Due to the COVID-19 pandemic, online education across the globe has become commonplace. To get a handle on how it’s evolved in India and the U.S., GLG hosted a conversation among John Katzman, founder and CEO of Noodle Education Inc. and founder and former CEO at 2U; Meenakshi Kaul, Founder and Managing Director at Zruti EduTech; and Ravijot Chugh, an edtech and product advisor and Co-Founder and former Head of Product at upGrad. Below are a few select excerpts from our broader discussion.

What has been the evolution and growth of the edtech market in India and the U.S.?

Chugh: India needs a lot more enrolment, both in formal higher education and upskilling lifelong learning programs, to keep up with the changing labor market needs and our growth aspirations. A lot of this incremental enrolment will be in online education programs. India was an early adopter of massive open online course (MOOC) platforms. Over time, a lot of Indian companies also got into certificate programs. Until about three or four years ago, that’s what dominated the market. That’s where a shift occurred, and companies started offering programs that were more in line with the quality expected from good university programs. People started to look at online programs as a primary way of either upskilling to directly impact their career or gaining credentials that provide long-term benefits.

Practically, what happened is a lot of private players partnered with universities in different models for certificate programs and more formal diploma and degree programs. Many universities introduced their own programs. Quite a few local Indian universities are now partnering with MOOC platforms. There are new models emerging such as boot camps, income-share agreements, and job guarantee programs, all focusing on providing people with a job transition. In all, there’s been a lot of growth in India.

Katzman: In the U.S., the first wave was a group of for-profit higher education players, such as University of Phoenix and Kaplan, which created a series of mediocre online degree programs. People realized their classroom programs were terrible and it wasn’t about the delivery medium, just the school itself. Nonetheless, online education in and of itself was considered to be inferior. When a few elite schools created online degree programs more than a decade ago, we started seeing people recognize that an online program could be as good as a classroom one. Before the pandemic, 35% of U.S. graduate programs were online.

From a university’s perspective, how has this shift been perceived?

Kaul: Prior to the pandemic, the government was keen to start some kind of online courses for university students, since there was a lot of reluctance from faculty and management. Goverment decided to allow governing bodies of the universities to allow students to add limited credit points from online course platforms like Swayam. This really made students in India to start looking at online courses with a new perspective. A paradigm shift has taken place during the pandemic. Right now, roughly 1,000 universities are running online courses since the pandemic hit. The National Education Policy gave 100 top universities the autonomous authority to launch online degree courses, and a few of them have already launched these.

Chugh: We’ve seen universities get excited about working with private edtech players for a couple of reasons. One is access to scale. A lot of universities may not be able to build and deliver programs at a high scale compared with their on-campus programs, and that’s where they are open to working with private players. A key consideration for them also is whether the program they’re delivering with private players is in line with the brand of the university. Universities are careful to not dilute their brand. That’s one of the key considerations: will online programs dilute the brand? That’s what we’ve seen from the Indian context.

Katzman: A decade ago, schools knew that they knew nothing about how to market, recruit, do learning design, support students who were in every time zone in a 24/7 way, so they relied heavily on online program managers. They considered it an extra stream of revenue. As it has become more mainstream, two things have happened. First, a lot of these skills have become more accessible. Second, they’ve realized it’s cutting into their classroom programs. This isn’t just found revenue — collectively it shifts from classroom to online. If that shift is completed, they’ll have given away half or more of their tuition to these for-profit providers. With the newer model of online program management that’s evolved, where schools are used to being completely self-contained, they now realize that in order to bring down expenses and compete more effectively, they have to collaborate at scale. Those network effects dramatically lower costs and improve outcomes.

What are the overall economics and considerations for edtech players?

Katzman: In the U.S., teaching is only about 20% of the university’s cost structure, and that’s with fairly low student-faculty ratios. Faculty are not inexpensive, but not overwhelmingly expensive. It’s everything around the faculty and the students that adds expense. That’s the reason that online has such potential to lower the cost of higher ed. In the U.S., I believe that it will end up taking about a quarter out of tuition, because that savings is going to end up back in the hands of students through financial aid and merit and need-based aid.

How has the pandemic changed edtech’s subsegments and delivery?

Chugh: In India, the pandemic has done a couple of things. From primary school all the way up to adult learning, it’s made a lot of people more comfortable with doing stuff remotely. Many companies have taken advantage of this and offered free access to their learning programs. People are open to try now, and it’s a great opportunity for people to experience what online learning could be.

Second, what tends to happen whenever there’s an economic downturn, people tend to invest in themselves, especially things that give them not just short-term returns, but that future-proof their careers. There’s definitely been an increasing demand for more formal credential programs, leading a lot of programs to rethink their value proposition for the short term.

Kaul: There’s definitely a shift in higher education in India from the traditional mode in the past four and a half years. This is partially driven by the Government and mostly by the students who are keen to compete with their counterparts in the developed nations. For example, 25% of the credit points in every semester are mandated to be taught through online platforms. This has risen a huge market in Indian universities and colleges. A lot of universities are looking for help from edtech players that can help them achieve this. In the K-12 segment in India, there are lots of players who have seen a lot of success in the past year and a half. They were mostly in the coaching segment. Thanks to the pandemic, it has successfully replaced traditional classroom teaching with the new age online classes. Universities have put a lot of effort in preparing themselves to conduct online classes, with some putting 25% to 35% of their annual budget aside for digital transformation. There is a lot of emphasis on simulation, for example. A few universities put a lot of budget toward creating short videos in the labs and have started building infrastructure, e.g., studios, edition units, and so on. Money does not seem to be a focus as far as private universities are concerned. They’re more concerned with maintaining a quality experience for students that’s closer to the classroom experience.

Katzman: During the pandemic, it’s been about just doing something, getting everybody on Zoom, and let’s hope that next term is better. The quality of programs has been almost universally terrible. There’s a big difference between something that’s a thoughtful approach to online pedagogy and just sticking a professor in front of Zoom. At the same time, it has made everybody more comfortable that this modality is workable, and I think we will never go back in the U.S. to sub-50% online for adult learners in graduate school. Then it’s a march toward 100% because it’s just a better model in terms of lowered opportunity costs.

What the pandemic juiced is, if a school has one student, building this entire infrastructure for that student is very expensive. As they have more students, that denominator is larger, the cost is spread out among more people. In the U.S., even through the pandemic, the percentage of people studying online within 50 miles of home has continued to grow to more than 75%. As regional schools have gone online, they’re claiming back market share from larger providers. The cost of acquiring a student at the beginning is low, because if a good school opens an online program, somebody will take it. But every additional student is more expensive to acquire. At some point the savings of the scale is smaller than the increased cost of the marketing, and at that point, local providers have a large advantage over national ones. Online has consolidated higher ed in the U.S. and now is dispersing it again, and watching that play out is one of the stories of the pandemic that hasn’t been told yet.

 

About Ravijot Chugh
Ravijot Chugh is currently an edtech and product advisor. Previously, Ravijot was the Co-Founder and Head of Product at upGrad, India’s largest online higher education company. Prior to this, Ravijot was a product manager heading the new projects vertical at Housing.com, an online real estate start-up. He was also the Founder and CEO of an online travel platform called 36hrs.in. Before this, Ravijot worked as a management consultant with the Parthenon Group (now Parthenon-EY) advising education clients and PE firms on due diligence, market entry, and growth strategy across different emerging markets.

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About John Katzman

John Katzman is the Founder and Chief Executive Officer at The Noodle Companies, which connects learners, technology, and educators. Prior to that, he founded and ran 2U (TWOU), which works with research universities to create high-quality online degree programs. Prior to that, he founded and ran The Princeton Review, which helped over 50% of students applying to U.S. colleges and universities each year find, get into, and pay for school. Katzman is the co-author of five books; he is a frequent lecturer and panelist and sits or has sat on the Boards of the Woodrow Wilson Foundation, Renaissance Learning, Carnegie Learning, the National Association of Independent Schools, and the National Alliance for Public Charter Schools.

About Meenakshi Kaul

Meenakshi Kaul is the Founder and Managing Director at Zruti EduTech. The company provides consulting services in the field of education, technology, sales, marketing, online assessments, and training to educational institutes and helps these organizations build efficient and simple processes and systems with modern and innovative technology solutions. Prior to this, she was a self-employed business management consultant in the education sector. She was also the Vice President-Education Technology Sales and Marketing at IMT Ghaziabad (distance learning). She has held a number of roles within the edtech space.

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This article is adapted from the September 15, 2020, GLG Remote Roundtable “Emerging Trends in the EdTech Space.” If you would like access to this teleconference or would like to speak with Ravijot Chugh, John Katzman, Meenakshi Kaul, or any of our more than 700,000 experts, contact us.