Consolidating the edtech data science industry

Earlier in May, edtech unicorn upGrad acquired the International School of Engineering (INSOFE) in a $ 33 million share swap deal. A profitable company, INSOFE is an educational institution that focuses on data science, artificial intelligence and machine learning courses. In the last year alone, upGrad has acquired several major players in data technology edtech, including names such as KnowledgeHut and TalentEdge.

This aggressive acquisition strategy is not limited to upGrad. Decacorn Byju’s added Great Learning to its long list of companies ahead of it with a huge $ 600 million deal.

As with most industries, after a phase of rapid growth, through a series of mergers and acquisitions, they go through a life cycle of consolidation. Such consolidation often leaves the dominance of a handful of companies. Looking at how the domain of data science edtech is growing, could we expect such a consolidation lifecycle to happen here as well?

The edtech boom

While other industries were busy catching up after the COVID-19 pandemic, one industry that jumped, sprinted and jumped to become the most exciting and fast-growing domain was edtech. Investors also have great potential for growth. After only e-commerce ($ 10.7 billion) and fintech ($ 8 billion), the edtech sector raised $ 4.7 billion to become the third most funded sector in 2021. from Inc42, test start-ups withdrew from the bulk of funding – 65 percent of total funding ($ 3.06 billion). It was followed by online certification (22 percent or $ 1.04 billion), K12 (5.7 percent or $ 270 million) and corporate edtech (5 percent or $ 240 million).

In the edtech sector, one area that generated such interest was the edtech market in data science. According to a report, the edtech data science market is expected to grow from $ 103 million in 2020 to $ 626 million by 2025 with a CAGR of 43 percent over that period. The market for off-campus courses or online courses that include executive programs and online certifications is expected to grow to $ 239.6 million.

This is hardly surprising, given that the demand for data scientists is consistently high, which is turning into high salaries and exciting career schedules. Analysts estimate that the number of data science and related jobs will reach 11 million by 2026. India alone has contributed 11.6% of the world’s total data science and related vacancies. Some of the factors that have played a role in this are the continued investment made by local companies in developing advanced data science / analytics capabilities; TNCs and IT companies are relocating their data science jobs in large numbers to India; increased funding for start-ups based on AI / analytics.

Credit: AIM Research

Large mergers and acquisitions

In 2021 alone, Byju’s acquired ten companies for a total transaction value of $ 2.5 billion.

This has made Byju’s the most active media and telecommunications (TMT) company in the global mergers and acquisitions market in 2021, according to a GlobalData report.

After the much-discussed billion-dollar acquisition of Akash Institutes, a name synonymous with competitive exam coaching, Byju’s next big hunt is Great Learning. With Great Learning, Byju’s celebrated its entry into the space for professional development and lifelong learning. In addition to the $ 600 million spent by Byju to acquire Great Learning, the former has set aside $ 400 million for this segment in the near future. In a public statement, representatives of Great Learning said they will now work to accelerate their organic and inorganic growth in India and overseas markets such as North America, Canada and others.

Interestingly, Great Learning recently acquired Singapore-based Northwest Executive Education through a cash and equity transaction. Founded in 2015, Northwest Executive Education offers management, technology and other courses for executives from MIT, UC Berkeley, Yale, UCLA, the University of Chicago and the National University of Singapore, etc., and expands to the United States, Europe, Asia, and Latin America.

By the way of Byju is another big edtech giant – upGrad. Recently acquired INSOFE (latest), TalentEdge and KnowledgeHut.

Speaking in an email to Analytics India Magazine, Mayank Kumar, co-founder and MD, upGrad, said: in scale. Speaking specifically of INSOFE and TalentEdge, these strategic business movements will not only accelerate profitability, but also enable us to reach a wider audience to further strengthen our leadership in the lifelong learning market in India.

He also mentioned that upGrad’s vertical analytics, with subjects such as data science, machine learning and business analysis, grew 50 percent in revenue after the first wave of Covid-19 in Q2FY21 (JAS 2020) compared to the third wave through Q4FY22 (JFM 2022). He predicts that analytics as a domain with data science will fundamentally continue to evolve, thus preparing professionals for the upcoming Industry 5.0.

Scalar Academy, which raised $ 55 million in a series of B-Series funding in February, acquired the AppliedRoots training platform in a $ 50 million deal to strengthen its data science, AI and ML offerings. This is the company’s third acquisition after Coding Minutes and Coding Elements in 2021.

In addition, Manipal Group edtech-backed UNext Learning has acquired Jigsaw Academy to strengthen its higher education offerings by adding specialized professional certification courses. In 2020, the division of the National Stock Exchange – NSE Academy, acquired Talentsprint, a prestigious name in the educational space for AI, ML and data science.

Relatively smaller companies are also making progress. The iNurture Higher Education and Vocational Development Platform recently acquired the Krackin Accommodation and Vocational Skills Platform.

Market consolidation

A general trend observed in the industries, after several mergers and acquisitions, is advancing a lot through consolidation. According to a study of 1,345 mergers and acquisitions completed in 13 years, once an industry is formed, it goes through four stages of consolidation in 25 years. The study predicts that this duration will decrease in the future.

Credit: Harvard Business Review

Last year, Hero Group launched Hero Vired in April. Their first program launched in July, and the company has since introduced many similar industry-related programs. According to several sources, Hero Vired is working on an expansion strategy and may seek to acquire similar companies.

Speaking to Analytics India Magazine on consolidating the edtech space in data science, Dipayaman Sanyal, Head of Academics and Training, He said: “Like the fintech industry, the data science sector is also consolidating. We see that bigger companies take over smaller companies. One of the problems with this trend is that it can affect the ability of acquired companies to take risks, as larger companies tend to stick to traditional and tried-and-tested ways of working. But that’s how the industry develops. However, I am sure that this phase will also give way to newer competitors, filling the gap. “

Regarding the consequences of such consolidations, Mayank Kumar of upGrad, He said: “We have seen consolidations in the edtech sector over the last 12 months and I think this may be slowing down now in the current environment. But larger companies in this area will continue to pursue opportunities for inorganic market share growth. They will continue to invest in developing their own supply channels, offering hybrid training solutions, expanding platform development and expanding globally to enter neighboring and connected markets. I also believe that cooperation and partnerships will see a significant increase in the edtech sector. As we continue from here, we can expect much younger companies in the game and the market will focus on stimulating platform innovation at all micro levels.

Subramaniam Reddy, founder and CEO of KnowledgeHut, a company recently acquired by upGrad, believes that some level of consolidation could occur in the short term. He said: “Growth in data science is leading to a proportional growth in the edtech data science industry, which is also seeing growth driven by various factors such as the pandemic and various government policies. The edtech industry is likely to remain growth-oriented for some time.

Given that the amount of funding will decrease in the coming months, there will be some level of consolidation that may occur in the short term. However, when we talk about the online sector of higher education, the need for data science has never been more relevant and we believe that it will continue to stimulate overall growth in this sector.

Paul Kim, chief technology officer and assistant dean of Stanford University School of Education, said in an earlier interview that India is in a much better position in data science education due to the many technological innovations here . He said that while the United States and China are big contenders, institutional funding and government support for policy and regulation will ensure India’s rapid growth in this area.

Even as the world returns to normal and institutions begin to open, these online lifelong learning providers are unlikely to be hit hard. However, as Prof. Kim mentioned, traditional institutions need to be transformed to bring in line with competing alternative education opportunities.

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