Upskilling players on growth trajectory as AI, layoffs up demand for learning

Eruditus, upGrad, and Simplilearn—three edtech startups that provide upskilling and reskilling courses—seem to be on a steep growth trajectory in the past few years.

The reason: technological advancements, driven by artificial intelligence (AI) and generative AI (GenAI) have reshaped work dynamics. The shift has compelled white-collar employees—both tech and non-tech—to reskill.

In FY23, edtech unicorn Eruditus again witnessed sharp revenue growth, solidifying its position as India’s second-largest edtech player. It recorded revenue of Rs 3,322 crore in FY23, a 75.9% surge from the Rs 1,888 crore earned in FY22. 

Eruditus’ net loss narrowed 66.1% to Rs 1,049 crore in FY23 from Rs 3,094 crore in the previous fiscal.

“In higher education, unlike K-12 and test-prep, things have been positive. Our numbers bear testimony to that. We have grown 75% year-on-year (YoY) on what is not a small base,” says Ashwin Damera, Co-founder and Chief Executive Officer of Mumbai-based Eruditus. The company was founded in 2010.

“Despite whatever is being written about edtech around us, we are not seeing any negative impacts of all of that, as far as the business is concerned,” he tells YourStory.

Another unicorn, Mumbai-based upGrad, which launched in 2015, recorded a revenue of Rs 1,194 crore in FY23, up 96% from Rs 608 crore in the previous financial year. Meanwhile, Blackstone-backed edtech firm Simplilearn clocked Rs 701 crore in revenue in FY23—up 50.5% from Rs 465 crore earned in FY22. 

In FY23, upGrad’s losses held steady at Rs 558 crore, compared to Rs 572 crore in the previous fiscal year, while Simplilearn’s consolidated loss expanded by 36.5% to Rs 244.2 crore in FY23 from Rs 178.8 crore in the prior financial year.

Multiple factors are driving this business growth in upskilling and reskilling— individuals looking to reinvent careers, and better work prospects, as well as fears over technology, especially AI, taking away jobs.

According to a ResumeBuilder survey of 750 business leaders at companies, 53% currently use AI, while 24% plan to start in 2024. Among current AI users, 37% reported worker layoffs in 2023 due to redundancy caused by AI implementation, while 44% of AI-utilising companies or those intending to adopt AI, anticipate potential employee layoffs.

Driving forces behind growth

Some individuals argue that regardless of the current economic conditions, significant demand for skills will arise soon, leading to higher salaries, remarks Kashyap Dalal, Co-founder and Chief Operating Officer of Simplilearn Consumer. The edtech startup was founded in 2010. 

“This belief has prompted many to prioritise upskilling themselves. They reason that being prepared now will position them ahead of the curve. If others delay in honing their skills, those who have invested in upskilling will likely stand out and secure opportunities,” he explains.

GenAI tool ChatGPT is adding to jobseekers’ fears. A survey conducted among learners at Simplilearn revealed that over 80% have used the chatbot. 

For Simplilearn, the Gen AI theme is working “amazingly well”, so much so that a Gen AI application module is integrated across various disciplines, including data science, data analytics, cybersecurity, and cloud computing. 

“We have ensured that every skilling programme incorporates a segment dedicated to generative AI applications, as we believe this technology will have a significant impact across all domains,” shares Dalal.

Cybersecurity is second only to GenAI in terms of course demands. About 50% of Simplilearn’s enrollments are in these two areas.

Mayank Kumar, Co-founder and Managing Director of upGrad believes that the upskilling and reskilling ecosystem has not witnessed a decline because outcomes are measurable and evident.

Same terrain, different strategies

Platforms offering upskilling and reskilling programmes are all catering to different needs of the market. 

While Temasek-backed upGrad provides a wide array of programmes across higher education and skilling segments, including online and hybrid degree programmes, certifications, boot camps, and executive doctorate programmes for professionals at all levels, Eruditus focuses on partnering with universities to offer short courses, degree programmes, and executive programmes designed specifically for working professionals with 0 to 20 years of experience. 

Similarly, Simplilearn offers online boot camps for digital economy skills training in collaboration with universities, corporations, and industry bodies, catering to a broad audience from college students to executives. 

Each platform stresses collaboration with educational institutions and industry partners for industry-relevant programmes that can be broadly categorised into two themes: technology-related courses, which include areas like data science, AI, machine learning, and agile scrum, and management-focused courses, covering topics such as leadership, sales, digital marketing, and legal education.

In recent years, management education has gained prominence alongside technical fields, says upGrad’s Kumar, adding that despite millions enrolling in higher education annually, only a fraction pursue further credentials like the Common Admission Test. 

This trend reflects a growing interest in management-related programmes, particularly among non-tech graduates seeking career advancement, including through Master of Business Administration.

According to industry experts, these companies are always in pursuit of developing programmes that truly distinguish themselves by offering unique value additions that are challenging for others to replicate. Often, this is achieved through strategic partnerships.

For instance, one of Simplilearn’s cybersecurity programmes, in partnership with the International Institute of Information Technology, Bangalore and National Payments Corporation of India, offers access to NPCI’s experts who developed the UPI payment system, enhancing the curriculum with exclusive master classes and making it one of its top programmes.

While these companies are striving to provide distinctive programmes, what is motivating a diverse range of learners to engage in upskilling and reskilling?

Early career professionals, typically with 0-5 years of experience, seek to transition to higher-paying roles, Kumar notes, adding that mid-career professionals, with 5-10 years of experience, aspire for promotions and often shift to emerging fields to pursue better career prospects. 

Meanwhile, when it comes to senior professionals with 10+ years of experience, fear of missing out is the main trigger driving them to chase jobs such as thought leaders within their organisations, explains upGrad’s Kumar.

According to upGrad’s recent report, based on a survey of 3,560 respondents across India, primarily from urban corporate environments, individuals who engaged in upskilling over the past five years experienced 2.5 times better appraisals compared to those who did not. 

Additionally, those who pursued upskilling within the last three to five years reported 2.3 times more frequent promotions, 1.7 times greater job security, and remained in their new careers six times longer than their non-upskilled counterparts.

Future trends

Business-to-consumer (B2C) segment remains the primary revenue driver for these companies; however, business-to-business (B2B) is also seeing growth

For Eruditus, its enterprise business has grown more than 100% year-on-year in FY23, according to Damera. upGrad’s business distribution comprises 70% B2C and 30% B2B segments. 

Simplilearn’s enterprise business, currently representing 25 to 30% of its total business, is slated to reach at least 40% contribution within a two-year timeframe.

Moreover, from a geographical standpoint, Eruditus currently derives about 80% of its revenue from international markets. However, with India emerging as its fastest-growing market, Damera foresees a significant rise in the country’s contributions to around 35% over the next three to five years.

For upGrad, it’s the other way round, with 80% of its business originating from India and 20% from international markets. 

In the case of Simplilearn, 70% of its revenue comes from international markets, while 30% is from India. It is looking to expand in the EMEA region to leverage market growth potential and increase profitability.

Companies like Eruditus and Simplilearn, despite their international presence, face stiff competition from global platforms like Coursera, Udemy, and edX, says an edtech industry expert.

“upGrad’s focus has been in the Indian market, which may eventually lead to a disproportionate share in the ecosystem. Meanwhile, domestic institutes such as Amity, Narsee Monjee, Jain University, and Manipal are aggressively entering the market and launching online products,” the expert adds.

upGrad’s Kumar says the company may not hit 100% YoY revenue growth in FY24 but will come close. “It will be a good growth broadly for us. We’ll also see a very strong contraction in the losses, and we are looking at breaking even in this or next quarter,” he adds.

SoftBank-backed Eruditus projects a revenue of about Rs 4,200 crore in FY24 and targets turning EBITDA-positive with a margin of Rs 240-270 crore.

For Simplilearn, December was profitable, and January to March is going to be a profitable quarter as well, as per Dalal. “We are entering the next year with a strong revenue base and a profitable P&L, and our goal over the next two years is to double our revenue. This would require maintaining a growth rate of roughly 40-50% YoY,” he adds.

Strong companies in the space are expected to grow at a similar rate, achieving profitability, according to Dalal. Over the next three years, he anticipates increased consolidation in the professional skilling sector, with potential acquisitions and M&A activity leading to the emergence of larger players.

The global higher education market size was estimated at $736.80 billion in 2023 and is expected to grow at a compound annual growth rate of 12.1% from 2024 to 2030, according to business consulting firm Grand View Research. Other companies in the Indian edtech sector include Great Learning and Scaler, which offer products and services tailored to meet the growing demand for upskilling.

“I am bullish about India and upskilling,” Damera says.

(Cover image and infographics designed by Nihar Apte)