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Market analysis of offline language schools in India

Release date 16.06.2022

Number of pages 38

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The relevance of research

Proficiency in a foreign language is an important skill for a modern person, especially if he is set to receive higher education and employment in a prestigious high-paying position.

Purpose of the study

Analysis of the state of the market of offline language schools in India, assessment of the market size, analysis of competitors, as well as identification of factors influencing the market of offline language schools in India)

Content

Part 1. Overview of the Indian offline language school market

1.1. Definition and Characteristics of the Indian Offline Language School Market

1.2. Dynamics of the volume of the Indian market of offline language schools, 2017-2021

1.3. Market structure by type of service provided in India

1.4. Market structure of offline language schools by Union Territories

1.5. Assessment of current trends and development prospects of the studied market

1.6. Assessment of factors affecting the market

1.7. Analysis of sectoral indicators of financial and economic activity

Part 2. Competitive Analysis in the Offline Language School Market in India

2.1. Major players in the market

2.2. Market shares of the largest competitors

2.3. Profiles of major players

Part 3. Analysis of the consumption of offline language schools

3.1. Estimated consumption of offline language schools per capita

3.2. Market Saturation and Estimated Market Potential in India

3.3. Description of consumer preferences

3.4. Price analysis

Part 4. Assessment of factors of investment attractiveness of the market

Part 5. Market forecast for offline language schools until 2026

Part 6. Conclusions on the prospects of creating enterprises in the study area and recommendations for current market operators

Research excerpt

Part 1. Overview of the Indian offline language school market

1.1. Definition and Characteristics of the Indian Offline Language School Market

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There are three main types of language schools: university, network and independent.

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Network schools usually operate under one brand, with branches in several cities or even countries around the world. Regardless of the country, schools use the same programs and methods, and the cost of education for different countries and cities may vary slightly.

Independent schools usually exist in one instance and can vary greatly from unknown small private schools to world-famous educational institutions. As a rule, the format of education in independent schools is focused on an individual approach; they recruit small groups of students. They may become famous through student feedback rather than through advertising.

For language schools that operated offline before the lockdown, the need to switch to distance learning has proven to be a major challenge. Group classes, especially teaching children, are not so easy to organize efficiently in a remote format, and it is groups that have always brought schools the bulk of the revenue in the B2C segment.

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Among the advantages of offline teaching foreign languages, it is worth noting:

group activities, drive of live communication, expansion of social contacts, competitive interest, urging to equal the best;
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1.2. Dynamics of the volume of the Indian market of offline language schools, 2017-2021

The volume of the private business market in the field of offline language schools at the end of 2021 amounted to … billion Rs., having increased by …% against the low base of 2020.

At the same time, the specificity of language schools is such that education can be mixed: online classes are combined with face-to-face lessons. However, in 2021, most courses (…%) were held only on the Internet, while in 2016 only …% of companies taught only online (data from the report from the eSTARS conference).

1.3. Market structure by type of service provided in India

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Note that the total share is more than 100%, since one language school can offer training in several foreign languages.

Diagram 2. Market structure of offline language schools by types, Jun. 2022, %

Note that in India, since the beginning of 2022, there has been a demand for specialists who speak Chinese. This is due to the reorientation of business towards Asia due to anti-Indian sanctions. According to experts, in the future, the need for Chinese-speaking workers will only grow.

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1.4. Market structure of offline language schools by Union Territories

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Chart 3. Structure of provision of offline language schools in India by Union Territories, Jun. 2022, %

In the regional context, the highest concentration of language schools in India is observed in the Moscow region.

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1.5. Assessment of current trends and development prospects of the studied market

Trends:

Microlearning is the study of material in fractional portions, the division of a large specialty or course into mini-programs. For example, preparation for school and international exams, business and thematic programs;
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The geopolitical events of recent months, caused by a special operation, as well as massive sanctions against India, have affected the stability of the industry under study. As of the beginning of June 2022, against the backdrop of the Ukrainian crisis, new trends are noted:

Active growth in demand for courses in the field of IT, which in general implies the importance of knowledge of the English language for the profession;
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Perspectives:

Educational products will be personalized to the needs of both the customer and the user;
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1.6. Assessment of factors affecting the market

Consider the main factors affecting the market and, accordingly, demand.

Economic

India GDP

GDP is a macroeconomic indicator that reflects the market value of all final goods and services produced in a year in all sectors of the economy on the territory of the state for consumption, export and accumulation. The dynamics of India's GDP is decisive in the vector of development of the entire economy of the country and determines the key trends in consumer effective demand and economic activity.

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Dollar rate

In 2017, the dynamics of the dollar exchange rate is oscillatory, but without sharp increases or falls compared to 2016. For the period from January to December 2017, the maximum value of the dollar exchange rate is 60,2 Rs., and the minimum is 56,2 Rs. .

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Chart 4. Monthly dynamics of the US dollar against the rupee, 2017-Jun. 2022, Rs. for 1 US dollar

In 2022, the rupiah began to depreciate due to geopolitical instability. At the end of February 2022, the rupee began to change against the backdrop of Western sanctions. The reason for them was the Indian military operation in Ukraine, which was announced on February 24, 2022.

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Социальные

Population

During 2014–2017 India's population has shown a positive trend. However, in 2018, the vector changed – the population decreased due to the natural population decline in 2016–2019.

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Real income of the population

Real disposable money income per capita is income minus mandatory payments, adjusted for inflation. This factor determines the level of effective demand of buyers, is one of the key reasons for the formation of the dynamics of both retail turnover and demand for services.

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Importance of knowing a foreign language

Today, specialists who speak at least two foreign languages are in demand - for example, English and a second European or Oriental language. And it’s not enough just to know languages, for successful activity you also need to understand the national and cultural context of a particular partner state and the specifics of the professional industry in the region.

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technological

Quality

One of the main problems is the low quality of educational products.

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Convenience of the online format

Online provides the opportunity to learn throughout life, combining learning with work and family.

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Improving online learning

With the help of artificial intelligence (AI), it is possible to tailor training to individual requests, identify ""hard-to-reach"" fragments in the program, and predict which of the participants is most likely not to complete the training.

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Political

Licensing

Language schools conduct educational activities, and it must be licensed by law. Educational activity has its own characteristics, the main one is the presence of an educational program, which consists of: content - what will be taught; volume - for how long, how many hours; planned results - what a person will learn in the end.

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The possibility of using maternity capital

In Jan. In 2022, news appeared that they plan to allow the use of maternity capital funds for individual entrepreneurs for educational services. The Ministry of Labor must submit the relevant amendments to the State Duma by August 2022.

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Concluding the assessment of the factors influencing the market of offline language schools, we will summarize the key ones in the framework of the STEP analysis.

Table 1. STEP analysis of factors influencing the offline language school market

1.7. Analysis of sectoral indicators of financial and economic activity

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The profitability of profit before tax in the field of offline language schools in 2021 is not only lower than the average profitability for all industries, but is also in the zone of negative values - “minus” …%.

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The stability of the financial position of the enterprise is impossible without effective management of working capital, based on the identification of significant factors and measures to provide the enterprise with its own working capital.

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In general, the analysis of industry financial ratios in the field of offline language schools shows low gross margin and profitability before tax, while indicators of industry values of absolute and current liquidity, financial stability indicate the ability of most enterprises to repay current debt at the expense of existing current (current) assets .

Part 2. Competitive Analysis in the Offline Language School Market in India

2.1. Major players in the market

Conducting a competitive analysis in the market of offline language schools is complicated by the fact that networks are often represented by several legal entities and individual entrepreneurs.

Thus, the first degree criterion in determining the market share of competitors was the size of the network, the second degree criterion was the revenue of the main legal entity of the offline language school or a known set of legal entities of the network.

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Table 2. Main companies participating in the market of offline language schools in 2021

2.2. Market shares of the largest competitors

Among the largest operators of the market of offline language schools, the largest revenue by a known set of legal entities of the network is demonstrated by …

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Part 3. Analysis of the consumption of offline language schools

3.1. Estimated consumption of offline language schools per capita

Estimated consumption per capita was made by GidMarket based on the ratio of the market size of offline language schools to the population of India.

The consumption of offline language schools in India has decreased significantly in 2020 and amounted to … Rs./person. Growth in 2021 did not ensure a return to the levels of 2017-2019, as users increasingly began to consider online learning as a natural alternative to offline.

3.2. Market Saturation and Estimated Market Potential in India

The offline language school market is in the early stages of a life cycle decline. The stage is characterized by a decrease in sales dynamics and a decline in demand. Companies begin to leave the market or consolidation processes begin. Only strong players keep fighting for market share.

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3.3. Description of consumer preferences

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3.4. Price analysis

Price analysis in the market of offline language schools was carried out according to Rosstat data for foreign language courses.

For the period 2017–2021 the average annual consumer price index for classes in foreign language courses amounted to …%. Growth rates slowed down in 2020 – only …%. For Jan.-Apr. In 2022, consumer prices for classes increased by …%, which was the minimum increase in the entire study period.

The cost of individual lessons varies significantly for each school, depending on a number of parameters: time and duration of training, location, training program, etc.

Also, the cost of training depends on the payment for the number of lessons: the more lessons the client pays for at a time, the cheaper the cost of each lesson is. Also, the cost is affected by the level of language proficiency: the higher the level, the more expensive the lesson.

At the same time, classes in a foreign language with a native speaker cost about twice as much as with a Indian-speaking teacher.

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Part 5. Market forecast for offline language schools until 2026

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Part 6. Conclusions on the prospects of creating enterprises in the study area and recommendations for current market operators

In 2017-2019 The market of offline language schools was stable: the market volume was within …-… billion Rs. Quarantine measures caused by the coronavirus pandemic in 2020 ensured an explosive demand for online language courses, in connection with which the volume of the offline language school market decreased by …% to … billion Rs by the end of the year. The volume of the private business market in the field of offline language schools at the end of 2021 amounted to … billion Rs., having increased relative to the low base of 2020 by …%.

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Diagrams

Diagram 1. Dynamics of the market volume of offline language schools, 2017-2021, billion Rs.

Diagram 2. Market structure of offline language schools by types, Jun. 2022, %

Chart 3. Structure of provision of offline language schools in India by Union Territories, Jun. 2022, %

Chart 4. Dynamics of India's GDP, 2013–Q1 2022, % to the previous year

Chart 5. Monthly dynamics of the US dollar against the rupee, 2017-Jun. 2022, Rs. for 1 US dollar

Diagram 6. Population dynamics in India, as of 01 Jan. 2013–2022, million people

Chart 7. Dynamics of real incomes of the population of India, 2013–1 quarter 2022, %

Diagram 8. Profitability of profit before tax (profit of the reporting period) in the field of offline language schools in comparison with all sectors of the Indian economy, 2017-2021, %

Diagram 9. Current liquidity (total coverage) in the field of offline language schools for 2017-2021, times

Chart 10. Business activity (average receivables turnover) in offline language schools, 2017-2021, days days

Diagram 11. Financial stability (security of own working capital) in the field of offline language schools, in comparison with all sectors of the Indian economy, 2017-2021, %

Diagram 12. Shares of the largest competitors in the market of offline language schools in 2021, %

Chart 13. Dynamics of the total revenue of the largest operators of the market of offline language schools (TOP-5) in India, 2017-2021, billion Rs.

Diagram 14. Consumption of offline language schools per capita, 2017-2021, Rs./person

Diagram 15. Criteria for choosing an offline foreign language school, scores

Diagram 16. Forecast of the market size of offline language schools in 2022-2026, billion Rs.

Tables

Table 1. Expert forecasts for the decline in real GDP in India in 2022, %

Table 2. STEP analysis of factors influencing the offline language school market

Table 3. Absolute liquidity in the field of offline language schools in comparison with all sectors of the Indian economy, 2017-2021, times

Table 4. Main companies participating in the market of offline language schools in 2021

Table 5. Basic information about participant No. 1 of the market of offline language schools

Table 6. Basic information about participant No. 2 of the market of offline language schools

Table 7. Basic information about participant No. 3 of the market of offline language schools

Table 8. Basic information about participant No. 4 of the market of offline language schools

Table 9. Basic information about participant No. 5 of the market of offline language schools

Table 10. Consumer price indices in the market of offline language schools in India in 2017-Apr. 2022, %

Table 11. Average prices in the offline language school market by Union Territories, 2017-April 2022, Rs./academic hour

Table 12. Assessment of factors of investment attractiveness of the market of offline language schools

Table 13. Forecast indicators of the development of the Indian economy

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