Education Technology/EdTech market in India — Guesstimate
After a long hesitation, this is my first post on Medium.com.
As I am interested in making this account a resource for “unfortunate souls” (just kidding) preparing for non-tech job interviews or planning to get into management consulting, I want to start by guesstimating the number of such poor souls in India :P
Management Consulting and Product Management are two hot career paths among fresh graduates. Some of you might be confused about which path to choose. This interesting article helps understand these careers closely: https://themanagementconsultant.medium.com/my-journey-as-a-consultant-at-a-big-firm-vs-pm-at-a-series-a-startup-2897957ac232
But before we get into working on the guesstimate, I would like to give some introduction to the ed-tech industry in India, without using many statistics or numbers. You can skip this section and move to the guesstimate if you are not interested in the industry.
To give you a quick funny/sad story: I was looking at my 10th-grade slambook (which is literally non-existent now :P). There was a question “What is your dream?” Reading it, I feel very sad now (probably very normal when I was in my 10th grade) because most of my classmates’ answer was “to become an IITian.” Well, now I feel really sad that not even one of us wrote: “become a lawyer” or “become a journalist” (forget traveling around the world or exploring the moon or anything crazy).
Take a look at this story for more info. https://themanagementconsultant.medium.com/interesting-education-technology-edtech-startups-to-watch-out-for-in-india-2021-9de7daf9f74c
Coming back to our industry information:
In 2009, India passed the Right of Children to Free and Compulsory Education Act (RTE), envisioning a future with 100% school enrolment for children aged 6–14 years. In around the decade since then, the proportion of unenrolled children has dropped to the lowest ever in India’s history — 2.8%
Although this bodes well, concerns remain about post-primary dropout rates, equal access to quality education, affordability, and outcomes.
2019 National Education Policy (NEP) 2 seeks to address these challenges and extend the scope of RTE to students aged 3–18 years. One of its recommendations is to harness EdTech through app-based learning, online student communities, and lesson delivery beyond ‘chalk and talk’.
Thus, EdTech became a crucial link between enrolment and enhanced learning outcomes. It is not limited to classrooms. Supplementary education, commonly referred to as tuition or coaching, has become crucial to bridging learning gaps.
BYJU'S, Coursera, etc got a lot of traction among the urban kids and youth. Adding fuel to the fire, now, COVID-19 has served as an inflection point for Indian ed-tech startups. The industry reckons that the pandemic has been to ed-tech what demonetization was to fintech. As soon as India adopted lockdown, Ed-Tech platforms witnessed a surge in users and traffic.
Now let's get back to understanding the math.
Problem statement: Guesstimate the potential number of students ready to adapt to online education / Ed-Tech resources
Framework/Methodology: First, let’s build a plan on how we can solve this
Step 1: Using a top-down approach, I want to understand the number of students in India
Step 2: To understand the adaptation to online education, we need to understand the technology accessibility among families/students — we can get this by segregating the population into urban, rural, etc.
Step 3: Then by calculating technology accessibility among these sections, we can get an estimate of the number of students ready to adapt to online education
Protip: It is good to prepare a bit about population, birth rate, etc before you attempt guesstimates. However, it is always okay to make assumptions and state those explicitly in your interview
The population of India is 1300M. And thank god, India has a fairly young population :P
Protip: In your interview, it is very important to structure your analysis in the form of tables, graphs, etc on the sheet given to you by your interviewer
So let us assume 50% (650M) of the Indian population is 25 or below. Given or assuming the birth rate to be fairly constant over the past few years, we can take an equal split of people by age (yearly)
So the population of kids in each year (below 25) is 26M — rounding it to 25M
Population grades 1 to 5 = 25M*5 = 125M
Population grades 6 to 10 = 125M
Populations grades 11 to 12 = 50M
Given the policies brought in place by govt., we can assume
- 100% enrollment in grades 1 to 5
- slightly lower 90% enrollment in grades 6 to 10
- low enrollment of 60% in grades 11 and 12 (This is due to high drop out rates and logically, using 60 to make the 50M population to multiples of 10 again)
Number of enrolled students in
grades 1 to 5 = 125M
grades 6 to 10 = 125M*0.9 = ~115M (rounding it to 115M to bring the sum of all the 3 sections to a multiple of 10)
grades 11 and 12 = 50M*0.6 = 30M
Total addressable student base = 125M + 115M + 30M = 270M
It is a known fact that the vast majority of the Indian population is located in rural areas. So we can assume 10% tier 1 population, 15% tier 2 population, and 75% rural
Addressable student base in tier 1 = ~30M
Addressable student base in tier 2 = ~40M
Addressable student base in rural = ~200M
(rounding numbers to make them multiples of 10)
Most of the tier 1 population these days have access to at least one smart device/ TV/ Computer/ Laptop/ Internet. So we can assume 100% (30M)technology accessibility among tier 1 students.
In tier 2 areas, we can assume 25% (10M) of the students going to private schools and 75% (30M) of the students going to govt. schools. Among those going to private schools, we can assume 100% (10M) with access to digital devices, and among those going to govt. schools, we can assume 50% (15M) access to digital devices.
However, among the rural population, technological accessibility is very low. So realistically, it is safe to assume 10% (20M) penetration.
So to sum it up, the total number of students ready to adopt online education = 30M + 10M + 15M + 20M = 75M students
- Always keep rounding the numbers to make the calculations simple for you & do not make any mistakes in those calculations
- To make the guesstimate more robust, you can carry on with the split by grades to all the steps
- If the problem statement is to determine the market size, it is better to answer in terms of amount (INR/US$) — this can be obtained by multiplying the students with the amount they might spend on purchasing subscriptions to ed-tech platforms
Hope this made some sense. And as this is my first ever post, I wanted to start with something simple.
“..someone who has made plenty of errors — though never the same error more than once — is more reliable than someone who has never made any”
NN Taleb (Antifragile)
If you find any mistakes with my methodology or calculations, do let me know. Will help me improve the content I post. Also, happy to hear your suggestions on what I could post. :)