a quarterly report by - Technopak

perspective
a quar terly repor t by
Volume 02 / 2009
| Volume 02
Unique Dynamics and Growth Drivers
of the Indian Education Sector
Education is the key to unlocking and building lasting value in a robust economy. For any country to grow
and prosper, a well positioned educated young population is the fundamental requirement to meet the
demands of an increasingly global economy and productive value creation. Over 50% of India’s Education
sector is private (in the US, the private sector’s share is 32% and in China it is 25%) and in 2008 this stood
at US$ 40 Bn. This is projected to grow to US$ 70 Bn by 2013 and US$ 115 Bn by 2018 (from a demand
growth perspective, if supply keeps pace). We have a large demand-supply gap, and on average poor to
middling quality. There is clearly an opportunity for more private players to enter the education space.
Few unique drivers of the education sector in India are interesting to examine. Historically, education has
been delivered in the country by the government or through “Non- profit” charitable trusts. The number of
quality institutes imparting higher education are limited, inducing tremendous competition for the limited
number of seats available in the IITs, IIMs and other quality institutions. Higher education in the private
sector is not generally perceived as a quality alternative. The Indian mindset is culturally geared towards
choosing limited study streams such as engineering, medicine and management. There is a need to link
the employment needs in India to the enrollments in higher education, in order to create a pool of productive
employable workforce.
Exhibit 1
More than 55 % of the Indian population will be under the age of 25 by 2010, This would
Demographic Advantage
lead to increased demand for quality higher education and a skilled workforce.
High income households (income more than US$ 10,410) expected to increase from 5
Increasing Affordability
Mn to 14 Mn by 2018 resulting in higher affordability. This will propel awareness towards
consumption of education as a priority and an essential tool for career growth.
India, once considered an agrarian economy is now dominated by the services sector.
The share of services has increased from 31% in 1991 to 55% in 2007. This increase
Knowledge Led Economy
in the services sector has led to a steady increase in the demand for an educated skilled
workforce.
A large young working population with a median age of 24 years, nuclear families in urban
areas, along with emerging job opportunities in the services sector driven economy has
Increased Participation of Women in the Workforce
led to increase in working women in India. The population of working women is estimated
to touch more than 25% by 2015.
Technology Aided Delivery Increasing penetration of technology will aid virtual learning and education delivery.
Globalization has led to the increase of newer employment avenues. Industries such as
outsourcing (KPO, LPO), legal, retail, aviation, animation, healthcare, supply chain &
New Employment Avenues
logistics, have increased employment opportunities, and the demand for highly skilled
manpower
Sizeable Investment Needed to Create
Additional Capacity
The financial potential in all segments of education in India is huge. The demand-supply scenario as per the
current and projected enrollment ratios at the K-12, higher education and vocational education segments
indicate the need for huge capacity creation. The investments required to build this capacity have been
estimated below at very conservative assumptions.
69 | Forecasting the Financial Potential in Education
The Growth Drivers of the Indian Education Sector
Source: Technopak analysis & industry reports