Pearson india’s growth strategy

Pearson india’s growth strategy

For Pearson, the world’s biggest education company, India is strategically a crucial market where education receives a major wallet share of the Indian middle class. Srikanth B. Iyer, CEO, Pearson India, explains why efficacy and profitability are the two key metrics at the company

S. PREM KUMAR

Srikanth Iyer, CEO of Pearson India, is an entrepreneur at heart. In the year 2000, he started Edurite Learning with the vision of taking the best teacher to the last student, using technology. The first two years were tough and by September 2002, Iyer was at crossroads. “We either had to shut down or reboot this into something different,” he says.

Thankfully, he pivoted (to use a Silicon Valley jargon) into the digital content space for the K-12 segment. The business model was to create several small modules of digital content from the CBSE curriculum. Then, the company would make money by licensing these modules and also offering tuition services around the content. “It was a slow and steady business model but we made progress,” quips Iyer.

When Tutorvista, an online tutoring company, started in 2005, it became Erudite’s customer. Edurite’s digital modules were repurposed for the U.S. K-12 segment, the market served by Tutorvista. A couple of years later, when Tutorvista wanted to enter the Indian market, it acquired Edurite, and Iyer became the head of the Indian operations of the merged entity.

The thing that one needs to internalise in the education business is that impact on the learner takes over anything else.

Over time, Tutorvista started focusing on two verticals – school management services and Digiclass (a product to digitise a classroom) – in the Indian market. Then, in 2009, Manipal Group and Pearson became minority shareholders in the company. In 2011, Pearson became a majority shareholder in Tutorvista and by February 2013 owned 100 per cent of the company. Iyer, now as CEO of Pearson India, leads the global education conglomerate’s business in the country.

Iyer says, “In a corporate setup, your mindset is geared up to meeting the corporate objective, often very different from that of an entrepreneur.” Today, Pearson India’s game plan is in line with Pearson Global’s overall strategy.

Iyer says, “Without a doubt, India is extremely important for the company. We all know about the size of India’s middle class population and the emphasis it lays on education.” Globally, Pearson’s strategy is split by geography. The U.S. brings in over 60 per cent of the revenues and its other core markets include UK, Australia, Italy and Germany. But the fastest growing markets are the emerging countries – India, China and Brazil. Out of this list, India is crucial because of two key reasons – one, the importance education plays in the lives of people and, two, Pearson has already made wonderful inroads in the market.

Iyer says, “There are two significant changes in strategy across geographies. The first one is, of course, the focus on the learner and measuring how efficacious our training is. In other words, we want to measure the impact of our education offerings. The second is that we want to focus more on direct delivery of education services. So, in some sense, we’re moving from a product-centric approach (that of selling textbooks) to a services-centric approach.”

The reason why India is considered an exciting market is because the direct delivery business has already made wonderful inroads. For example, in the K-12 space, the company operates in 30-odd schools, offering direct delivery of education to 27,000 students, which is the highest number of students to receive training from Pearson directly when compared to other geographies.

In India, Iyer spearheads the K-12 business, both digital and non-digital (the traditional textbook business) while Ranu Kawatra runs the higher education business based out of Noida. Currently, the key business verticals for the company include Digiclass, a multimedia-teaching tool deployed in classrooms across the country; Test Prep (for CA, IAS etc.) and after-school tuition centers; school management services, vocational education and text books.

With respect to Digiclass, Pearson is exploring an asset-lite strategy. Digiclass essentially has two components to it – the software part, which has the multimedia digital content modules and the hardware part, which includes the smart board, projector, computers and such. Iyer says, “Over time, we want to work with partners who’ll bring in the hardware and our role will be to deploy the digital content multimedia in the classrooms.” Digiclass, of course, became a part of Pearson through Edurite and is a thriving business today. It is implemented at schools and engineering colleges and has won widespread recognition including the Marico Innovation Award and the President Award for IT.

Pearson entered the Test Preparation space through IndiaCan, which it acquired when it bought over Educomp’s 50 per cent stake in the company to become the 100 per cent owner. IndiaCan operates technology-based satellite coaching centers across the country. It has three divisions – ETEN (for training for Chartered Accountancy, IAS, Company Secretary, Bank PO and CFA Exams), skill building and vocational services and a government projects division.

In the third vertical, the school management services business, the company works with relevant partners to manage schools. Here, the typical partners include real-estate developers who’re mandated to open a school within the complex and sometimes, currently operational schools who could use a helping hand. Iyer says, “The key aspect we need to understand here is that to manage a school well, one needs to be very hands-on. Be it teacher training or facilitating the use of multimedia in the classroom, the choice of leaders we’ve for each of the schools is crucial.”

Iyer often emphasises on the importance of efficacy, even as he tracks the profitability of each business. He says, “We are extremely learner-centric in what we do, and it is crucial to measure the impact our teaching has on the learner.” The measurement of impact is a slight change to Pearson Global’s old strategy when it used to be in the business of selling textbooks. Now, the idea is to have a layer of services around the content, to ensure that impact can be measured. In fact, Pearson Global, which is listed in exchanges in both New York and London, now puts out an impact report along with its financial statements every quarter.

“The thing that one needs to internalise in the education business is that impact on the learner takes over anything else.” To enable this, the company – both in India and globally – is willing to take a long-term view so that the efficacy is not compromised for the sake of growth,” says Iyer, as he wraps up.


Snapshot 

PEARSON INDIA

Key People: Srikanth B. Iyer (K12), Ranu Kawatra (Higher Learning)

Business Verticals: Digital content in classrooms, test prep, school management, vocational services

Key Strategy: Effectiveness of its education services on the learner, profitability 


What Next?

Growth through organic and inorganic routes

Expand the test prep business into Bank PO coaching, IAS coaching and such.

Expand the school management services business to 100 schools, by partnering with real-estate developers

Move to a asset-lite approach in the Digiclass vertical, by partnering with hardware vendors

Continue to measure impact on learner in a formal way, across all segments

 

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