Indian edtech major Simplilearn trains its sights on boot camps

The Indian edtech major is gearing up to compete with global majors in the space

Companies spend millions and even billions of dollars building brands. A Nike, a Coca-Cola or Louis Vuitton not only spends money like water, but plenty of sweat and tears also go into ensuring high consumer recall. This often makes or breaks businesses.

How, then, did a relatively unknown Indian brand such as Bengaluru-headquartered Simplilearn get learners in geographies, where it is practically unknown, without spending billions on brand building?

The simple answer the two founders, Krishna Kumar and Kashyap Dalal, have honed into more recently: by piggy-backing on mighty brand names in their own right. So, the company’s digital boot camps — its bread and butter — are on offer and being lapped up by learners at premier institutions in the US like MIT, Caltech, Purdue and Wharton, and a bunch of companies including IBM, Microsoft in the corporate space to overcome the brand hurdle. In India, too, the company is partnering with equally well-known universities that include the IITs.

“The technology team, product, and admission counsellors are all based in India but the programmes are being offered in the US so this works out to be quite cost effective,” explains Kumar, one of the founders of Simplilearn. By partnering with the “biggies” in the business, Simplilearn has been able to pretty successfully overcome the biggest challenge in growing its boot camps in the US.

Many in the edtech sector argue that Indian companies with their global ambitions and footprint are often better placed than some of the bigger American names who are in the same space but operate mainly through e-learning without instructors and problem-solving assistance. While the instructor-led courses may cost the learner more than recorded videos and lectures, many feel these provide far better learning and outcomes in the job market. “Face-to-face learning and some constructive feedback through trained instructors enhances learning,” argues Kumar. He points out that many of the global platforms that were based on instructor-free training have been witnessing a flat or even a declining rate of growth in their business-to-consumer (B2C) segment.

The higher completion rates prove that this model is more effective, too. For Simplilearn, the completion rate is at 65-70 per cent across programmes against some of the rivals who have completion rates in single digits. This single factor helps them and others who have a similar model lower the cost of acquisition of a new learner as this happens often by word of mouth. “A learner, who is able to improve his or her career prospects or remuneration after completing one of our programmes, tells a few others, or others observe his or her progress and sign up,” explains Dalal, co-founder and chief business officer. Repeat and referrals lower the cost of acquisition of a new learner. This, according to industry observers, is the critical factor in separating the wheat from the chaff in the edtech space.

The third factor that Simplilearn is counting on is its growth strategy paying off. A misstep, they argue, to which many rivals have fallen prey, is chasing unbridled growth, burning large amounts of cash in the process. So in 2022, the company expects to clock in a revenue growth of 60 per cent — not the 200 or 300 per cent of some competitors — and has no product line that is not “net contribution positive”. “We have been focussed on profitable and revenue-generating product lines without burning too much cash,” explains Dalal. While they have invested in improving the product or the technology and therefore this may show up as a loss on their books for a limited period, as a rule they have refrained from “burning cash like water”.
 

In addition, observers and analysts in the sector point out that certain macro factors are aligned: lifelong learning is here to stay. “Very few can now navigate their entire career of 35-40 years without upgrading their skills to stay relevant,” says a sector analyst. This, they feel, is a segment that can only grow. Moreover, acceptance for digital upskilling and learning has jumped dramatically post-pandemic globally.

Thanks to the above and a few other factors, when funding has dried up for start-ups, especially in the tech arena, Simplilearn last week raised $45 million and is eyeing a 60 per cent year-on-year revenue growth and remains optimistic about the future. The money will mainly be used to acquire smaller companies or start-ups that fill critical gaps that they may have in their portfolio. For instance, it recently bought US edtech Fullstack to launch upskilling courses in partnership with American varsities. In 2021, the company sold 51 percent of its stake to Blackstone at a valuation of $500 million, raising $250 million.

In addition to this, the new round of funding will allow Simplilearn to grow its present business in breadth and add new geographies. Sixty programmes will be added this year taking the total on offer to 120. It has recently brought on board Eric Martorano, who has led a few American firms as CEO in the past, as chief revenue officer in the US to lead and grow the enterprise business that currently contributes around 25 per cent of its total revenues. In the US, anywhere between 200,000 and 300,000 users have bought Simplilearn courses, while in India over a million may have been trained through their products.

As things stand, around 40 per cent of their revenue comes from the US, 40 per cent from India and 20 per cent from the rest of the world. Over the next five years, the founders expect this to change to around 50 per cent from the US, 35 per cent from India and 15 per cent from the rest of the world. From 1,100 employees in 2020, it has grown to 2,400.

But as with all edtech businesses, the question is whether the team can keep its feet on the ground and continue to grow while keeping their ship steady in choppy waters. It is too early to say. But if it does, an Indian edtech company will end up giving its global peers a run for their money.