Edtech's teachable moment

Govt's advisory highlights flaws in business model

The government’s advisory to citizens stressing caution in using the services of companies that offer online and remote learning courses is a well-timed and thoughtful move. It extends a useful warning to parents to carefully evaluate offers that range from luring subscribers with ostensibly free courses that suppress information about auto-debit facilities to marketing visits to vulnerable families, urging them to sign up for tuitions without fully explaining the financial implications. The government has felt it incumbent to issue this advisory after growing complaints from parents about being misled and inordinate delays in getting refunds — a recent ruling by a Pune consumer court to market leader Byju’s to pay a customer Rs 50,000 as compensation for a delayed refund being an example.

This is a teachable moment for the edtech industry. The sector has been booming with the closure of schools during the pandemic, attracting a staggering $4 billion in funding since 2020 compared with around $500 million in 2019. India now boasts five edtech unicorns against just one in the pre-pandemic era. As with the B-school and technical education boom a decade earlier, the sector has inevitably spawned fly-by-night operators, especially in what is known as the K-12 (kindergarten to class 12) segment, which operates largely unregulated. This sector was inadvertently helped in July after China passed a set of decrees stipulating that edtech companies offering after-school tutoring turn non-profit, capping tutoring hours, and banning them from going public or raising foreign capital. These laws were apparently designed to encourage families to have more children by freeing them from the burden of education fees but may also be an effort to curb the growing economic clout of tech companies in the Chinese economy. Those decrees may have destroyed considerable value in the Chinese e-commerce market but Indian edtech players have been beneficiaries in terms of redirected investor interest.
 

In that sense, the government’s advisory is suitably light-touch, offering an early warning to the edtech sector to mend its ways before it is subject to the heavy hand of scrutiny and regulation. The problem, however, is that monitoring this sprawling sector is nearly impossible. Also, the business model is more conducive to delivering revenues rather than quality education, with investors typically seeking an exit in five years. So the government may need to consider a standards-setting and certification process for online schooling or a long lock-in for investors in edtech. Some experts have suggested a “Netflix-type” monthly subscription model with no lock-in period. None of these is an optimum solution, but, equally, the unfettered nature of the edtech business demands some measure of regulation. A more concerted campaign that spreads the message of this advisory may be called for so that more parents in lower-income families are saved from financial ruin. This conundrum, however, highlights one of the key problems of abdicating education to the private sector at any time. Had the government created public distance learning education modules, an issue that has been discussed for at least two decades, the problem of access to learning would never have arisen during the pandemic, especially among those children attending government schools. The edtech boom, then, may be a good opportunity for the government to start bridging that gap.