Indian Education sector is considered very hot today with many entrepreneurs betting their careers and VCs betting their money on it. Hundreds of companies have popped up in past few years; some of them do have some solid value proposition while the rest are just another education startups. Whether all this sudden interest in education is just hype or something real, time will tell us. My take – there is definitely lot of froth now which shall settle down soon, however there is a lot of work to be done considering the fact that the most precious resource that we have today is our people. Being a technology guy, there is always a bias for finding solution to every problem with technology (To a man with hammer, every problem looks like a nail, says Charlie Munger). Here are few points that I think make it necessary for technology to play a role in Indian Education.
1. Shortage of (good) teachers in India – There are around 400 million kids in India. Assuming a very conservative teacher-student ratio of 1:40, we should have 10 million teachers today. By year 2015, we will need more that 2 million new teachers according to a report by Unesco Institute of Statistics. Everybody is aware about the quality of teachers we have today. Teacher training is almost non-existent in India today. Where is this next lot of teachers going to come from? There are multiple ways in which technology is answering these questions. For instance, there are e-learning companies that are developing educational content so that students become less dependent on blackboard teaching by their teachers. Students can use these services as complementary to what is taught in classrooms and teachers can use them as teaching aids. There are ICT companies deploying computers and internet in schools so that students can learn from them.
2. Geographical Barriers – India is land of mountains, rivers and plains. But India is also a country without roads and electricity. My native village is yet to see a road or a bus reaching to it even today. There are many such villages in India where teachers fear to tread and students find it hard to travel outside for studies. But there are mobiles everywhere. There are TVs and DTH connections. All because technology has enabled us to jump directly from being road-less to being mobile-ful. With an appropriate business model, best of the teachers can reach to these places virtually using mobiles, TVs and, as we talk, computers.
3. Shortage of Schools – We are limited by our school infrastructure. And we are limited by funds to set up thousands of quality institutions. Although we have IITs and IIMs, there are many schools in India without toilets and there are many schools running till 8th std with just two classrooms and three teachers. There are high quality private schools coming up but they are not accessible to everyone. Above that, even education quality is doubtful in many of these schools. From government side, we have around 31K crores for education in this year’s budget. Is this enough? That is not even one thousand rupees per student! Over that, corruption will eat away most of it. Technology can help us in delivering quality education at very affordable rates. Worldwide, broadband and mobile rates are going down because of technology and business innovations. Very soon, all engineering grads would be able to learn from IIT professors and all kids can take tuitions from Khan Academy.
4. We need to bridge the digital divide – If I compare an 8th std student from Bangalore and one from say, Hosur or Jabalpur, there would be a big difference. Primarily because of the ecosystem they grow up in. Can we create the same ecosystem in Tier 2, Tier 3 or Tier 4 cities without using the technology?
5. Number of career options will explode – When I was in school, one wanted to become an IAS officer, a doctor, an engineer or a pilot. Accordingly, we would choose our career options. Today, we have wedding planners, hair stylists, fiction writers, furniture designers and many more. This list is going to get bigger as our economy expands. Internet has enabled kids sitting in Dehradun learn Bharatanatyam by watching videos on Youtube. Supporting education for so many career options would be impossible without using technology. We are already seeing democratization of education and technology is playing a key role in connecting the students and teachers!
6. There is a lot of Innovation happening in the technology – Some of our best talent is moving towards technology. My belief is that when good guys work together, something good comes out. In past couple of years we have seen many entrepreneurs opening education companies and many smart software geeks coding for indian education. Some thing good is going to come out for sure.
7. Complexity of Indian system – With 15 national languages, 10s of state boards, 100s of competitive exams and millions of students, the current system is looking too complex to be managed without using technology. We are moving towards a knowledge economy. And we are moving at a very fast pace. Our course content need to reflect this movement – what is relevant today might not be relevant tomorrow. We need to continuously adapt to this change which will become increasingly difficult with our current education system.
8. We are nowhere right now – We need fresh investments to support our education system. And with our limited funds, it is better to go directly wireless than laying out wires, i.e., go for high ROE technology-supported investments instead of investing in Brick-and-Mortar models.
1. IT industry: Most of the success has come because of outsourcing from the western world. If the “India/China” story is true, Rupee factor is going to haunt the Industry. Companies catering to developing economies can foster since the market size will be big but “20% salary hikes” may not work out. Companies in higher value chain and with competitive advantage will have pricing power and hence may do well. Economy of the industry can change drastically. The effects will be seen much later. And as theory of evolution says, only the fittest will survive. IMO, the inflexion point is going to come very soon in this Industry or we may be already in it.
2. Logistics: India spends more proportion of GDP in transporting and supply chain than most of the countries. This is leading to a very systematic Logistics Industry with most of the companies outsourcing their logistics need to logistics companies. This will help companies in saving some cost by outsourcing to more efficient companies specialized in doing this stuff.
3. Cement/Steel/Pharma/FMCG/Consumer Durables – I dont see big change in these industries. With more consumers and more purchasing power, all these may do ok.
4. Premium Segments: There is new market coming up for luxury products. And contrary to what we may feel, it is not limited to Metro cities. I heard Merc sells more cars in Ludhiana than any other city in India. Be it slim TVs, ACs, Cars, Clothes, beauty products, companies capturing the nerves of consumer can strike it big.
6. Education: After being neglected for so many years, recently education sector has become very hot. And when something becomes hot, imitators follow innovators and then come the incompetents. And the best example of this would be the following industries.
7. Real Estate/Infrastructure/Power/Telecom: Lot of people trying to solve the same problem. Result: lower profit margins. Only the companies with Moat will do well.
8. Entertainment: If we go by the numbers of IPL, there is lot to come in this sector.
I might have left out lot of other industries. Will add to this if I remember something later.
2. There is immense opportunity in agriculture industry. If, somehow, this “more that 50%” people can be made to earn more and hence spend more, economy can catapult in a healthy way.
So what are the problems to be solved.
Firstly, farmers have very little knowledge. They dont know what crops are suitable for the land they have, how to time the whether, which seeds, fertilizers, pesticides to use, how to sell the yields profitability and how to add value to the crops. Empowering farmers by providing them more information will not only boost farmers income but also improve our crop productivity and hence GDP.
Secondly, there is lack of trading systems for farmers. I agree, mandis exist in local towns and villages but they are largely manipulated by traders. And farmers dont know about commodity exchanges.
Thirdly, rural infrastructure is next to nothing. There are no roads connecting them to cities. Thanks to mobiles, some communication gap is being filled up. Electricity, water supply, hygiene are all missing.
The third problem is largely the responsibility of government but in absence of one (not government but a good one), it is left over to enterprises and NGOs. The problem with enterprises is that they need to see the profitability in avenues. I thing first and second problem do have such avenues. And if some smart people can come up with ideas to resolve the third problem too, it can make the backbone of rural India. “More that 50%” people will get rich and so will people resolving their problem. Remember the market size comprises 500M people. And that is just India.