How Edtech Firms are Disrupting Management Education

While pursuing his MBA at Harvard Business School in the early 2000s, Ashwin Damera mingled with a diverse bunch of classmates across many clubs and student groups. After graduation, he became an entrepreneur and is currently building Eruditus, an edtech upskilling start-up that offers executive-level courses across 80 countries. The idea for his first startup—online travel agency Travelguru—came in runners-up at a Harvard Business Plan contest.

Like him, many of Damera’s classmates went on to become founders and lead large organisations. The more notable names include Naveen Tewari, Founder and CEO of adtech InMobi; Alexander Samwer of German start-up incubator Rocket Internet; Jeremy Stoppelman, Co-Founder and CEO of review website Yelp; and Rishad Premji, Chairman of Wipro.

But despite co-founding an edtech start-up, Damera knows he would have had neither this critical social capital nor a strong network of peers, professors and alumni if he had pursued an online course. “The benefits of doing an MBA from a top B-school are the intellectual capital, brand capital and social capital. Intellectual capital, one can argue, is somewhat similar online, though it isn’t possible to do hundreds of case studies online. A brand is often offered to online graduates, too. But the social capital of who you meet and who inspires you, all of that is very difficult to replicate in an online world,” he says. And that’s what gave B-schools an aura of impregnability. So far.

Typically, B-schools target two cohorts of learners. The first is the younger population—either a student fresh out of college or an early-career professional—which goes for the typical full-time, on-campus course. The second group is working professionals, typically five to 25 years into their career, who opt for short-duration executive management programmes aimed more at upskilling. These courses have become popular in the past 10-15 years because of the opportunity cost for experienced professionals to leave their job to pursue full-time courses.

It’s this very cohort of learners that edtech firms have been targeting, with a multitude of online programmes offered at lower price points and in a range of convenient formats. Executive management courses have moved from a B2B (business-to-business) play, with corporate-sponsored programmes for employees, to a B2C (business-to-consumer) play, with B-schools offering such courses, to a D2C (direct-to-consumer) play as edtech platforms democratise executive education. Executive MBA courses, it turns out, were their beachhead. Edtech firms are now turning their focus to the first cohort of learners—B-school students.

Helping their cause is the Covid-19 pandemic, which has pushed all learning online. A veritable tsunami of capital has flowed into the edtech sector over the past year and a half, making soonicorns into unicorns and unicorns into decacorns. Damera’s second venture Eruditus itself became a unicorn this August when it raised $650 million at a $3.2-billion valuation. Its primary domestic rival upGrad, too, made it to the unicorn list that same month. A month prior, decacorn Byju’s snapped up Great Learning, a professional learning and higher education company, in a $600-million deal. Armed with a boatload of capital and a virus-given opportunity, edtech platforms have stampeded into almost all levels of education. And now, B-schools are on their radar.

“Edtech firms are making big strides forward in the IT space, training people in specific skills. We are not yet seeing a big impact on the management education or MBA side. [But] it will happen,” says Suraj Moraje, MD and Group CEO, Quess Corp., one of India’s largest staffing companies that also runs its own management training programmes. “Edtech firms are making distance courses better-quality products and are making executive experiences far more meaningful.”

Unlike K-12 school education, edtech can rewrite the whole concept of management education. Traditionally, an MBA is a two-year, on-campus programme. Now, students can, at their own pace, take bite-sized, certificate-based online courses that add up to a degree. A few universities are already collaborating with edtech platforms to unbundle their programmes into stackable courses to make them more flexible and accessible.

“Our institutions are not tuned in to any of these challenges,” says P.D. Jose, Professor of Strategy and Former Chairperson of digital learning at IIM Bangalore (IIMB). “Should a student of digital marketing have to learn 40 subjects to earn an MBA, or learn five courses in digital marketing and one or two on basics of management science, and be done with it?” he asks.

Despite their advances, edtech platforms have been student acquisition and content delivery engines for universities as far as management education is concerned. The early ones carried MOOCs (massive open online courses) created by universities, of which a chunk was free or moderately priced. Some edtechs were faculty providers for resource-strapped universities, while others played an end-to-end role.

But the new pool of edtech start-ups wants to have more skin in the game. And more than the top-tier institutes, it’s the Tier II and III B-schools that could be at risk.

Nowadays, edtech companies work with top-tier universities to design curriculum that is delivered via live and recorded sessions by either their own or the university’s faculty. These courses are more rigorous than MOOCs and priced on the higher side, targeting value-conscious users. And they are becoming popular. The maturing of the edtech ecosystem of management education has accelerated this flight to quality. And this is to the peril of Tier II and III B-schools.

India’s National Education Policy 2020, which reinforces the importance of digital learning, further weakens the prospects for the lower-ranked institutions. A proposal by the University Grants Commission (UGC) states higher education institutes can offer up to 40 per cent of any course online. Meanwhile, the top 100 universities in India’s National Institutional Ranking Framework can now offer a full degree course online. The plan is to roll this out to more institutions. A handful of the top 100 universities already offer fully digital MBA degrees, while many have begun the groundwork for completely online courses that they will either deliver directly or in partnership with an edtech platform.

Consequently, enrollments are falling at the lower end of the B-school hierarchy. India has around 4,000 B-schools, as per unofficial estimates. Up to three-fourth of them will disappear in the next few years, as per many edtech entrepreneurs, analysts and industry experts. Students would much rather opt for an online course from a premier institution over a two-year-long course at a low-quality B-school. Moreover, there is also the question of faculty, says Abhishek Chakraborty, Associate Professor, XLRI - Xavier School of Management. “Many Tier II and III schools struggle to get decent faculty members. They end up bringing people from industries who don’t come from top companies.”

“Unfortunately, the lower-ranked institutions will not survive,” says Mohan Lakhamraju, Founder and CEO, Great Learning. “They never had a compelling value proposition. They do not offer quality education, a great learning experience or career opportunities for what they charge. Now that people have affordable, quality options in edtech, Tier III and IV B-schools will disappear, they will die.”

In fact, edtech platforms are aggressively marketing their online MBA courses in Tier II cities, further weakening the case for local universities. And it is not just the brand name that is the draw of an online course.

“Greater disruption may happen in Tier II, III universities. Students and even working professionals may prefer an option to earn a degree from online courses offered by internationally well-known universities and at an affordable price. This will also allow them the flexibility to take on a job and continue education online,” says Amit Nawka, Partner - Deals and India Startup Leader at PwC.

While many premium B-schools in India and the US are expanding their non-degree, non-credit certificate programmes (without alumni status), they shy away from offering full-fledged online degree programmes. That’s because not only do they fear cannibalising their own brand and offline courses, but because going digital involves more costs. “Premium institutions tend to be very rigid; they are not the most adaptable, they are not nimble, and they don’t change. US institutions are very agile, they are run like corporations. They want to maximise the global opportunity, but our institutions don’t necessarily think like that,” said an edtech founder who did not wish to be named.

And even if they want to, Indian B-schools, including some premium ones, are too severely resource- and capacity-constrained to expand offline or online, says Professor Jose of IIMB. Moreover, he adds, their brand appeal is diminishing. “When employers are willing to recruit people regardless of where they studied from, the branding of your institution is only an initial advantage, not a long-term advantage. In the long run, people will look for knowledge and competence rather than where you come from. The role of the campus as a recruiting centre, while not irrelevant today, is going to reduce,” says Jose.

In the current working environment, where competency skills constantly need to be upgraded and learning is life-long, a two-year MBA may not cut it. Moreover, education is only becoming more expensive, while the opportunity cost of staying away from work is increasing. And, as Jose points out, brand value is losing its sheen.

These are critical gaps in the traditional structures of management education that edtech platforms have identified and are addressing for the two cohorts of learners, says Mayank Kumar, Co-Founder and MD, upGrad. “In management education, there aren’t many options for people in the 5-15 years experience range and programmes are dependent on global case studies and exposures. While for the younger audience, if you are not in the best of form on that one day for a competitive exam, you won’t qualify and can lose a year.” Not only are online courses cheaper and more flexible, but they also heavily incorporate local context, case studies and applications.

Edtech also offers an opportunity for B-schools, especially the Tier II or lower-ranked ones, to catch up with the education evolution. Edtech platforms are a quality alternative for resource-strapped B-schools to either train their faculty or, more relevantly, strike partnerships with top universities to give their own certification courses a higher market value.

“It’s an opportunity for Tier II B-schools to do the catching up rather than lose ground totally. They can embed a specialisation that consists of four-five courses (from a top university) so that their students graduate with a degree from a Tier II school with a certification embedded from a Harvard or Stanford, which adds value,” says Parag Diwan, Chairman of Paradigm Consultants & Resource Management, a management consulting firm. Diwan is closely associated with the education sector and was previously President and CEO of Great Lakes Education Group, which offers undergraduate business programmes.

For premium organisations, embracing edtech is an opportunity to expand domestically and build their brand in foreign markets. “The days of elite management education are over. Access is more important; we should provide access at the right price and people are willing to pay. Scale is critical now; we can no longer be teaching just 100 people in a class. Technology will help us to scale and make a large impact,” says R. Srinivasan, Professor of Strategy at IIMB. “We should use partnerships to build brands and leverage technology to reach new markets and scale.” Already, India’s premium institutes enjoy great brand recognition in many markets, including Africa, South Asia and the Middle-East. Edtech platforms offer the means to expand further.

On the flip side, edtech firms also open up the market to foreign universities. While not yet financially lucrative enough for the likes of a Wharton or an MIT (Massachusetts Institute of Technology) to enter directly (online), India is also too critical a market for them to ignore. An easy way for them to tap India, then, is to provide their content to edtech platforms that repackage and sell it to Indian students. Such partnerships are quite unlikely to cannibalise their main offline courses.

“While we have a capacity constraint, foreign universities have geography and regulatory constraints. Edtech platforms take this away. They can enter remotely and offer their degrees at a relatively low cost, and even a hybrid experience in their institution. So, we are going to face a really big challenge,” says Professor Jose of IIMB.

Of course, the allure of an on-campus MBA programme will not diminish anytime soon for all the reasons Damera outlined earlier—the campus experience, world-class resources and faculty, the social milieu and network effect. Universities will continue to grow, but there’s no doubt that edtech firms will grow faster. What remains to be seen is if edtech platforms will leave universities behind in their wake or if their rising tide will lift universities as well. That, as Jose points out, depends on one’s outlook.

“We [usually] think great institutions are those that keep people out. I think great institutions get people in and skill them before they go out. It is time to relook at this very model itself.”

@binu_t_paul