We’ve all spent hours in tuition at some point in our lives. Whether it’s with a private tutor or in a local coaching center, all so that we can get a better college, a better job and a better life.
Quite naturally, this need for academic support services has resulted in the formation of an industry that is completely distinct from the formal education sector, but complementary and essential at the same time.
Since India is home to the world’s largest young population, the coaching industry is going to get a lot bigger as more and more youngsters answer that fateful question (info-graphic below).
While that is good news for established players, the competition has never been more intense. Read on.
How Traditional Indian Coaching Center’s operate ⚙️
Coaching-Business Basics 101 📚
Coaching centers for competitive exams and technical professions (like Medical, Engineering, Civil services, Chartered Accountancy) serve the biggest fraction of students in the coaching industry. They are far more common than private tutors and online coaching.
These centers have a simple business model. They set-up facilities (land & premises) and train potential teachers who join their institution to coach students.
From thereon, they simply extend to various locations throughout the country by following the same principles (of owning/leasing land, constructing premises and training teachers) or by forming franchise agreements with local people (which is faster).
There are several coaching centers that have established a national footprint and are running great businesses. We extracted some data from the Registrar of Companies (for Revenue) and company websites to highlight the grandeur of these brands.
While there are several other brands in the market, the rules of the game have been pretty straightforward for all.
Coaching institutes compete with each other by dropping tuition fees on a seasonal basis (as usual) or by investing in advertising to boast their merits – usually the ranks obtained by their students in previous year’s examinations.
Remember the billboards and newspaper pages that display the faces of toppers from time to time? Higher the rank, higher the inflow for that coaching center.
Ed tech startups have been able to attract a significant user base that coaching center’s normally take year’s to attract 💨
They came, they saw, they conquered 🤖⚔️
BYJU’s tablet model has helped it scale up to be the world’s largest ed-tech startup with a user base of 2.4 million paying subscribers. Alternatively, Vedantu has differentiated itself from pre-recorded content to providing live-interactive sessions.
These digital startups have changed the rules of the game. While they have no/minimal physical presence, they have perfected their technologies to offer the same level of support that coaching centers offer.
The emergence of such platforms in the ed-tech space has directly affected the growth of these established brands because they’re faster to scale and have a greater reach – especially in Tier-2 and 3 towns where coaching centers haven’t yet reached.
But, is their financial backing and technological prowess enough to rule out coaching centers altogether?
Research indicates that a large majority of students still prefer an experience that involves real-physical interaction with mentors 👩🏫
Several market studies indicate that a large chunk of parents (that eventually pay for the courses) prefer that their children visit a physical coaching center with teachers rather than staying home and studying through online portals.
While that safeguards traditional coaching center’s to an extent, they too have realized the importance of integrating technological systems to provide a holistic, comprehensive and engaging experience.
The most relevant case that highlights this understanding is how Black boards have been replaced by white boards and white boards, eventually replaced by smart boards.
While every offline coaching brand is working on technological integration to some extent, Aakash Education Services Limited (AESL) seems to be the chosen one.
Bigger, better, Faster, Stronger
AESL has been trying to build a digital portfolio of services for students even before BYJU’s launched their flagship tablets. In 2013, they experimented with CD’s and SD cards (pre-loaded with courses) but failed miserably.
Eventually, AESL decided to form a separate entity to focus folly on digital test-prep market and has since hired a team of data engineers and designers to build and perfect its own platform.
Interestingly, Aakash is the only traditional player in this segment that has gone out of it’s way to procure funding from a large institutional investor for competing with startups. It rose ₹ 1300 Crores by selling 37.5% stake to Blackstone earlier this year.
While startups believe that this dual approach (offline & online) will lead AESL nowhere, tell us what you think.
^This post was originally published in our 39th issue on 17th October, 2019. For stories that matter, subscribe to the Guide.