The APS Marketplace

Background

The private school segment in India has been steadily growing over the past ten years. Currently, more than 42% of children, around 12 crores in total, study in 5 lakh private schools. The private school share has been growing at about 1 – 1.5 percentage points yearly; the projection is that by 2030 this will cross 50%. This is already the case in several states. The largest growth has been in what is called the ‘Affordable Private Schools’, or APS market. These schools are generally classified as those that charge between 500 – 1500 rupees per month, per child. Considering the rapid growth in market share of APSs, it becomes critical to ascertain the quality of being provided in these schools.

Evidence on the quality of education in private schools as measured by student learning outcomes is inconclusive. A claim is made that private schools provide better education at a lower cost per child when compared to government schools. However, this point can be refuted when we adjust for socioeconomic factors. ASER 2016, in fact shows that learning levels have improved in government schools since 2014, while private schools have remained more or less the same.

Landscape

The proliferation of these private schools, especially in urban settings, has created a huge market. Parents are more engaged with and actively voice concerns when it comes to private schools. Since they are paying customers, private schools are obliged to address their queries and take their demands into account.
Parents use proxy markers for quality – such as technology in the classroom, their child’s English speaking ability, etc. Most schools, especially in the low-income segment, are not able to cater to these requirements internally. This, in turn, has spawned several organisations collectively dubbed as School Improvement Service Providers (SPs). The services/products provided by these companies range from textbook publishers to teacher training.

For private school HMs and owners, there are various constraints to employing service providers. The most often cited ones are expressed in the table below:

Constraint Description Solution
Financial Lack of funds to buy services without passing cost to parents Varthana, ISFC, Shiksha Capital
Knowledge Awareness about school improvement services The APS Marketplace
Mindset The value of improving quality of education delivery ISLI, 3.2.1
Demand and supply SPs and APSs aligning on what is needed for improving quality The free market

At present, there is no channel that exists between SPs and schools. Decision makers choose services/products on an ad hoc basis, without any formal evaluation or long term thought process. The most common spread of information is through word of mouth – HMs are told about services from a particular company and vice-versa. In this case, a market is limited to the number of connections a particular player has.

Successful service providers use what they recognise as less effective methods – cold calling, recommendations from current clients or mass media publicity [emails, SMSes, sponsored presentations] to tap the APS market. Their conversion rate, by and large, tends to be low and the sales pitch drawn out over weeks or even months.

Problem Statement

Currently, there is a need for a conduit between APS and SPs –

  • APSs do not use service providers to improve quality due to limited knowledge and resources
  • Service providers find it difficult to contextualise and sell their products to APSs at scale

The gap also results in a demand-supply mismatch, where SPs are unable to understand the exact needs of the schools and APS owners cannot find SPs that adequately address their concerns.

Hypothesis/Solution

A marketplace for APS and SPs can bridge the gap by providing a channel:

    • For schools
      • To evaluate the right service provider suitable as per their requirement
      • Motivate them to use better services
      • Choose the SP as per their budget
        • For service providers
          • To tap the APS market more effectively
          • Increase their sales
          • Understand the market requirements

Challenges

School owner/HM mindsets
Some schools are committed to improving quality, but there exist a significant number at the other end of the spectrum as well. The major challenge here will be to convince the decision makers to invest in improving their schools.
There are enough for-profit service providers whose continuing existence proves that it is not an insurmountable challenge. Further, an assumption can be made that enough, if not all, school owners are interested in quality education and will engage with SPs.

Diverse stakeholders
The use cases for such a portal are varied for parents/students, school owners, SPs, NGOs, the government and other concerned parties. Therefore the functionalities and outward facing view of the marketplace will need to be deeply thought through.

Complex Ecosystem
It is worthwhile to note that the private school ecosystem as a whole is extremely heterogeneous and fragmented. Schools exist across boundaries of geography, fee points, quality, enrollment, ownership and management structure. Furthermore, there is no one representative agency for these institutions.

Outreach
At this time, there is no way to reach a large number of schools. Getting both SPs and schools on this platform will be one of the key challenges.