Online professional skilling platforms
Online professional skilling platforms
Business Model Description
Affordable degree and non-degree courses to impart employability-oriented skills delivered through an online / mobile-based platform.
Expected Impact
Using digital platforms, improve employability of students and working professionals.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- India: Countrywide
Sector Classification
Education
c.1.4 billion people under the age of 25 (1.1). India ranks 129 of 189 countries in the 2019 Human Development Index. (1.2) India's progress on SDGs 4 (Quality Education) and 8 (Decent Work and Economic Growth) was given a score of 58 and 64 respectively on 100 on the SDG India Index, with many States still lagging significantly behind on their targets (1.3).
Policy priority
GOI released the Draft New Education Policy in 2019 (1.13), with the following objectives:
1. Increase the proportion of formally skilled labor in India from 5.4% to 15% by 2022-23
2. 100% enrolment and retention at elementary education and secondary education levels
3. By 2025, every student in Grade 5 and beyond has achieved foundational literacy and numeracy
Gender inequalities and marginalization issues
Gross Enrolment Ratio (GER) is 26.0% for males and 24.5% for females, with females constituting 46.8% of the total enrolment of 35.7 million. (1.5)
GER for scheduled castes (SCs), scheduled tribes (STs), other backward castes (OBCs) and minorities have been increasing, these are still below the overall average in most cases. (1.5)
Investment opportunities introduction
GOI allowed 100 percent FDI under automatic route: From April 2000 to December 2019, India’s education sector received FDI worth US$3 billion (1.14)
Key bottlenecks introduction
COVID-19 has further increased the urgency to productively engage and reskill the workforce due to disruptions across industries such as tourism, agriculture, automotive, etc. (1.15)
Education Technology
Development need
After five years of schooling, at age 10-11 years, just over half of students in India can read a grade II level text (appropriate for seven to eight-year-olds). This figure is lower than in 2008. The results for arithmetic ability show a similar picture: Just 28 percent of grade V students are able to do division. The disparity between public and private schools is also stark (2.1)
In a resource-constrained environment -India has the highest pupil-teacher ratio among comparable countries (2.3) - technology can improve reach.
Policy priority
Overall policy thrust towards skilling under the Skill India Mission, which aims to skill around 400 million youths in the country by 2022. The World Bank aided SANKALP and STRIVE schemes were approved in October 2017 to boost Skill India Mission. Skill India program has benefitted more than one crore (10 million) youth annually (3.14)
Gender inequalities and marginalization issues
Access to upskilling platforms continues to focus on white collar workers and can be expensive, creating a critical barrier for skill development across the population (3.3) There is a strong need for affordable skilling platforms that can skill India's future workforce.
Various schemes to promote education for SC / ST students include: Free Coaching Scheme for SC Students, Post-Matric Scholarship for SC students, Upggadation Of Merit Of SC Students, Top Class Scholarship for SC students and the like.
Investment opportunities introduction
Only 5% of the Indian workforce has had formal training in skills indicating a significant market gap where business models can potentially operate with significant socio-economic returns.
Key bottlenecks introduction
Lack of a uniform framework to recognise degree / certifications by employers, especially for online degrees.
Pipeline Opportunity
Online professional skilling platforms
Affordable degree and non-degree courses to impart employability-oriented skills delivered through an online / mobile-based platform.
Business Case
Market Size and Environment
> USD 1 billion
65 million students and working professionals
The post-K12 EdTech market is set to grow 3.7 times to touch $1.8 billion according to an Omidyar Network Report (3.9) According to the International Labour Organisation (ILO), India is staring at a 29 million skill-deficit by 2030 (3.10)
It is estimated that a combination of increased government spending, additional IT hiring, the rise of independent work, and an increase in entrepreneurship created gainful employment for between 20 million and 26 million people between 2014 and 2017 provided they were skilled (3.12)
A National Skill Development Corporation study estimates an incremental human resource requirement of 103 million during 2017-2022 across 24 sectors. (3.13) This includes all skilled workers and is not specific to white-collar professionals.
Indicative Return
> 25%
Overall, investors expect to make a 30% return from EdTech investments for a 3-5 year time horizon in India (3.7)
Online skilling models are relatively new in India. Investments are at an early stage and IRRs have not been reported. A number of providers have not yet posted a profit as they are still in the growth phase.
Salesken (ISTAR Skills Development), a skill training provider for aspiring sales professionals, was one of the first few companies to have investors partially exit (Michael & Susan Dell Foundation and Unitus Seed Fund) in March 2020. Details of the deal were not disclosed (3.8)
Investment Timeframe
Medium Term (5–10 years)
Skilling platforms need to demonstrate employment outcomes to attract students, which typically take 2-3 enrolment cycles Course development and refinement also require a lead time.
Online platforms have further costs of customer acquisition, increasing the capital requirements at the start of the business to enable rapid growth UpGrad, a leading start-up in this vertical, was founded in 2015 and has not reported a profit up to 2019.
Ticket Size
Early-stage investments, especially Venture financing in the education space amounted to USD 80 million in the first six months of 2020, compared to 65 million invested throughout 2019. (1.25)
Market Risks & Scale Obstacles
Business - Business Model Unproven
Impact Case
Sustainable Development Need
Only 5% of the Indian workforce has had formal training in skills (compared with 96% in South Korea)(1.9) and less than a fifth of Indian graduates are immediately employable(1.10). As a result, in 2019, the output per worker (PPP terms) in India ($21.2K) was 49% lower compared to the world average ($43.6K) according to International Labour Organisation (ILO) data (3.1)
Skill gaps can cost India $1.97 trillion in GDP growth (3.2). COVID-19 has further increased the need to productively engage and reskill the workforce (3.3) India's unemployment rate was already pushed to 24% in May 2020 according to Centre for Monitoring Indian Economy (CMIE) due to the COVID-19 pandemic (3.4) Access to upskilling platforms continues to focus on white collar workers and be expensive, creating a critical barrier for skill development across the population (3.3) There is a strong need for affordable skilling platforms that can skill India's future workforce.
Gender & Marginalisation
A declining female labour force participation rate (LFPR) despite increasing levels of education and declining fertility rates has emerged as a worrying trend. The current female labour force participation rate (LFPR) is 23.7 per cent (26.7 per cent in rural areas and 16.2 per cent in urban areas). The declining trend is particularly strong in rural areas, where it has gone down from 49.7 per cent in 2004-05 to 26.7 per cent in 2015-16. (1.5)
The pandemic has especially caused women to suffer significant job losses and wage loss especially in the unorganized sector where women are mostly employed in low pay and low skilled jobs.
Expected Development Outcome
The business models under this IOA have the potential to decrease the number of unemployed and underemployed by equipping them with the necessary skillset and training required for integration into the labour force.
The business model under this IOA has the potential to lower the probability of individuals becoming 'NEET' (not in education, employment or training) by offering a wide range of trainings for varying technical / vocational skills demands and interests.
Gender & Marginalisation
Access to online skilling platforms can help women upskill themselves and narrow the wage gap.
Primary SDGs addressed
4.3.1 Participation rate of youth and adults in formal and non-formal education and training in the previous 12 months, by sex
4.4.1 Proportion of youth and adults with information and communications technology (ICT) skills, by type of skill
8.2.1 Annual growth rate of real GDP per employed person
8.5.1 Average hourly earnings of employees, by sex, age, occupation and persons with disabilities
8.5.2 Unemployment rate, by sex, age and persons with disabilities
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Indirectly impacted stakeholders
People
Planet
Outcome Risks
Low digital access / literacy and paying capacity in the most underserved communities lead to high drop-out rates, lack of jobs, especially as the economy recovers from the effects of a pandemic.
Impact Risks
Most online models focus on white-collar workers as the skills imparted to blue-collar workers are challenging to impart online, limiting impact on the most underserved communities.
Lack of recognition from employers for the degrees may limit the depth of impact. Given the models are relatively new, there is medium risk despite early success.
Impact Classification
What
Higher access to technical and vocational education through online platforms could provide learners with the necessary skills to increase their income and fully integrate into the labour force.
Who
Affordable online models can help those who traditionally could not access skills training due to geographical, time or income contraints, attain skills.
Risk
The impact of the model may be limited to urban areas and high-income students as lower income students may not be willing to spend additional amount on skills development.
Impact Thesis
Using digital platforms, improve employability of students and working professionals.
Enabling Environment
Policy Environment
Overall policy thrust towards skilling under the Skill India Mission, which aims to skill around 400 million youths in the country by 2022. The World Bank aided SANKALP and STRIVE schemes were approved in October 2017 to boost Skill India Mission. Skill India program has benefitted more than one crore (10 million) youth annually (3.14)
eSkillIndia (National Skills Development Corporation’s e-learning aggregator) partnered with private players such as UpGrad, British Council and Saylor Academy with the aim of providing online skill development courses amid the COVID-19 pandemic (3.15) (3.16)
There is also a strong focus on digital skills across education levels. PMGDISHA scheme was approved in February 2017 with the aim to provide digital literacy to 60 million rural households in the country by March 2020 (3.17)
In July 2020, the Government of India launched "SWAYAM", an initiative to provide “best teaching-learning resources to all” online (2.20)
Financial Environment
Financial incentives: National Skill Certification & Monetary Reward (STAR scheme) by the Ministry of Skill Development and Entrepreneurship is encouraging skill development among the youth by providing monetary rewards for successful completion of approved training programmes (3.20)
Other incentives: Support to training and employment programme for women provides assistance to skilling programmes for women in certain domains (3.21)
Regulatory Environment
The University Grants Commission (“UGC”) regulated degrees, diplomas and certificates offered by Universities and Institutions deemed to be Universities in an online medium, to students in India. In June 2017, Government of India announced that it would replace the University Grants Commission with Higher Education Commission of India, however the change has not been reported to take effect as of July 2020 (3.18)
In a landmark reform, higher educational institutions in the country have been allowed certificate, diploma and degree programmes in online mode under the University Grants Commission (Online Courses) Regulations, 2018 (3.14) In 2020, the government has announced plans to allow 100 top universities to launch online courses (3.19)
Marketplace Participants
Private Sector
Investors: Sequoia Capital India, Michael & Susan Dell Foundation, Unitus Seed Fund, Unilazer, LionRock Capital and MEMG Family Office, GrowthStory, CBA Capital, Tiger Global Management LLC; Global Founders Capital Management GmbH, Astarc Ventures have invested in this space (3.22)
Private Sector
Corporations: UpGrad offer degree and non-degree online courses, partnering with top universities. Harappa Education (funded by James Murdoch-led Lupa Systems) offers skills-based training through its own web portal as well as corporate tie-ups. Salesken (iSTAR Skill Development) partners with colleges to make business and commerce students employment-ready. Companies such as Interviewbit and Aeon Learning provide tech skills to those working / aspiring to work in technology companies. They have tie-ups with companies such as Google, Facebook, Netflix and Twitter (Interviewbit) and GE, Capgemini, Cognizant and Oracle (Avagmah). A number of platforms have emerged for specific skills / domains such as GreyAtom (data science, ML(, Guvi (coding in vernacular), SOAL. Career Launcher, VIVO healthcare, Jigsaw Learning Academy (owned by Manipal Education & Medical Group)
Non-Profit
NSDC was set up by the Ministry of Finance and Ministry of Skills Development & Entrepreneurship to act as a catalyst in skill development by providing funding to enterprises, companies and organizations that provide skill training. It also develops appropriate models to enhance, support and coordinate private sector initiatives. More than a 3rd of CSR spending in India goes towards Education and Skilling, with a number of foundations active in the space (1.22) including Pratham Education Foundation, Tata Trusts, Azim Premji Foundation and Citi Foundation.
Target Locations
India: Countrywide
References
- (1.1) https://www.theguardian.com/commentisfree/2018/jan/13/india-600-million-young-people-world-cities-internet
- (1.2) http://hdr.undp.org/en/content/2019-human-development-index-ranking
- (1.3) https://niti.gov.in/sites/default/files/2019-12/SDG-India-Index-2.0_27-Dec.pdf
- (1.4) https://unesdoc.unesco.org/ark:/48223/pf0000373718/PDF/373718eng.pdf.multi
- (1.5) https://data.worldbank.org/indicator/SE.PRM.ENRL.TC.ZS
- (1.6) http://data.uis.unesco.org/#
- (1.7) https://niti.gov.in/writereaddata/files/Strategy_for_New_India.pdf
- (1.8) https://thewire.in/labour/nearly-81-of-the-employed-in-india-are-in-the-informal-sector-ilo
- (1.9) https://niti.gov.in/writereaddata/files/Strategy_for_New_India.pdf
- (1.10) https://www.bbc.com/news/world-asia-india-33550853
- (1.11) https://www.prosperity.com/rankings
- (1.12) https://data.worldbank.org/indicator/SE.PRM.ENRL.TC.ZS
- (1.13) https://mhrd.gov.in/nep-new
- (1.14) https://www.india-briefing.com/news/investing-indias-education-market-after-covid-19-new-growth-drivers-20330.html/
- (1.15) https://economictimes.indiatimes.com/blogs/et-commentary/reinventing-indian-workforce-in-times-of-covid-skill-development-holds-the-key/
- (3.1) https://ilostat.ilo.org/topics/labour-productivity/
- (3.2) https://www.fortuneindia.com/macro/skill-gap-can-cost-india-197-trillion-in-gdp-growth-accenture/102841
- (3.3) Stakeholder Consultations
- (3.4) https://economictimes.indiatimes.com/news/economy/indicators/indias-unemployment-rate-continues-to-hover-above-24/articleshow/75998561.cms?from=mdr
- (3.5) https://niti.gov.in/sdg-india-index-dashboard-2019-20
- (3.6) https://www.aicte-india.org/sites/default/files/India%20Skill%20Report-2019.pdf
- (3.7) https://www.entrepreneur.com/article/249006
- (3.8) https://www.vccircle.com/sequoia-invests-in-ai-platform-salesken-unitus-ventures-msdf-partially-exit/
- (3.9) https://redseer.com/reports/edtech-in-india-an-omidyar-network-india-redseer-report-2019-20/
- (3.10) https://indianexpress.com/article/jobs/skill-gaps-affecting-hiring-across-sectors-6193029/#:~:text=In%202019%2C%20several%20new%2Dage,could%20not%20recruit%20in%202019
- (3.11) https://community.nasscom.in/communities/nasscom-insights/future-skilling-for-the-digital-economy.html#:~:text=The%20installed%20talent%20base%20of,reach%208%2C84%2C000%20in%20FY2020.&text=The%20report%20discusses%20how%20companies,on%20their%20talent%20development%20strategies
- (3.12) https://www.undp.org/content/dam/india/docs/poverty/india-skills-report-2018_undp.pdf
- (3.13) https://www.msde.gov.in/assets/images/annual%20report/Annual%20Report%202017-2018%20(English).pdf
- (3.14) https://www.ibef.org/download/Education-and-Training-June-2020.pdf
- (3.15) https://www.moneycontrol.com/news/business/economy/nsdc-ceo-says-e-learning-programmes-grew-162-in-april-amid-covid-19-lockdown-5349761.html
- (3.16) https://www.hindustantimes.com/education/covid-19-nsdc-encouraging-skill-seekers-to-acquire-new-skills/story-JfgJOva37NqOKmgxGDHiNO.html
- (3.17) https://www.pmgdisha.in/
- (3.18) https://www.indiatoday.in/education-today/news/story/heci-draft-legislation-to-replace-ugc-might-be-introduced-in-winter-session-of-parliament-1563321-2019-07-06
- (3.19) https://www.business-standard.com/article/education/govt-allow-universities-to-start-online-courses-but-where-is-the-infra-120060200895_1.html
- (3.20) https://www.startupindia.gov.in/content/sih/en/government-schemes/star_scheme.html
- (3.21) https://www.startupindia.gov.in/content/sih/en/government-schemes/support_to_training_and_employment_programme.html
- (3.22) S&P Capital IQ data
- (3.23) https://cse.azimpremjiuniversity.edu.in/wp-content/uploads/2019/04/State_of_Working_India_2019.pdf