We at Viedea capital have been working with companies the training & e-learning industry over the past few years and continue to witness that companies in this space are growing a rapid pace. This is also marked by the fact that E-learning players in India have one of the highest representations in the Deloitte Technology Fast 500 list, after the software sector.
Training, not completely in-house, anymore:
Corporations world over, look at E-learning or tech based training as one of the ways to achieve organizational growth and improved business performance. E-learning helps employees, vendors, and dealers of a company to better their performance and deal with fast-changing environments. E-learning makes training highly efficient, by making it available anytime, anywhere and at the same time reducing the total cost of training. E-learning is used to train employees, customers and service technicians on product knowledge, concepts, strategies, risk and finance, compliance and technology.
Engaging third party training/elearning companies is more common place in the US than in India. Training companies, in general, specialize in either particular sector or particular verticals like sales, leadership etc. Again, leading IT consulting & ITES companies such as Accenture, IBM, ACS, etc rule the roost in training. However, standalone training providers like Element K (NIIT), Expertus, Adayana, Intrepid Learning, Learn.com, Geolearning, Total Training Network etc offer more specialized & custom training/e-learning solutions.
Market Size:
· There is an inherent shift in the learning methods adopted by companies in employee training from on-the-job & classroom based training to e-learning. IDC estimates e-learning adoption at 48%, here.
· IDC research estimated the size of e-learning market at ~$16 bn in 2007, growing 20.4% a year to reach $40 bn by 2012.
Outsourcing to India: Like most solutions, training is also broken down into processes and in-turn into the ‘non-core’ processes which can be outsourced. What is outsourced? Training providers focus on their core competencies like deployment, delivery and R&D in their domain. While, other processes such as (1) content creation/design/conversion/repurposing; (2) technology tools to create, convert, deliver, host & support content and (3) Consulting & implementation support are outsourced to either third party elearning companies or captive centers in countries like India.
Market Size: Viedea estimates that revenues from e-learning offshoring industry in India stands at $500-600 mn (including captives). The major companies which operate in India are Tata Interactive Systems, NIIT, Centum (Bharti entity), Apatara, Hurix, Excelsoft, eMantras, Liqvid, Harbinger (tech products), FCS Software (listed entity), Adayana, Brainvisa, Edutech, Expertus, WhiteHouse IT, LearningMate, Zeus, Praxis, EI Learning, Upside learning, Libra Interactive, Magic software etc
Value Notes, an Information & Research firm has estimated that the sector is set to grow at 20-30% a year.
Sample this:
1. Arguably, India’s best Venture Capital exit came from a company in the e-learning industry. UTI exited from Excelsoft Technologies with 50X returns by selling ~35% stake (costing it $600K) to D E Shaw in 2008 at a whopping $31 mn, valuing the company at close to $75 mn. Sudhanva who is considered a stalwart in the industry has driven the company through a storm during the early 2000’s and is now on the path to hit the market with an IPO. The learning solution company has generated a net profit margins of 50% on a top line of $11 mn in FY08, which essentially meant that the company was valued at 7x times its topline! DE Shaw has paid such a high valuation because of the enormous profit levels on the company’s product and the blistering pace of growth (last heard, they had doubled revenues to nearly $20-22 mn in 2010).
2. Upside Learning, founded by Amit Garg & Amit Gautam, is one of the fastest learning solutions companies in India with a growth rate of 413% y-o-y over the past 3 years. The Company provides custom content, LMS & assessment products, e-learning solutions and a myriad of catalog courses to training companies, SMBs & enterprises. The Pune based company has also been recognized as an emerging leader in Training Industry Inc’s 2009 list and was featured in Deloitte’s Fast 50 & 500 list.
3. Harbinger Knowledge Products, part of the Pune based Harbinger Group, is widely known for its innovative interactivity products & learning solutions like Elicitus, Raptivity (aimed at e-learning & web professionals), TeemingPod (focused on informal learning) and YawnBuster (classroom training). Harbinger’s Chairman & MD Vikas Joshi along with Jayant Kulkarni & Seema Chaudhary have grown the company by over 200% y-o-y over the past three years, according to Deloitte.
