, http://entrancecorner.com . Suggestion and inputs related to career counseling fields are welcome write m at naveen.goyal@entrancecorner.com

naveen Friday, March 11, 2011 at 2:41 AM PT

I think as internet penetration increase, it help a lot in education system. Students from different places especially from small cities who are far behind from students of large cities due to quality education can cover the difference with the help of online education. Also it help parents to save money as its cheap and easy to access anywhere and anytime.
Keeping this in mind we develop an online free classroom http://eduarrow.com providing free video tutorials so that students who miss the class or feel shy to ask the teacher in class can learn or clear their doubt related to any topic and build more self confidence in them to get better result.

Sachin Friday, May 13, 2011 at 10:19 PM PT

As reflected in many of the posts above, quality of education is a major issue leading to the employability crisis. While there are many individual factors resulting in this, the number and quality of teachers/faculty is an important one.

I think, making it mandatory to complete a teaching assignment, as a part of the completion of any degree or PG course would at least solve the problem of shortage of faculty in the country. While all of them might not put their heart into it, it would be an assignment well served in the interest of the country.

Sreenath Raju Friday, May 27, 2011 at 2:35 AM PT