Ed-Tech Sector In A Consolidation Wave
The online higher education industry has had a unique growth path right from the start, often defying the usual expansion and development norm seen in other industries.
Companies which have been able to achieve critical mass with a strong financial foundation are all set to ride the next wave of consolidation which has hit this industry. Consolidation as a format of growth works for certain sectors at a certain stage of maturity. In most traditional businesses, consolidation begins when the industry matures and the scope of organic growth is limited. It is then that big players start consolidating their position and eventually top 5-10 players own 80-90% of the market share in that industry, On the other hand, if we look at new age tech businesses, it is a mixed bag. It can be observed that companies across the stages of their life cycle have opted to consolidate with a different objective, the majority of them either want to strengthen their market position to achieve rapid growth. Others are keen to vertically integrate to enhance customer experience or to have an integrated business model where they want to control the entire supply chain.
A recent example of this is Swiggy and its intent on buying uber eats to consolidate offerings while at the same time acquiring Mumbai based start-up Scootsy for on-demand delivery as a service extension. In the recent past, many consumer-tech companies have acquired analytics based start-ups with the idea to enhance the user experience.
But how this opportunity of consolidation presents itself so soon for online higher education links back to basic economics. It is an undisputed fact that India is today among the fastest growing economies with a significant demographic dividend and a growing purchasing power of the middle class. This coupled with the constantly evolving job market has made upskilling and professional learning imperative as well as accessible to a larger population.
Due to its benefits of convenience, reach and flexibility online learning is fast picking up pace in gaining a favourable response across the ecosystem including the universities, corporates and learners. Till now, universities never had this kind of a unique outreach for such blended learning. The courses offered are usually job-oriented courses and are very popular in tier II/III cities, each learner has different learning objectives and seeks a tangible impact on their careers to stay ahead of the curve
The potential of the sector is very favourable and so far, the industry has been fragmented. There are over 3500 + ed-tech start-ups across segments. But only a few managed to attain critical mass and achieve significant growth. In the natural course of the sector's development, many of the start-ups will either flunk out or will be up for strategic investment from larger players who possess the capability to scale up.
Stand-alone these niche players will have a limited shelf life in the form that the industry is moving in. However, consolidating and playing to their strengths will prove to be the winning strategy in the near future. As for the larger consolidating players, the idea is to be able to identify good niche players and integrate them effectively to stay ahead of the curve.
We at Talentedge also feel there exists an opportunity for massive consolidation. As part of our aggressive inorganic growth strategy, our acquisition of a strategic stake in the Hyderabad based Grey Campus is the first step in this direction. The objective was to increase our global presence and expand the product portfolio. Grey Campus has a strong footprint in the US, Middle East and Asia-Pacific and offers technical and job-oriented certification courses that are complementary to Talentedge’s offerings. We are also in talks with a few other companies in this sector to explore strategic investment opportunities. Idea is to create a string of pearls with a complimentary portfolio and supporting a learner with a lifelong learning opportunity.
Watch this space…action has just begun.
