HomeCURRENT AFFAIRSBUSINESSFrom restructuring to layoffs, Is India's ed-tech sector crashing?

From restructuring to layoffs, Is India’s ed-tech sector crashing?

Bengaluru: India’s ed-tech industry witnessed a tremendous boom during the covid lockdown as parents and students who preferred online education are now facing various challenges. The companies are now left with no option than laying off their employees. They were forced to open offline tuition centres.

Some of the major ed-tech companies are proposing enormous discounts on their courses in order to attract students. Right now, it is hard for the companies to get their funds, there are top companies who closed high funding rounds easily but now it is hard for them to even boost money.

Edtech major BYJU’S recently announced an $800 million funding in March 2022. However, the company is yet to receive around $250 million from its investors. BYJU’S spokesperson has attributed the delay to several macroeconomic reasons.

“In the first place, the context in which the ed-tech companies grew has changed with children going back to physical classrooms. However, the problem for ed-tech companies is much beyond the context change. The parents who had tried the service in Covid times are not renewing, primarily because they haven’t seen a positive impact on their kids,” said Ganesh Mahadevan, Partner – Thinksynq solutions.

Must read: Shopify lays off 10% of its global workforce

Mahadevan, a mentor of several startups said that the process of sourcing customers and selling them the right product has recently been short-charged and because of this the ed-tech companies are facing cashflow challenges, business downsizing and all of these have resulted in delayed funding.

Immediately, the Indian Edtech Consortium (IEC) under the aegis of the Internet and Mobile Association of India (IAMAI) issued clarification around mis-selling and misleading advertisements by these companies.

IEC said it has created a two-tier grievance redressal mechanism that has been actively resolving consumers’ complaints.

According to the Advertising Standards Council of India (ASCI), which resolves issues in advertisements, education remains the single largest violative sector, followed by healthcare and personal care.

ASCI ‘Complaints Insights 2021-22’ data shows about 33% of complaints are filed against the education sector. Edtech companies promote their courses by offering deep discounts. ASCI ‘Complaints Insights 2021-22’ data shows about 33% of complaints are filed against the education sector. Edtech companies promote their courses by offering deep discounts.

Must read: Microsoft Lays Off Nearly 1,800 Employees Amidst Fears of Global Recession

Teachers as sales representatives

In some companies, teachers act as sales representatives and get incentives of Rs 5,000 at least for a student they refer to. “If a student wants to pursue a course, they are given trials. If the student is satisfied with the trial, parents enrol them in regular classes. For instance, of the 10 trials, if 3-5 are converted into regular classes, a teacher receives money accordingly,” said a teacher with an ed-tech giant. At the same time, these teachers have to fulfil certain metrics. “Switching on the camera during classes is mandatory and we need to encourage students by making use of ‘claps’ ‘Hats off’ and other icon images. We need to keep classes very interactive and have to be punctual too,” said the teacher.

Shifting from online to offline mode

To attract more students BYJU’S, Unacademy, Vedantu and Physicswallah have opened many offline tuition centres. By the time, people realised the significance of face-to-face interaction to engage high levels and motivation, said Ranjita Raman, CEO, of Jaro Education.

The approach that ed-tech took by focusing on only scaling the business and not looking at profitability has led to a significant dent in revenue structure, causing a delay in the various funding rounds, Raman said. “Companies have started taking thoughtful steps in marketing spending. The marketing budget was reduced from 11.6% in 2019 to 8% in 2021 of the total revenue,” he further added.

Last month, Unacademy announced the launch of its first two offline learning centres in Kota, Rajasthan. The Unacademy Centres will facilitate the offline classes for learners and will extend access to top educators in the NEET-UG, IT JEE, and Foundation (9-10) course categories, it said.

Unacademy aims to enrol more than 15,000 learners in its first batch across the upcoming Unacademy centres. The centres will be opening in Kota, Ahmedabad, Pune, Chandigarh, Jaipur, Patna, Delhi, Lucknow, and Bengaluru. Unacademy’s top 30 educators will be onboarded for its Kota centres.

“The sector needs to communicate clearly and ensure that students are not falsely misled. More transparency and clarity are required from ed-tech in terms of accountability. While growth in business is undeniably critical, it is also of paramount importance to allow consumers to make more informed choices and decisions while being protected,” he added.

These offline tech centres have a massive library, multi-functional cafes, doubt-solving zones, and function zones. Unacademy centres have everything to attract more and more students.

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