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‘Sustainability in edtech depends on whether you are able to provide outcomes’

The number of users grew 200pc in 2020 and 150pc in 2021, giving upGrad a large base. Foreseeing a slowdown, the focus this year has been on profitability, reveals Arjun Mohan, CEO, upGrad India, even as the company is taking the acquisition route to becoming a one-stop-destination for higher education.

by Neethu Mohan
December 12, 2022
in Exclusive, Featured, STRAIGHT TALK
Reading Time: 8 mins read
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‘Sustainability in edtech depends on whether you are able to provide outcomes’
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Several Indian edtech players are said to be in some sort of crisis after the pandemic. How has the journey been for upGrad pre and post-pandemic?

The pandemic was an exceptional phase for upGrad as a brand and for edtech as an industry. You might have heard a lot of narratives about how the pandemic was great and changed the course of edtech. What actually happened was the traffic went through the roof across edtech after the first few days. We saw the traffic going up seven or eight times by April-May 2020.

Around 2020, higher edtech was not a hot industry. All of us were running on a bootstrapped budget; fortunately for us upGrad had Ronnie Screwvala backing us through.

Everyone’s reaction initially was to stop investing because there was so much confusion about the future everywhere. What upGrad saw from a consumer perspective was the uncertainty. Also, interestingly, the consumer had a lot of time and discretionary income because most of them had nothing to spend on. It’s a unique point where you have money, time – both the things that (when one lacked) were preventing you from doing better things. We saw this coming.

During the pandemic upGrad was one of the brands that was able to use the traffic and successfully convert traffic into revenue. A lot of K-12 edtech companies failed to do so. Even those brands which were able to do so failed in the next phase because they failed to provide outcomes for the people who paid for their services.

In the end, sustainability depends on whether you are able to provide an outcome to users. We were clear about it from the beginning because questions will be asked. We were able to and hence results were exceptional. We were able to maintain 87pc completion rate and 80pc of the learners getting the outcome.

Post-pandemic, when things were back to normal, we have all seen what happened to some of the edtech companies as they failed to deliver the promised outcomes. Post-pandemic, our customers became busy as offices started functioning, hence the big growth was not expected this year. The base has gone up in the last two years. In 2020, we grew by 200pc and in 2021, we grew by 150pc. Currently, we are sitting on a big base and able to sustain the same this year. The growth is happening, but not similar to the last two years. We foresaw it, hence our focus this year has been on being profitable and ensuring unit economics is right. Last two quarters we have broken even, this quarter is also doing good for us.

What we did for growth was we invested in a lot of new businesses. For instance, we started the study-abroad business. It is an agency business in India, which acquires students/customers and sends them abroad. We work with a lot of international universities. We did an agreement with these universities for the Bachelor’s and Master’s programmes. Half of the programme will be done in India online, which means instead of spending two years on campus, you can do a Master’s by spending a year on campus and the benefits like work permit are the same as for other international students. The advantage is that the programme can be done at 40pc price of the regular programme.

This proposition has been working well for us. We have been able to grow the study-abroad business quickly. After IDP, which is globally the largest player in the business, we will be the leading player in India. The acquisitions that we have been doing have also helped us grow.

Yes, upGrad has been on an acquisition spree. Latest to be added to the list was corporate training solutions player Centum Learning in a share swap deal. Why the acquisition route? Any new acquisition plans?

One of the interesting things we observed during the pandemic was a lot of companies were working in adjacent markets to those we operated in. For instance, in categories like the short certificate programme, we were not big. We hardly had any courses. Those skill-focused programmes were picked up by techies as they want to get better in a particular skill or technology. We saw companies with great products at the right scale where we felt that if we bring these companies into our ambit they can really grow much faster. We went to the market and found entrepreneurs who had great products and where we saw the talent to grow well in the upGrad ecosystem. Our discussion point was the company can grow much faster if you are under the upGrad umbrella, you needn’t find funding as we are a well-funded company. Second is Brand upGrad has got awareness. If you look at the way we built out, what we did was create an end-to-end ecosystem to take care of all needs of higher education customers. So, upGrad became a one-stop-destination for all needs of higher education after the 12th standard.

According to reports, India’s edtech industry is estimated to reach $10.4 billion by 2025 with 37 million paid edtech users. What would be the share of platforms that offer upskilling courses among this?

When this report was made the K-12 was doing really well. What has happened is over two years, higher ed which was seen as a small category has shown the potential, especially in revenue generation. I can only estimate and say the rate at which it is moving, I would expect half of the total will be higher edtech.

The reason is K-12 is supplementary and higher edtech is formal, which has more credibility because of the certificates and credits you get. Our regulation is also changing in a big way giving more credibility to online degree courses. A large portion of students, especially working professionals, have started taking online degrees.

What will happen to K-12 is tough to say. I don’t expect to see a recovery in one year. I would expect a recovery to happen in June-July 2024.

There is definitely a growth factor, but the issue has been the price factor. Most of the players have been playing for Rs 15,000-20,000 (course fee) which is higher than the fees paid in small city schools. If you are looking at that price point, then you have an opportunity to be saturated.

My sense is that K-12’s next round of growth will be in creating more tailor-made, (affordably) priced products.

There is also an interesting path, which is through schools. There are a breed of schools who are open to using the services of K-12 edtech companies in formal education. If that picks up then it will cater to the growth story.

What would be the market share of upGrad in the Indian edtech sector?

It would be hard to say as the concept of market share comes in when you are working in a mature market. Here,the market is growing. At upGrad, we are growing by 100pc every year and we are figuring out and understanding that. 

There are new markets within tech. For instance, nobody really thought that core engineering will be a part of the edtech market; there is a lot of activity coming in there. The market which I saw last year is so different from what it is today. In India, working professional learners are predominantly from metros because most tech companies are in metros. I see a lot of traction coming from places like Trivandrum, Indore and Ahmedabad as IT offices are shifting to these places as well. The access to upskilling courses is getting solved through platforms like upGrad.

You have recently launched a campaign which featured the real life impact on the learners. Can you elaborate on the thought process behind the campaign?

Three years ago we started the marketing journey of repositioning upGrad and building awareness. In the early 2020s, we did more campaigns to create awareness, which were grabbing attention and making a point. It was successful.

Post that in the current phase of upGrad we are building consideration. upGrad is also a complex company as we offer different courses in different categories. Hence, deep understanding is required to build consideration for our products.

When we did the research what we understood is that most of our consumers before taking up the courses tend to talk to people who have taken courses from us. We were clear that to build consideration they need to have trust in us; that comes when the customers share it. Testimonials are not new, they have always been there. How do we want to convince people that there is trust and that’s where the campaign came in. We have a huge alumni database which is our USP. We have data of 75,000 students who have transitioned after learning from upGrad. We spoke to some of our learners and asked them to come online and speak about their journey.

The whole idea was how to build very credible testimonials. The campaign is doing quite well.

Because it is a credibility building campaign we deliberately decided to do it digitally because it allows us to target the cohorts. 

upGrad has made its presence felt with some bold advertising. Whether it is using donkeys or a celebrity. The need was to cut through in a cluttered media universe? Will the approach continue?

That depends on which phase of brand building you are in. The bold or fun advertising was created during the awareness building phase. The philosophy was that a customer is exposed to hundreds and thousands of ads. If you want them to give three seconds of attention you need to shock them, that’s why awareness ads started with something shocking.

In the case of upGrad, when we started working on awareness-building ads, one thing we realised is that consumers have changed a lot. We were created in an era (2015-’16) where upskilling courses online were done by people who were very studious and ambitious. Hence,it was always built as a university product. By 2020, we realised ambition doesn’t mean studious;today they also want to have fun. We wanted to speak in their lingo. We understood that to speak in the office lingo is the best way to reach out to them, pick up the happenings atthe0 office and make a fun ad on it, which will then move towards upskilling solutions.

Earlier this year you have signed Amitabh Bachchan as the brand ambassador. How do you assess growth post his appointment?

He was signed for the study abroad program UpGrad Abroad. When we went with the propositions we found a lot of consumers who felt the course to be incredible. The courses are for kids where decisions are made by parents.It was very important to build trust as our product was stellar. As Bachchan is one of the credible faces in the Indian ad world, signing him helped us a lot and the business has grown multifold.

upGrad Abroad, which started operations in January 2021, enrolled 1,500 students between March and December 2021. It further aims to enrol 13,000 learners by FY23 and 30,000 by FY24.

Some of our subsidiaries also used him for promotions of their offerings.

There is a recent wave of mistrust in online learning, if market sources are to be believed. Has there been an impact on upGrad?

We haven’t really had any such impact. Fortunately, we have not been among the brands which got affected. We took care of things earlier itself. We have never had any kind of customer complaints about unethical practices. When you are a higher edtech platform in India, it is a highly regulated segment – you have UGC, AICTE etc. We take our governance seriously and have had zero (negative) impact.

Tags: Arjun MohanupGradupGrad Abroad

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