Unemployment in Indian Edtech Sector

The country has witnessed growth in the IT sector and a shift towards education, with more than 4,500 EdTech startups have been launched in India to cater the needs of around 300 million students in the country. The sector got a much-needed push due to digital adoption; close to half a billion internet and smartphone users contributed to it.

The lockdown and fear of COVID-19 spread has taken schools, colleges, and educational institutes online, thus leading to the emergence of many EdTech products and services and a rise in adoption.

The EdTech sector in India can be compared in two phases – pre-COVID-19 and during/post-COVID-19. Prior to the pandemic, the EdTech sector was growing in India but at a relatively slower rate as online education was still meeting with some resistance.

The lack of technology posed a major concern of reskilling and upskilling for teachers. While the pandemic has wreaked havoc across sectors and industries in the Indian market, it has been a watershed moment for India's EdTech sector.

Since then it has also received a fresh round of billion-dollar funding. India’s edtech industry produced six unicorns ( firms valued at $1 billion or more) including Unacademy, Eruditus, UpGrad, Vedantu, Lead School, and PhysicsWallah.

The demand for online learning did, however, diminish when traditional tuition centres reopened and students flocked to them, pushing edtech businesses to re-evaluate their growth estimates and business models as the industry was shifting to become more hybrid (online and offline)-oriented.

India’s edtech players have struggled for a while to sustain the industry’s pandemic-triggered boom. Their troubles are now becoming more apparent. Most of India’s edtech unicorns’ valuations seem to be off as they prepare for slower growth after raising capital at extremely high revenue multiples until the first half of 2022.

The venture funding in edtech startups in India declined 54% Year-on-Year from a remarkable $4 billion in 2021 to a mere $1.8 billion in 2022. It will decrease to $889 million in 2023. The root cause of this unexpected hiring slowdown in edtech companies can be attributed to the prevailing economic uncertainties, including the looming recession and a funding slump that has cast a shadow over the IT sector.

Resulted the edtech industry, once a beacon of opportunity, is facing a challenging time as Byju’s, India’s largest edtech company, grapples with layoffs and financial troubles.

Consequently, the industry has experienced a wave of challenges, including mass layoffs, hiring freezes, and bidding farewell to the cherished work-from-home cultur.

S Mohini Ratna, Editor, VARINDIA