Is a steep rise in number of study abroad students and competition a reason behind mounting loss of ed-tech firms? – Education News

Indians’ love for study abroad has only grown with time, if not declined. As per the data available with the Ministry of External Affairs, there are  approximately 15 lakh Indian students pursuing education abroad as of January CY23. This number has increased from 13.24 lakh students studying abroad in CY22 which shows an increase of 11.11% from CY22 to CY23. “The main reason why the study abroad sector has grown is because of two factors including awareness about foreign education and access to capital. As awareness about foreign education increased among students in tier-2 and tier-3, access to financial assistance also became easy. With new NBFCs (Non-banking Financial Companies) and gramin banks it is easier to get education loans,” Vikrant Shivalik, co-founder and COO of Ambitio, told FE Education.  

Yet another study by ICEF Monitor, a market intelligence resource for the international education industry shows that the number of students who study abroad is expected to increase by many as 20 lakh by 2025. The study further highlights that Indian students have spent nearly $47 billion towards studying abroad in 2022. The spending includes tuition fees, housing and other living expenses. Interestingly, projections indicate that this expenditure is anticipated to rise significantly, reaching a potential $70 billion by 2025, considering the current growth rates.  As the number of students continue to rise, so does the business opportunity for these ed-tech companies. Typically, these platforms operate on two kind of revenue streams – under the first set it charges students to get an admission abroad based on their profile and interest and secondly these platform charge a commission from foreign universities post closure of per admission. “From my understanding, the business model is typically a B2B model for companies operating in study abroad segment where students don’t pay a commission but the universities or an intermediary pays a negotiated percent for each recruitment of students done from India for the university abroad. Some consultants also charge the students’ families and offer a one stop solution to help families to send their wards abroad,” Abhinav Upadhyay, CMO, CollegeDekho, said. 

Perhaps, this is also the reason why some of these companies’ losses have risen. GirnarSoft Education Services which operates CollegeDekho posted an 89% increase in revenue from operation to Rs 163 crore in FY23 from Rs 86.1 crore in FY22, as per regulatory filings accessed by business intelligence platform, Tofler. The company’s net loss widened Rs 129 crore in FY23 from Rs 59.7 crore in FY22. In case of Leverage Ed-tech, the company’s revenue from operation rose 225% to Rs 40 crore in FY22 from Rs 12.3 crore in FY21. While the company’s net loss widened to Rs 29.8 crore in FY22 from  Rs 6.4 crore during the same period in preceding year. Meanwhile, Ambitio which filed its regulatory filings of first year of operations posted a total revenue of Rs 1.49 lakh in FY23, as net profit stood at Rs 8,486. 

Despite the losses, this category of ed-tech firms have continued to receive funds from investors, Leverage Edu in FY24, raised a total fund of $40 million in Series C. The fund was raised through Princeton-based Language Testing conglomerate ETS, Blume Ventures, besides debt. Post the round, the start-up’s valuation rose to about $150 million, as per data shared by Traxcn, 

Besides options and affordability, there are other factors which also have played a role in the rise in the number of students going abroad to study. As per the Indian Student Mobility Report 2023 by OneStep GLobal, access to the varied range of courses and programmes which are not available in India, flexible and multi-disciplinary approach towards academics in foreign universities, besides the fact that overseas education is considered a ticket to global careers and foreign citizenship are some of the reason behind the rush. The report further states that the teaching mode in India is largely theoretical and the application of subject is minimal and the private HEIs (Higher Education Institutions) in India charge high fees and provide substandard education with limited employability probability, “A large part of India’s new and old graduates are looking for prospects where their unique talent is admired and appreciated. And that is now, abroad – in countries like the US where there is a huge demand for skilled engineers, Spain where professions in the culinary arts are appreciated and Canada where nursing is a profession in huge demand. So a lot of the youth who aren’t seeing immediate demand in certain professions are moving out looking at the short term and the long term return on their investment of time and money,” Akshay Chaturvedi, founder and CEO, Leverage.biz, explained. 

Furthermore, industry experts opine that every year between 7-10 lakh students opt for foreign universities. With a competition as fierce as this, study-abroad ed-tech firms often end up playing on price by reducing commission, thereby ending up in losses. According to industry industry estimates, the average amount students spend during their two years’ masters in foreign countries ranges between Rs 25-45 lakh. It is to be noted that only 10% of students are able to get a scholarship. “As per my information, the starting tuition fees in the US is around $50,000 per annum, and in the UK is £11,400 per annum, in Canada it starts from $35,000 per annum, while in Australia it starts  from AU$18,000 per annum.  However, it’s important to note that these are largely starting or average costs and the actual tuition fees can vary based on the university, the specific programme and whether the institution is public or private.  Scholarships are available for the right profile of students and could vary based on the Institution and its objectives for the scholarships,”Upadhyay of CollegeDekho, explained.