EdTech Market Results 2022

Contents:

• How the global EdTech market is developing
• Why growth rates are slowing
• Trend: companies are outgrowing the market segments in which they started
• Trend: focus on employment and employer demands
• Trend: human-centricity through technology and more

The session "Global EdTech Trends in a Market Slowdown," organized with the support of the Smart Ranking agency, kicked off the EdTech track at the annual EdCrunch conference dedicated to new technologies. Participants of the conference, held in Almaty (Kazakhstan) and online, discussed key trends in the development of the global online education and educational technology market, and also highlighted the most relevant of them for the Russian reality.

How the global EdTech market is developing

Among the most successful EdTech companies in the world, American firms predominate. According to Daria Ryzhkova, CEO and founder of the analytical agency Smart Ranking, currently half of the 50 largest global educational technologies are based in the United States. This underscores the significant influence and leadership of the United States in the field of educational technologies, making them key players in the global EdTech market.

The number of large Chinese companies in the EdTech sector is declining, but their example clearly illustrates the gigantomania characteristic of this industry. The ten largest Chinese EdTech companies demonstrate revenues comparable to the top 25 players in the US market. This demonstrates significant potential and competition in the EdTech sector, where Chinese companies continue to hold a significant position on the global stage.

EdTech companies in emerging markets demonstrate steady growth. Among the 50 largest companies, four represent Latin America, and two represent India. Over the past year, there has been a trend of active entry of players from other countries, including Russia, into these markets. This demonstrates the growing interest in educational technologies in regions with developing economies and the need for innovative educational solutions.

The largest EdTech companies in the world make their money primarily from online education and educational software. Educational apps and gadgets account for only 6% of the market. Adult education accounts for the largest share of the learning segment, accounting for 46%. Children's education accounts for 36%, and foreign language training - 18%.

Over the course of the year, the market has demonstrated growth at the level of 17%, however Compared to 2020–2021, there has been a slowdown. This slowdown is partly due to the sharp decline in the Chinese market, which occurred after new government restrictions were introduced in 2021 for edtech companies operating in school education. These changes have had a significant impact on global EdTech trends, requiring additional analysis and adaptation to the new conditions.

According to Daria Ryzhkova, the Chinese "storm" has had a significant impact on venture capital investments in education. In 2022, global EdTech investment volume was approximately $5 billion, a sharp decline from $15 billion in 2021. In Russia, investment in EdTech companies also experienced a sharp decline: in 2022, it fell fourfold due to military conflict in Ukraine.

Why growth rates are slowing

Experts note that the slowdown in the EdTech market is due to natural causes. Mikhail Myagkov, founder and CEO of Maximum Education, believes that the sharp increase in investment and active development of the sector were caused by the interest of non-core investors during the hype period of 2020-2021. With the easing of coronavirus restrictions and a decline in interest in online learning, these investors began to leave the market. Thus, the EdTech market is returning to its usual state, which may open up new opportunities for sustainable growth and innovation in the education sector.

Reduced investment and the overall economic downturn are creating additional challenges for new EdTech companies entering the market. This situation is exacerbated as the field matures, making competition even fiercer. New players in the edtech space must adapt to changing market conditions and seek innovative approaches to attract customers and investment.

According to Mikhail Myagkov, successful EdTech companies are those that are first to market with an innovative product or adapt and improve existing solutions. For example, startups can create a superior product compared to existing products or scale successful ideas. However, in the current environment, startups face challenges in both approaches. Developing a fundamentally new product is becoming increasingly challenging due to the shrinking number of available market niches. At the same time, start-up teams often lack the resources to improve and scale existing solutions.

Trend: Companies are outgrowing the market segments in which they launched

Yandex Praktikum CEO Ilya Kurmyshev notes that for large economic players, the challenges faced by startups can be profitable. In an economic downturn, existing companies benefit from a reduced number of new competitors. However, even maintaining dominance in the B2C market, where training is conducted for individual clients, is not enough for further growth. Large companies are looking to expand beyond this segment, which highlights the need for new strategies and approaches to development.

EdTech companies are transitioning to Working with corporate (B2B) and government (B2G) clients has become a significant global trend. As David Porcaro, Vice President of Learning and Innovation at General Assembly (USA), emphasized, individual clients often face a lack of resources to pay for their education. Consequently, education market leaders are shifting their focus from individual students (B2C) to companies interested in hiring specialists with the necessary skills and upskilling their employees. This shift allows EdTech companies to leverage their resources effectively and offer solutions that meet the needs of business and government. In countries with well-developed education regulations, such as France and Singapore, professional retraining programs are often financially supported by the state. Similar initiatives exist in Russia, for example, the "Employment Promotion" program and the "Digital Professions" project, although the latter is currently on hold. These programs are aimed at upskilling workers and adapting them to modern labor market requirements, which is especially relevant in a rapidly changing economic environment.

Russian EdTech companies are actively participating in government projects to retrain personnel and establishing partnerships with public universities, which is of mutual interest. Skillbox CEO Dmitry Krutov notes that many Russian universities recognize students' desire to quickly master in-demand professions to ensure a stable income. To create such opportunities and retain their students, many educational institutions are open to collaborating with EdTech companies. These initiatives contribute to the development of educational programs and the improvement of the quality of educational services, which, in turn, meets the requirements of the modern labor market.

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Every year, the number of people choosing online courses to acquire professional skills instead of traditional university education is growing. The main reason for this choice is the flexibility offered by online learning. Students can plan their own time and study at their own pace.

Furthermore, online courses often offer more relevant and practical knowledge that meets the demands of the modern labor market. This allows students to quickly adapt to rapidly changing conditions and be more competitive.

Savings also play a significant role: online courses are often less expensive than earning a university degree. Students avoid additional costs for transportation, accommodation, and course materials, making online learning more accessible.

Furthermore, the online format allows access to courses developed by leading experts and companies, opening up new opportunities for career advancement.

Thus, the combination of flexibility, knowledge relevance, and cost-effectiveness makes online courses an attractive choice for many people seeking professional development.

Trend: Focus on Employment and Employer Demands

In discussions among representatives of Russian EdTech companies working in the field of continuing vocational education for adults, the percentage of employed graduates is one of the key metrics reflecting the quality of education. These statistics allow us to evaluate the effectiveness of educational programs and their compliance with labor market requirements. Successful employment of graduates not only confirms the relevance of the acquired knowledge but also demonstrates a high level of specialist training, which in turn contributes to the growing reputation of educational institutions and organizations in the EdTech field.

Dmitry Krutov emphasizes that EdTech restores people's trust in the effectiveness of education. This trend explains the growing interest in online vocational training in developing countries. In a rapidly changing world, access to high-quality educational resources is becoming a key factor for career growth and professional development. Online platforms provide the opportunity to develop skills and gain knowledge in a convenient format, which is especially important for people seeking to improve their qualifications and adapt to labor market demands. Ilya Kurmyshev emphasizes that the key advantage of EdTech in vocational training is providing a secure entry point into a chosen profession, which facilitates successful employment. EdTech platforms offer relevant courses and programs that meet labor market requirements, making training more targeted and effective. Thus, students gain not only knowledge but also the practical skills necessary for a successful career. Kurmyshev emphasized that the trend toward training focused on specific professional tasks is becoming especially noticeable in collaboration with corporations. EdTech and HRTech are integrating, as in corporate training it is impossible to separate the learning process from HR processes, such as employee assessment and talent management. This interaction allows companies to more effectively develop their employees' skills to meet current market demands.

Many aspects previously developed within corporations are now being integrated into large-scale EdTech products. The speaker identified this synergy as the product of the future for numerous participants in the education and technology markets. This transformation opens up new opportunities for the development and implementation of innovative solutions in the educational process.

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Corporate universities are in no hurry to establish cooperation with EdTech for several reasons. Firstly, many companies prefer to develop internal training programs, which allows them to maintain control over the quality and content of the educational process. Secondly, there is concern that integrating technology may require significant investment and changes to established processes. Furthermore, corporate universities may doubt the effectiveness of EdTech solutions, given the rapid advancement of technology and the need for constant program adaptation.

It is also worth noting that the shortage of qualified digital learning specialists creates additional barriers to the implementation of EdTech in corporate universities. Many organizations are unwilling to take risks in implementing new approaches to learning until they see clear evidence of their effectiveness.

However, given the rapid growth of technology and changing market needs, corporate universities may be forced to reconsider their approaches. Collaboration with EdTech can open up new opportunities to improve the quality of education and increase the competitiveness of companies in the long term.

Trend: Human-Centered Learning Through Technology and Beyond

The choice of target audience for an EdTech company significantly affects the content and structure of educational programs. During the discussion, David Porcaro emphasized that if a course is developed for a corporation or university, it is primarily focused on the needs of the customer, and not on the interests of students. This underscores the importance of understanding the target audience when creating educational materials to ensure their relevance and effectiveness.

Student engagement is key to achieving successful learning outcomes. In this regard, the EdTech industry is seeing a growing trend towards human-centeredness. Companies are focusing on the needs of students, striving to create more adaptive and personalized educational solutions. This not only increases student motivation but also improves the quality of material assimilation, which ultimately contributes to more effective learning.

Dmitry Krutov emphasizes that companies like Skillbox are entering a new stage of development, focused on human learning needs. During the business formation phase, the emphasis was on product creation, market penetration, and content production. Today, companies are ready to implement more comprehensive solutions aimed at individualized educational trajectories, which facilitates increased speed, efficiency, and user engagement. Career changes and successful employment are becoming key performance indicators in this context.

When developing educational programs, it is important to consider the capabilities of the learning audience. Some students are willing to devote significant time to intensive learning, while others require a simplified approach. Failure to understand user needs and scenarios can lead to frustration for both learners and content creators. The former may have inflated expectations, while the latter may face challenges in the course development process. In this regard, an important aspect is the creation of adaptive learning paths and the use of IT tools to analyze how users absorb information and achieve their goals. Skillbox is currently actively working to improve these processes, which will increase learning effectiveness and student satisfaction.

Our primary goal is to make continuing professional education accessible and understandable for everyone. We strive to prevent inflated expectations regarding the duration of training and potential income. It is important to provide a high-quality assessment of opportunities at the initial stage and offer a wide range of educational paths. We will also support students throughout the process, providing recommendations based on an analysis of their activity and behavior.

For successful student employment, it is important to increase their engagement in the learning process, as more active students perform better in the job search. An important step in this direction is integrating students into a new professional environment. The opening of offline centers and the development of creative communities play a key role in this process, providing students with the opportunity to interact with employers and colleagues and develop their skills in a real-world setting. Thus, creating such spaces not only promotes students' professional growth but also improves their chances of successful employment.

Other discussion participants noted that modern technologies help place students at the center of the educational process. However, they also emphasized that immediate results should not be expected.

Mikhail Myagkov emphasized that the development of artificial intelligence technologies in education should occur in stages. It is important to automate individual aspects of the practice, regularly analyzing the results and conducting experiments. In his opinion, radical changes in EdTech and personalization of learning are impossible due to the complexity of this task. The learning process is influenced by both external and internal factors, which requires a careful and thoughtful approach to the implementation of new technologies.

David Porcaro shared his experience working with various failed artificial intelligence systems in education. In his opinion, attempts to create a universal technology for managing student learning have proven ineffective. Instead, specialized systems that provide individualized feedback to each student have demonstrated the greatest success. This underscores the importance of a personalized approach in educational technology, which can significantly improve learning and student satisfaction.

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