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From getting flooded with consumers complaints to experiencing capital crunch, how the flourishing edtech industry is increasingly seeing fault lines
“Edtech companies are engaging in predatory marketing practices, where they prey upon aspirational poor people who want to give their children a better education and supplement their education which they are not getting in a government school.” This was a statement made by MP Karti Chidambram in the Lok Sabha on December 14. This was one of the first public blemishes on India’s blooming edtech industry, which had grown exponentially during the pandemic.
The sector was valued at $750 million in 2020 and is supposed to reach $4 billion by 2025 at a CAGR of 39.77 percent, making it one of the fastest growing sectors in the country. This growth is owed to the increased penetration of technology and more openness to digital learning. This openness is part and parcel a result of the sales professionals employed with the edtech companies. For a young professional starting out his career, the opportunity that edtech companies provide is lucrative as they offer a good financial remuneration. However, the job is a tough one. Entrepreneur India reached out to several ex-employees from multiple edtech companies who claim that the job was exceptionally draining.
On various job review boards, disgruntled ex-employees have a common thread in their issues with the work. The job calls for long hours and a sales executive has to log in about 2 hours of total talk time with prospective customers on an average across the sector. Their targets would range from INR 1 lakh to 2 lakh of business generation per week.
On employee review sight Ambitionbox, an ex-employees of the top edtech company BYJU’s ranted, “You’ll have to report at 9.30 positively in office (for that you will be departing from your house average 1 hr before) and your day ends at manager’s wishes.”
Further, the issues are also reported about the sales practices associated with the company. “Company’s product is weak. You have to fabricate multiple lies in front of parents to sell courses,” the same employee said in their feedback. Similar are the cases for multiple other companies and was pointed out by the Member of Parliament in his December 2021 address as well.
Leads are generated when a child interacts with an app. The user needs to share their contact details with the platform at the time of registering. These are then pursued upon by the sales executive.
Since the edtech industry has been pioneered by the Byju Ravindran led BYJU’s- Think and Learn, we try to understand what their sales process is like. From conversations with multiple of the company’s ex-employees, we found out that the sales process the company employees is three tier.
Renuka, an independent businesswoman based in New Delhi, tells us that after her daughter signed up on a few edtech platforms, she started receiving multiple calls during the day from their sales team. “What I felt that was the costing of the products was really high and the quality was not matching the costs that they were asking for. Also, I wanted help for my daughters for only a couple of subjects but they pressurised to buy for all of the subjects,” she said on her decision to not buy a product. She further expressed discontent with the quality of teachers that the platform provides, an opinion she made after listening to various accounts from various subscribers in her known. The issues do not plague BYJU’s, the leader in the space, alone. Teaching material from its second closest competitor, Unacademy, was also a point of controversy recently. A question posed in their mock IPC examination paper said Muslims are carrying out a “rally on Eid” and Hindus pelted stones on the rally as it hurt their feelings. This triggered a row online and the company had to delete the question, issuing an apology for the same shortly.
Despite making her intent of not buying the product, Renuka still was getting calls at the time which deterred her from doing anything with edtech.
From various consumer interactions, the major issue from a sales point of view is the aggressive tactics employed to on board a customer for all edtech companies. “@vedantu_learn Please stop calling me now, I have passed 11th, 12th and now I’m in college and I don’t want your subscription. How many time do I have to block your numbers!? Please delete my number from your system,” Uday, a twitter user, raised a complaint.
To understand the sales tactics utilised, Entrepreneur India reached out to an ex-sales man working for BYJUs. Speaking in unanimity, the person highlighted that the job was highly demanding, with targets as high as INR 2 lakhs per week to secure incentives. The details of students are acquired when they register on the app for free, and the job of the salesman is to convert them from free to a premium subscriber for the company that they might be working for. The process is a little complicated yet follows a basic guideline. “When approaching a potential customer, our first job is to identify their purchasing ability. Then we have to gauge the interest level of the student. If the student seems to be interested and the parents seem a little apprehensive, we need to make them understand that the subscription is absolutely necessary for them. For this, we have a set of questions that the student would have issues with. These open the door to further questioning from which it may become apparent to the parent that the student is in need for an external self-learning help. That’s where we move in,” he said.
Leads can come in from anywhere, from more affluent families to less. For each, the courseware that is sold is different and the pricings also range. These prices, as the ex-employee tells us, are told to be at a highly discounted price to the parents. If they are not willing to purchase the product during the interaction, then the same would be dissolved and they’ll have to buy it a much higher rate.
The salesman also proposes an option of complete refund to the parent in case of dissatisfaction. The offer generally dissolves in 15 days. However, refund is seldom the case. “I basically did not get what I wanted. We bought a BYJUs product thinking that it could replace physical tuition for my child. At the time of purchase, the salesman ensured that live tutoring sessions would be conducted and individual attention would be given to each student. However that didn’t happen,” a consumer of BYJUs tells Entrepreneur India. After identifying the issue, the customer also raised multiple emails of complaints to the company but didn’t get redressal to the issue.
“No resolution to my complaints despite numerous phone calls. Very poor service for a fill paying customer. Ruining the life of a student. Respond urgently,” a tweet made by Twitter user and entrepreneur Anup Poddar read on June 9.
Entrepreneur India reached out to BYJU’s for their comments on the consumer issues we found out and the employee reviews, but the company declined to speak.
A plethora of cases of edtech consumers in distress can be found by simple searches online. A recent survey by online platform Localcircles finds out that happy consumers are a minority in edtedh. A majority of people who opted for online classes offered by ed-tech platforms have faced issues around infrastructure required for attending sessions, quality of teachers and refund of subscription fees, the company’s survey report released on June 9 found out.
The report reads, “Sixty-nine per cent of those who have taken online coaching-learning classes have faced issues. The question in the survey asked citizens about the kind of issues they or their family members have faced with online coaching-learning classes via ed-tech platforms. In response, 9 percent of citizens said they have faced infrastructure issues, 19 per cent said they have issues with the ‘teaching staff effectiveness issues’, and 10 percent had ‘refund issues’.”
The survey was conducted across 323 districts between April 1 and May 31, 2022, and received 27,000 responses.
Further, 96 percent of the consumers want government regulations to be more strict. The survey found out that there is a call from the consumer to make it mandatory for those selling coaching subscriptions to disclose cancellation and refund policy to customers and share on their websites. 66 percent of the respondents want the sector to be governed by a government code while 30 percent are of a view that edtech platforms should be governed by a voluntary code.
The Government decides to step in
The conversation escalated when Pradeep Poonia, a software engineer working for Cisco decided to put light on the issues in edtech, primarily WhiteHat Junior. “Two years back, my relatives were getting calls for one of my young relatives from Whitehat junior claiming that they could teach him coding at that young of an age. I am from a software background so I felt that there was not much validity behind the claim. I did my research on the same and found out there was a lot of mis-selling or aggressive selling to push products not only done just by Whitehat but all of the company’s growth in the space. So I made a video highlighting these issues and posted it on my social media handles. That video went viral and a general conversation about the issue started online,” Poonia told Entrepreneur India. The software engineer, who goes by the name “WhiteHat senior” on social media, says that his video was taken down by social media platforms multiple times, claiming that they were harassing in nature or made slanderous allegations on edtech.
WhiteHat Junior filed a defamation suit on Poonia worth $2.6 million in November 2020, which the company later dropped.The suit was filed against his statements against Wolf Gupta, a character used by the company in its marketing campaign. The advertisements showed Wolf Gupta landing a job with Google after learning coding from WhiteHat Jr. Poonia had also called the start-up’s instructors “uneducated” and “housewives”.
“My video got the ball rolling in terms of discussion about the issues with these companies. Prominent people also started pointing out the issue. Investors like Dr. Aniruddha Malpani also raised concerns and the dialogue picked up more steam. The biggest win was when the issue reached the parliament,” he commented.
What Poonia is talking about is an advisory released by the Government of India in late December to citizens regarding use of caution against edtech Companies. The advisory, which is available on the Press Information Bureau, mentions the do’s and don’t’s for people when engaging with edtech. “It has come to the notice of the Department of School Education and Literacy that some ed-tech companies are luring parents in the garb of offering free services and getting the Electronic Fund Transfer (EFT) mandate signed or activating the Auto-debit feature, especially targeting the vulnerable families,” the advisory read. It cautioned parents against blindly trusting advertisements from ed-tech companies, avoiding signing up for any loans of which you may not be thoroughly aware off, and not installing any mobile edtech applications without verifying the authenticity of the product.
What is the Indian Edtech Consortium?
This advisory was released on December 23. It definitely stirred the pot and the companies in question needed to make a move quickly. So, on January 12, 2022, the Internet and Mobile Association of India (IAMAI) announced the formation of the India EdTech Consortium (IEC). The consortium included leading edtech companies such as BYJU’s, Simplilearn, Unacademy, upGrad, Vedantu, among others.
Mayank Kumar, Co-founder and Managing Director, upGrad, discusses with Entrepreneur India that the leaders in the developing industry were already in discussions about implementing some actual changes in the entire ecosystem when the advisory came in.
“From an industry perspective, we have been taking command over the issues highlighted in the advisory for about a year at that point. There has been a lot of arbitration since then and we were looking for ways to make the ecosystem more vigil. IEC was the first formal step in that direction,” Kumar explained.
Talking about the primary objectives of the consortium, Kumar addresses that for any new industry at its initial time, there are issues that come up in the form of consumer complaints which will keep on increasing if left unchecked.
“So under IEC, we decided to set up an independent complaints resolution body, where consumers can come up and register their complaints if they have an issue with any edtech product or company. As the complaints come in, it goes through these members and they provide solutions to them,” Kumar said.
The independent committee, Independent Grievance Redressal Board (IGRB) is headed by retired Supreme Court judge BS Chauhan and comprises of Aruna Sharma, developmental economist and former secretary, steel and IT; Raj Nayak from media and entertainment industry; Anand Sudarshan, former vice-chairman and MD of Manipal Global Education and Gopal Jain, a senior advocate of the Supreme Court, Mohan Lakhamraju, founder and CEO, Great Learning, and Sanjay Kumar, president, corporate affairs & public policy for upGrad.
Addressing consumer issues is an important facet of the work IEC wants to put in. The consortium also wants to shed light to the impact that the entire industry is leaving. “Companies are aiming to strengthen India’s education ecosystem. Many companies are giving multiple scholarships to students, helping them upgrade their skills tremendously. That impact is not getting communicated enough. We would want to talk more about this and also survey which demographies and areas in India are the most impacted and which can need more work,” Kumar said.
As of now, 25 edtech companies have become a part of the consortium. For an increased adoption of the committee, the consortium and its founding members are organising various meet-ups with stakeholders and the government along with various edtech companies to discuss how the committee could be more impactful and its future. Another interesting thing that the consortium is doing is providing employment opportunities to people who got laid off by member companies. “We are actively taking initiatives to help reemploy people laid off in recent times. When Lido shut down, the consortium helped those employees move into larger companies. We are also in active discussions with the HR at Vedantu, who recently had to let go of a few hundreds of their employees,” Kumar claimed.
Leverage Edu, which is one of the leading names in the industry, did not join the consortium. Founder and CEO of the company, Akshay Chaturvedi, claims that he didn’t feel Leverage was a right fit for the consortium, even though he had an invitation to join the same. He said that the company’s business is a combination of edtech and fintech and he himself didn’t observe any of the issues that other edtech companies are facing in terms of consumer complaints and hence, didn’t feel it necessary to be a part of the consortium.
“I don’t see anything wrong with the government coming up and saying that let’s take care of the students. Students are the top priority in the business and they should be taken care of and given what they purchased. There’s no grey area in that. It’s absolutely black and white. I think we are fortunate that our business model is designed in a way that the company succeeds only if the student succeeds,” he said.
Commenting on the general complaints that consumers of various products of various companies are facing, Chaturvedi said that the issues are increasing in frequency as the scale of the operation of the industry is increasing. Despite this, he believes that anybody who’s dealing with education and healthcare has to be ten times more careful with what they are doing as it is a question of lives. Saying that, Chaturvedi adds that there is definitely not anything morally wrong with the companies’ businesses and says that the wrinkles would definitely be ironed away with time.
To keep service issues that many companies are facing, Leverage has assigned a procedure to keep the machinery well oiled. “Every call that our executives make is on record and the consumer can rate the conversation. Every single time a student ranks any interaction at less than seven, the student success team gets activated and tries to look into the issue,” Chaturvedi informs.
During the interaction with Poonia, he touches upon a very interesting subject. He informs that parents who had earlier subscribed to Lido learnings modules still have to pay their EMIs even though the company is disbanded and the company is not taking any classes at the moment. So now, he believes, the students who have undertaken that would definitely see an impact on their morale and even career growth as they have invested an amount on their education with no benefits. The general purview towards edtech would be negative and that is a big loss not just for the company in question but the entire ecosystem. Similar negative reviews would be developed whenever a complaint goes on unresolved and this would only spread when students talk with their peers. Hence, it is essential for the consortium to work towards resolving the existing issues that the consumers face before scaling operation.
Road ahead bumpy for Indian edtech?
The primary USP for learning online, which can be sensed from various product advertisements from companies, has been that self-learning using technology can be a better, more comprehensive way to study. This alternative to conventional studies did appear to be a lucrative for students and parents, as offline studies were more or less a distant option during the pandemic. This could be earmarked by the stark growth the environs of edtech witnessed during the pandemic. However, now, as the threat of the virus has subsided and educational institutions have opened their doors, the popular opinion towards online studies has changed.
The Ministry of Education released its National Achievements Survey (NAS) 2021 late in May which assessed the health of the school education system in the country. The report, which was initially accessed by The Hindu, found out from a sample size of about 34 lakh Indian school going students that about 80 percent found learning at home during the pandemic burdensome. Further, they felt that they learnt better in school offline than online when they are connected with their peers.
This shift in preference accompanied by the difficulties that people are facing with edtech, as evident by the Localcircles survey, doesn’t paint a very rosy picture. And this picture is getting realised more and more by the day, as news of edtech platforms laying off employees by the hundreds hit the newspapers more frequently. Unacademy, Whitehat Jr, Vedantu, etc., have all laid off large chunks of their workforces as funding in the sector has become scarcer.
In an email to his employees, Gaurav Munjal, CEO, Unacademy, told his employees that the company is looking at a time where funding will dry up for at least 12-18 months. He urged his employees to focus on profitability and generating free cash flow. Unacademy laid off about 600 employees, roughly 10 percent of their workforce, along with hundreds of contractual staff.
Vedantu, who also had to downsize by 424, also suffered a similar problem. In a blogpost, CEO and Co-founder of Vedantu, Vamsi Krishna, said capital will be scarce in the upcoming months due to the external environment, which is hit by war in Europe, impending recession fears, among other issues. “Capital will be scarce for upcoming quarters. With COVID tailwinds receding, schools and offline models opening up, the hyper-growth of 9X, Vedantu experienced during the last 2 years will also get moderated. For long term sustenance of the mission, V would need to adapt too,” he adds.
Two startups in the space, Lido Learning and Udayy have closed shop. Saumya Yadav, co-founder and CEO, Udayy, in a LinkedIn post said the startup shut down because business was not growing after the pandemic and not because of funding crunch.
With the downturn in the space, the startups in the environment are making concentrated efforts to adopt to the increased preference of the user to pursue their learnings offline. The big players in the space, BYJUs and Unacademy, have already started making their moves to the offline side of the business, opening up retail centres as well as coaching centres in different parts of the country. Will the move act as a breath of fresh air to the ecosystem? Only time will tell.
Entrepreneur Staff
Simon Lovell
Feras Moussa
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