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Online to offline! Ed-tech takes a U-turn as profitability becomes priority

Various ed-tech companies have started their offline centres to cope up with the changed demands in the post pandemic phase.

Funding for education technology in India has declined 50% in the Q2,CY22.
Funding for education technology in India has declined 50% in the Q2,CY22.

The ed-tech industry which clocked a high growth rate during the pandemic, seems to now feel the pinch, as offline education has returned. From Byju’s Aakash to UpGrad, Vedantu, among others, currently everyone is in a race to start their very own brick-and-mortar centers. “Ed-techs are currently going through course correction and hence, the number of lay-offs are high. These corrections are largely due to management decisions. ‘Back to coaching centre’ trend is a natural evolution and not a crisis. Those companies which were only present online, will now have some sort of physical presence and vice-versa,” Narayanan Ramaswamy, National Leader – Education and Skill Development, KPMG in India, said.

According to a PricewaterhouseCoopers (PwC) report  titled ‘Startup Deals Tracker — Q2 CY22’, funding for education technology in India has declined 50% in the Q2,CY22. Further, investment in the Indian start-up ecosystem has dropped 40% to $6.8 billion in the same period as opposed to $11.3 billion in the first quarter. As funds dry up, ed-tech firms are now forced to take a re-look at their business model with an emphasis on profitability. For Vamsi Krishna, CEO, co-founder, Vedantu, even as the cost of its offline courses is higher when compared to the online ones, customers are willing to pay for quality education, “Prices of our courses are comparatively cheaper than our competitors. So we are able to survive at a comfortable profit notwithstanding that the move is currently an experiment,” he added. 

Interestingly, ed-tech startups such as PhysicsWalla, 99+mytuitions app, Utkarsh Classes, among others, which boomed in the last two years now seem to focus on creating a physical presence. Meanwhile, large players such as Byju’s, Unacademy, Upgrad, and Vedantu are also caught in the churn and as a result have laid-off to sustain. “We are bullish towards expanding our courses across online and offline to stay afloat. We also plan to expand and start about 100 offline coaching centers in tier 2 and 3 cities in states such as Madhya Pradesh, Uttar Pradesh, Bihar, and Haryana in the next phase,” Nirmal Gehlot, founder and CEO, Utkarsh Classes, said. 

One major challenge for the ed-tech platforms which have returned to the offline mode is the increased cost of operations. The online model allowed these companies to save lot of costs. Industry observers opined that for ed-tech companies, hybrid is the way forward. “Ofcourse ed-tech is going through new challenges but we feel, there will always be the importance of offline coaching. And digital learning will be an added advantage for students as a reference bay,” Gehlot noted.

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