Rise of digitization is defining the future of India Test Preparation Market

Over the past few decades, the Indian test preparation business has undergone a phase of transition from one-on-one personal coaching to group instruction of a sizable student pool by numerous organized players. Presently, the online medium has become the most preferred way of learning.
As a result, online test preparation players have expanded in the market. In this edition, we have highlighted how the use of online mediums is anticipated to become the future of the India Test Preparation Industry.

1. The Cut-throat Competition-oriented structure of India, coupled with the high repute of top institutes & jobs makes Test Preparation popular in India

Role Played by Test Preparation

• Test-Prep allows aspirants for top colleges and jobs compete on a similar pedestal in terms of aptitude; test preparation courses help rural candidates bridge the urban-rural education divide
• IITs in India accept only 1 out of 100 applicants, every year giving the JEE. Test-Prep assists candidates to beat strong competition
• Test Prep helps candidates circumnavigate rising test cutoffs amongst major competitive exams in India

Test Prep Leading Ed-Tech Segment in India

• Revenue growth in Online Test Prep along with that of Online Certification is the highest in the Ed-Tech industry in India
• Test Prep in India capitalizes on the country’s obsession with top marks, top colleges, top jobs & top professions.
• Ed-tech players in alternate categories including online certifications & K-12 have been entering the test prep segment; online certifications & higher education company upGrad made its entry into Test Prep by acquiring The Gate Academy.

How the Test Preparation Landscape in India stacks up

3,000

Number of Test-Prep providing entities in India

$ 2.0 billion+%

Investment in Test Prep startups in India from 2014-2020

3.3 Years

Avg. duration spent preparing for government exams

30 mn+

Number of students giving competitive exams every year*

100+

Number of Competitive exams conducted in India every year

<1%

Success/pass rate of applicants vying for competitive exams in India

Source: Interviews with Test Prep Industry Experts, Industry Articles & Ken Research Analysis
* Doesn’t include aspirants for government exams

2. Presently, the Online medium is the most preferred mode of test preparation among students due to Convenience, Performance Tracking & Ease provided to Concentrate at home

Audience Demographics

• Audience majorly formed by Students: Users for Test-Prep courses & material are working professionals & students both, but students edge it out to hold a leading share; students opt for test-prep courses more often than working professionals, who also rely on self-study invariably
• Heavy Adoption from Tier-2 & Tier-3 Cities: While the major hotspots for competitive exam aspirants included Uttar Pradesh, Telangana, Madhya Pradesh, Bihar, Andhra Pradesh, Maharashtra, Delhi & Rajasthan, ~70%¹ of government job aspirants come from Tier II, Tier III & Tier IV cities.

Adoption of Online Learning

• Online Learning vs Offline Learning: A staggering 90% of students in a 2019 Gradeup survey indicated that they would prefer online modes of test preparation over offline modes. The figure stood at 95% for aspirants belonging to Tier-3 & Tier-4 cities.
• Reasons for Opting Online Learning: Students adopting Online Test Prep due to Learning Flexibility, Affordability & Prevalence of Immediate Results; working professionals going for Online Test Prep due to Convenience, Performance Tracking & the Ease provided to Concentrate at home.
• Live-Online vs Recorded Lectures: Students preferring online learning primarily opted for Live-online Classes while a lesser proportion opted for Recorded Lectures

Source: Industry Articles, Interviews with Test Prep Industry Experts & Ken Research Analysis
1. Testbook Edu Solutions Pvt Ltd data

3. Online Test Preparation is poised to be the Future of the India Test Preparation market as Offline coaching centers have very limited access

	Offline Coaching Centers	Online Test Prep Platforms
Learner Access	Access limited to centre presence in top 10 cities or tier-1 cities	Wide access facilitated by burgeoning internet penetration, specially in tier-2 & tier-3 cities
Learning Quality	Star-teacher concept hindering equivalent access to quality education Large batch sizes limit personal attention and lay more focus on bright students	At par content quality across different courses, due to live sessions Focus on individual learning outcomes through personalized doubt sessions
Flexibility & Ease of Learning	Low flexibility to change batches & to learn at own pace Limited convenience due to cramped centers and long travel	Access to multiple instructors allows learning suitability and better choice On-demand video format allows flexibility of schedule
Affordability	Limited price sensitivity of programs, due to high fixed costs	Online interface allows pricing to be ~80-90% less than offline counterparts

Source: Interviews with India Test Prep Industry Professionals, Industry Articles & Ken Research Analysis

4. Enhance technology by the online Test preparation players have been the key growth driver as it has improved User Engagement through Interactive, & Personalized Learning

Personalized Recommendation Engines backed by AI & ML

• Personalization of Learning is involved in multiple stages of test-prep: skill development, test-taking & doubt/mistake analysis
• Concepts identified by ML which are key to succeed in that particular exam are stressed upon further; Toppr has evolved its practice module be collecting data from its platform users.
• ML algorithms identify difficulty level of questions to create adaptive & tailor-made tests; Textbook's content team uses intelligent recommendations to identify & suggest relevant exams to students.
• Allowing a student to view questions according to his/her personal ability & also view ways of rectifying mistakes; Testbook is developing an algorithm to score a student’s preparation for a particular exam, basis cut-offs in mocks, quizzes, lectures and other interactions

Focus on Platform Scalability & Intuitiveness

• It becomes imperative for an ed-tech platform to be scalable, to support lakhs of learners learning simultaneously
• Some software aren’t very effective from the point of view of user experience, economics & scalability; Testbook used Golang for its backend development, allowing it to be more cost efficient than some of its peers working with NodeJS or Python-driven backends. A strong quality assurance process enables Testbook to speed up future releases & ensure stability of the platform
• Testbook has used Data Analytics to create an alert system to ensure their content remains error-free & used a git branching model to allow rapid changes to their platform through easy coding.

Ensuring Seamless Video Streaming

• Online Live-Video streaming becomes a challenge in Tier-3 and Tier-4 towns & districts in the country.
• Testbook has built on offline video lecture streaming feature in its learning app, ensuring undisrupted video streaming in areas with little to no internet connectivity
• In surveys with students, it was majorly found that students preferred live delivery of lectures rather than viewing recorded lectures.
• Test-prep companies have leveraged scalable micro-service architecture & established cyber cafes in Tier-3 & Tier-4 towns to ensure seamless live delivery of video lectures.

Gamification is the Key to Engagement

• Gamification of content & tests plays a key role in enhancing user engagement & NPS across the learner community, along with instilling a sense of motivation & drive to compete
• Testbook categorized its question bank into 5 difficulty levels, while progression to each level is based on gaining XPs (exp. Points). Introducing daily streaks & gratification messages on the app also helped Testbook improve user engagement
• Gradeup Coins, a ranking-based leaderboard system, saw Gradeup witnessing a 1.8x increase in questions attempted from April’18 to June’18 & an increase in total question attempts/user from 111 to 154.

Source: Industry Articles, Interviews with Multi-Brand Car Servicing Market Experts and Ken Research Analysis

5. Technological Developments & Policy Changes will strongly impact the Test Prep Landscape in India and will drive the growth of the market in coming years

Hybrid Learning Delivery

• User Research & Feedback indicating demand for mix of online & offline learning in the future
• Optimum mix indicated to be mostly online learning, with some classroom time (70:30 split)
• Incumbent player BYJUs acquiring offline stalwart Aakash in order to develop hybrid learning solutions going forward
• Gradeup looking to partner with offline institutes

Consolidation in Competition

• String of acquisitions by leading Ed-Tech players in the Test Prep space, as companies look to expand category presence, enter alternate education segments & explore regional markets
• Consolidation aids in solving the problem of scarcity of resources of smaller companies
• Further consolidation expected in future

Impact of New Education Policy

• Test Prep horizon expected to increase due to introduction of new entrance tests & grade-based exams
• Implementation of new learning methodologies during K-12, will lead to a need for alternative learning, opening the door for K-12 & Test-Prep start-ups
• User-base of test-prep start-ups expected to rise going forward

Personalization Using Data

• Digital course offerings will evolve to include more personalized touches including adaptive questions, mistake analysis, progress analysis & personal scheduling, all stimulated through tonnes of user data captured
• Personalized guidance & support through one-to-one coaching will play a key role in replicating offline learning experience

Source: Interviews with Test Prep Industry Experts, Industry Articles & Ken Research Analysis