The Study Abroad Industry: A Gold Mine for Opportunities
For many Indians, going abroad for a well-paying job is a dream that signifies a better quality of life and a higher standard of living. The number of Indians opting to migrate abroad has doubled in recent years, making the study abroad industry a lucrative opportunity. According to the Embassy in India, there were over 140,000 student visas issued in 2023, marking a historic landmark in student migration.
Gaps in the Study Abroad Market
With 6.4 million students studying abroad worldwide, there are still gaps in the market that present opportunities for investors and entrepreneurs. Understanding these gaps can lead to innovative solutions and services that cater to the needs of students seeking education abroad.
Finding the Right Investment Opportunities
Investors play a crucial role in the study abroad market, as they provide funding for initiatives that address the gaps in the industry. By analyzing research materials and data, investors can identify areas where their capital can make a significant impact. Whether you are an angel investor or part of the school community, leveraging this information can help you make informed investment decisions.
Leveraging Data to Identify Gaps
Even if you are not directly involved in building educational programs or services for students, understanding how to interpret data can help you identify market gaps. By slicing and dicing the information available, you can uncover trends, preferences, and unmet needs within the study abroad sector. This knowledge can guide you in developing solutions that address these gaps effectively.
The Future of Study Abroad
As the study abroad industry continues to evolve, there will be new opportunities and challenges that emerge. By staying informed and proactive in identifying gaps in the market, investors and industry stakeholders can contribute to the growth and development of this thriving sector. With the right strategies and investments, the study abroad market can continue to provide valuable opportunities for students and professionals alike.
The Growing Opportunity
In 2019, Indian students spent a staggering 37 billion on studying abroad. This number rose to 47 billion in 2022, with expectations to reach 70 billion by 2025. The sheer scale of this spending is evident when comparing it to the annual revenue of major Indian corporations.
Market Potential
With 1.3 million Indian students expected to study abroad in 2025, each student is projected to spend an average of 38.8 lakh rupees per year. The consistency and magnitude of this spending make the study abroad market a significant opportunity for businesses.
Income Disparity in India
Despite India’s vast population, a small percentage of individuals contribute significantly to the country’s income tax revenue. Only 22 million people in India pay income tax, highlighting the income disparity within the population.
Target Audience for High-End Products
For businesses looking to tap into the affluent market in India, focusing on the 22 million individuals who pay income tax presents a lucrative opportunity. By catering to this segment, companies can capitalize on the demand for high-ticket, high-margin products and services.
The Consumption Class in India
You can only make money with low margin, low-cost products. This understanding is crucial when it comes to tapping into the study abroad market. Blue Menes’ report categorizes India into three segments: India 1, India 2, and India 3. India 1 consists of 30 million households with an average income of 115,000 per person. India 2 has 300 million people with an average income of 3,000 per person, while India 3 comprises 1 billion people with an average income of 1,000 per person. These segments can be likened to countries such as Mexico, Indonesia, and sub-Saharan Africa based on their consumption levels.
The Spending Habits of India 1
India 1 stands out for its disproportionately high consumption levels. For example, despite being a minority, India 1 consumes 89% of beauty products, 70% of dining options, and 79% of the food and beverage consumption in India. This segment, which comprises just 120 million people, is spending three times more than the rest of the 1.3 billion population combined. It is important to note that the 13 lakh students who study abroad belong to this wealthy category of India 1, as they typically spend between 30 to 40 lakh rupees annually.
Opportunities in the Study Abroad Market
Given the considerable spending power of the India 1 segment, there is a vast opportunity in the study abroad market. These students not only have significant financial resources but also face common challenges and behaviors. This presents a lucrative opportunity for entrepreneurs to develop tailored products and services to cater to this specific group.
The Indian Higher Education Market
Out of the 13 lakh students in India, 8.5 lakh students are pursuing their higher education in just four countries; the US, UK, Australia, and Canada. Each of these countries has its most popular courses tied to it, with engineering, business, and social science students going to the US, Canada attracting STEM students for computer science and IT, Australia being the go-to destination for data science, data analytics, and psychology, and the UK attracting students for engineering, business, and computing.
Understanding the Market Gaps
However, with such a large number of students studying abroad, is this information enough to find a gap in the market? The answer is no. To truly understand the market, we must break down this data into more specific details of customer spending in the three main categories of the study abroad market: pre-enrollment, admission, and post-admission.
The Three Categories of the Study Abroad Market
Pre-Enrollment: This category includes all the activities and decisions made by students before enrolling in a foreign university. This can include test preparation, consulting services, application assistance, and more.
Admission: The admission phase deals with the process of submitting applications, waiting for acceptance letters, visa applications, and preparing for the move to a new country.
Post-Admission: Once a student has been admitted to a foreign university, this phase focuses on services such as accommodation, airport transfers, orientation programs, and ongoing support throughout their study abroad journey.
Opportunities in the Market
By understanding the gaps and challenges faced by students in each phase of the study abroad process, there are ample opportunities for entrepreneurs and startups to provide innovative solutions. Whether it’s developing a platform to streamline visa applications, providing language and cultural training programs, or offering personalized support services for international students, there is no shortage of potential niches to explore in this market.
The Study Abroad Market Overview
Now, if you look at this chart out of the 45000, that a student spends abroad, 2500 is spent on pre-admission, 27500 is spent on tuition, 9000 is spent on housing, and 6000 is spent on household and grocery consumption.
Identifying the Gap
Here is where we have the first big gap that needs to be explored, which is the student Market that is abroad and is paying 27500 as in 22.9 lakh rupees for MBA or Computer Science Education per year. So this customer by default has a humongous purchase power of 45 lakh rupees for 2 years.
Exploiting the Opportunity
This data indicates that if you build a school for MBA or computer science in India, which can help these students get a high paying job, you can charge a fee in the range of 20 to 30 lakh rupees per year, and it will be a big value for these students.
Comparing Costs in the US
Now, you might say with US education you can get a higher package. Well, we checked that and we found that the median salary in the US for STEM is about 64000. But if you look at the living expenses in the US, the cost of living in the US is very high.
Seizing the Opportunity in India
So if you apply simple purchase power parity, you will see that 100000 in the US is equivalent to 23 lakh rupees in India. If a STEM or business institution in India provides a 23 lakh rupees Plus package for these students in India, it will be a GameChanger in the study abroad market.
High Cost of Studying Abroad
Now you will say bro why don’t you apply purchase power parity for the fees, because even that should be less in India, no well that’s. What we did considering the fact that a student spends 46000 per year in India that is equivalent to just 10.5 lakh rupees, and this is both for graduation as well as undergraduation, so at a 10 lakh Rupees per year price point. It is an amazing value ad for these students, because if these students are able to study here, they save up on the rest, 60 lakh rupees over a period of 2 years.
Challenges in Studying Abroad
They don’t have to worry about getting the Visa and, most importantly, they do not have to worry about stay permits in a foreign country, and this market for MBA and STEM alone is as big as 8.5 lakh students and by the way I am IIT and all The top tier PG colleges combined don’t doing cater to 1 lakh out of these 8.5 lakh students. This is the reason why Brands like scaler Academy, Master, Junior and Mesa School. They are very bullish to provide premium grade education to help these students get high paying jobs in India, but in spite of the presence of these Brands, the opportunity in the space is huge and completely untapped.
Investment Opportunities
So if you happen to be an investor or an entrepreneur in the space, this is an approach that I would recommend you to consider. But anyways let’s say these 13 lakh students are going abroad and when they do, even though this 27500 is no longer an opportunity, we have a huge opportunity.
Pre Admission Opportunities
In the pre-admission space, there are three massive opportunities: test preparation, admission and application consulting, and financing. The biggest opportunity lies in the application and admission consulting space, especially for international students from countries like India.
Challenges with Proficiency Tests
In countries like India, English proficiency tests are often mandatory for international students. Two common and widely accepted tests are TOEFL and IELTS. However, there are several challenges with these tests in the Indian context.
Cost
TOEFL and IELTS can cost students around 16 to 17,000 rupees. Additionally, sending scores to more than five colleges incurs an extra fee of 250 rupees per university. As students apply to more colleges, the application costs can quickly add up.
Accessibility
In India, there are only 78 test centers for IELTS, yet there are an estimated 1.3 million test takers every year. This limited number of test centers means that students may have to travel long distances to take the exam, adding an extra burden to the application process.
Solution: Dual lingo English Test
To address these challenges, Dual lingo has introduced an English proficiency test as an alternative to TOEFL and IELTS. The Dual lingo English test costs only 5000 rupees and can be taken using a laptop and an internet connection.
One of the key advantages of the Dual lingo test is that scores can be sent to unlimited schools at no additional cost, eliminating the financial barrier of sending scores to multiple universities. This not only reduces the financial burden on students but also makes the application process more convenient and accessible.
The Cost Factor
One major aspect of the study abroad market is the cost involved in pursuing education in a foreign country. Companies like Du Lingo have tapped into this market by offering cost-effective solutions for students. However, there is still a huge potential for other players to enter this space and provide more options for students looking to study abroad.
Lending Opportunities
Another significant area in the study abroad market is the provision of loans for students. While banks have traditionally been the main source of study abroad loans, non-banking financial companies (NBFCs) like HDFC, Creda, Avance, and Oxom have captured a substantial share of this market. With an average interest rate of 11 to 12.7, there is an opportunity for new players to offer smoother loan processing and lower interest rates for students.
Admission Consulting Market
The admission consulting market is another lucrative segment in the study abroad industry. Companies like KC Overseas, Advise Fat, and Seed Global provide counseling services to students and earn commissions from university marketing budgets. According to surveys, these companies make an average commission of 2500 to 33500 per student successfully placed, highlighting the potential in this sector.
Visa and Forex Services
Visa agencies and forex credit card companies play a crucial role in facilitating the study abroad process for students. Companies like Neog Global Cards are looking to tap into this market by offering specialized services for students navigating visa and foreign exchange requirements. This sector presents yet another opportunity for businesses to cater to the needs of students studying abroad.
The Forex Markup Gap
While HDFC and IC charge you a 2 Commission of the total expenses, neog Global has zero Forex markup and helps you make payments effortlessly all across the world. This gap in the market has drawn the attention of many companies trying to capitalize on this opportunity.
The Housing Expense Opportunity
The housing expense of students studying abroad presents a mammoth opportunity for companies. Approximately 20% of the entire money spent by students is dedicated to housing. Many universities provide accommodation to only 16 to 20% of the total students enrolled, leaving the remaining 80 to 84% to find space off-campus.
Students ideally seek accommodation within walking distance of the university to avoid additional travel expenses. They also look for rentable, small, and affordable spaces, similar to college and PG spaces in India.
Types of Housing in the Study Abroad Market
Three different types of housing are prevalent in the study abroad market specifically for Indian students. The first type is PBAs, which stands for purpose-based student accommodation.
Understanding the Study Abroad Market
Organized Housing Options
Some housing options in the study abroad market are fully furnished buildings made specifically for students. These accommodations come with amenities and cleaning services, providing a comfortable living experience. However, they can be quite expensive, with prices ranging from 20 to 223000 per year, which equates to 16 to 19 lakh rupees in India. Companies like Stanza Living in India and global ones like Gyar, Unite Student Accommodation, Scape Students, and Vita Students cater to this organized housing market. Despite their benefits, only about 20 to 25 percent of students are able to secure accommodation in these hostels, leaving a significant portion of the market unserved.
Second Tier Housing Options
For the remaining 50 to 60 percent of students, there are second-tier housing options available. Private apartments in residential areas accommodate both students and non-students, offering a more flexible living arrangement. Additionally, home stays, similar to paying guest accommodations, allow students to live with local families. However, these categories are more disorganized compared to the organized housing options mentioned earlier.
Challenges in Finding Accommodation
One of the significant challenges in the study abroad market is finding suitable accommodation in a timely manner. Due to the large influx of students, securing a place to stay in a foreign country can be a daunting task. Students often have to rely on Facebook groups and university guides to coordinate accommodation arrangements before their arrival. If booking is not done well in advance, students may find that all the best rooms are already taken, leading to high demand and inflated prices at the last minute. This can result in students having to pay up to 20 to 30 percent more than the original cost, turning what was once a reasonably priced option into a costly endeavor.
The Study Abroad Market Gap
In the study abroad market, there exists a significant gap that needs to be addressed. The demand for affordable and reliable student accommodation is on the rise, with many students seeking housing options that cater to their needs and preferences.
Market Potential
The market potential for affordable student accommodation is immense, with the segment being valued at a staggering 6.5 billion dollars in just the top five regions of the US, Canada, Europe, Australia, and the UK & Ireland. This indicates a vast untapped opportunity in the study abroad market.
Addressing the Gap
One company that has successfully identified and addressed this gap is University Living. Founded in 2015, this Indian company has carved a niche for itself in the global accommodation booking platform industry, boasting a 30% market share.
Unique Approach
University Living has adopted a unique approach to solving the problem of student accommodation. By partnering with various student accommodation providers such as UK-based Nido, Australia-based Student Housing Company, and Ireland-based Livv, they offer a wide range of options to students.
Virtual Reality Solution
One of the key features that set University Living apart is the use of virtual reality technology to showcase accommodation options to students. This innovative approach allows students to virtually tour potential living spaces before making a decision, enhancing their overall experience.
Quick Accommodation Booking
Unlike traditional accommodation booking platforms that require a waiting period of up to 14 days, University Living offers a unique solution. Students can secure accommodation within just 48 hours, providing them with a fast and efficient booking process.
Guaranteed Accommodation
Moreover, University Living goes the extra mile by offering students a guarantor for their accommodation. This is particularly beneficial for students who do not have family or friends abroad to fulfill this role. By providing a guarantee, University Living ensures that students can secure accommodation hassle-free.
Understanding the Gaps in the Study Abroad Market
The Accommodation Gap
And it makes logical sense to become a guarantor, right? Because when these students are being trusted with the bank loan and the US and UK security agencies to enter the country, the probability of them not paying rent is very, very less. By tapping into just this one gap, uni living today has 15,000 properties, with 2 million beds across 515 cities in UK, Australia, US, Canada, and parts of Europe.
Post Admission Services
Just like the admission consulting companies, uni living type companies are paid both by the students and by the accommodation partners for getting them students. There are a host of services that are required to be done from getting visa, health and travel insurance, getting forex, paying bills, and job search. In each of these segments, there are specific companies that cater to these services.
Companies in the Study Abroad Market
If you want to enter the same market for visas, there’s a company called One Vasco, which makes global travel easier by offering health insurance and travel insurance services. Companies like Matrix provide internship and job search services, while job aggregators like Jubil, Student Circus, and Prosel help students find job opportunities. For forex services, companies like Easy Transfer and Flywire are available.
Value Added Services
Companies like University Del Living fall at the center of student requirements and end up partnering with all these different companies to offer value-added services. This not only benefits the students by providing them with a one-stop solution for all their needs but also creates a lucrative business model for the companies involved in the study abroad market.
The Post Admission Segment
After gaining admission to a foreign university, students often face numerous small problems related to accommodation, transportation, and settling into a new environment. To address these issues, companies partner with affiliates to provide solutions and earn commissions in the process. This segment focuses on easing the transition for international students.
Household Consumption Segment
In the household consumption segment, big players like Walmart dominate the market with a wide variety of products. However, there is a gap in the market for Indian food, particularly in the packed food segment. Brands like Haldiram and MTR have gained popularity, indicating a demand for tasty Indian meals abroad.
Opportunities in the US and UK Market
An emerging opportunity lies in introducing packed Indian food brands to the US and UK markets. Products like ready-to-cook Dal mixes have the potential to appeal to a wide audience looking for convenient yet delicious meal options. Companies with successful packed food brands in India should consider expanding into these regions to tap into this growing market.
Taking Advantage of Market Gaps
If you have a packed food brand that has seen success in India, exploring the US and UK markets could be a lucrative venture. By offering authentic Indian flavors in convenient packaging, you can cater to the demand for quality ethnic food abroad. Sharing your brand deck with potential investors or partners could help you make a strong entry into these markets.
Feedback and Future Endeavors
As we conclude our market research on the study abroad market from India, it is essential to gather feedback on the insights shared. Whether this information has been helpful or how it can be improved, your input is valuable in shaping future content. Share your thoughts on this format of videos and any suggestions for enhancement. Your feedback is greatly appreciated.
The Growing Demand for Study Abroad Programs
Studying abroad has become increasingly popular among students seeking a unique academic experience, cultural immersion, and personal growth. The opportunity to learn in a different environment, interact with students from diverse backgrounds, and explore new places is enticing for many young individuals.
Challenges Faced by Study Abroad Programs
Despite the growing demand, study abroad programs face several challenges that create gaps in the market. These challenges include high tuition fees, limited scholarship opportunities, language barriers, cultural differences, and bureaucratic processes for obtaining visas and permits.
Lack of Diversity in Destination Countries
Another gap in the study abroad market is the lack of diversity in destination countries. Students often choose popular study destinations such as the United States, the United Kingdom, Australia, and Canada, while overlooking other countries with quality education systems and unique cultural experiences.
Need for More Affordable Study Abroad Options
One of the major gaps in the study abroad market is the lack of affordable options for students from lower-income households. Many students are unable to afford the high tuition fees, accommodation, and living expenses associated with study abroad programs, which limits access to international education.
Opportunities for Innovation and Collaboration
Despite the challenges and gaps in the study abroad market, there are opportunities for innovation and collaboration to improve access and diversity in international education. Initiatives such as online learning platforms, virtual exchange programs, and partnerships between institutions can help bridge the gaps and make study abroad more inclusive and accessible to all students.